OMB BULLETINS 1966

• Document Type: CREST
• Collection: General CIA Records
• Document Number (FOIA) /ESDN (CREST): CIA-RDP06M00944R000200070001-8
• Release Decision: RIPPUB
• Original Classification: C
• Document Page Count: 59
• Document Creation Date: December 27, 2016
• Document Release Date: July 17, 2013
• Sequence Number: 1
• Publication Date: May 24, 1966
• Content Type: REPORT

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EXECUTIVE OFFICE OF THE PRESIDENT
BUREAU OF THE BUDGET
WASHINGTON, D.C. 20563
BULLETIN NO. 66-6
TO THE HEADS OF EXECUTIVE DEPARTMENTS AND ESTABLISHMENTS
SUBJECT: Improvement of financial management
May 24, 1966
1. Purpose. This Bulletin requires each agency to take prompt and vigorous
action toward modernizing its financial management system in accordance with
existing laws, requirements, and administrative regulations.
2. Background and need.
a. Need for action. An analysis of information submitted by agencies
in response to Bulletin No. 65-9--which covered accomplishments and the
status of their financial management improvement programs--indicates that
more expeditious action is needed to achieve identified goals in the finan-
cial management field. Comparisons of plans, target dates, and accomplish=
ments in the annual agency reporti of the last few years reveal delays and
deferments in needed and planned improvement work More positive and effec-
tive action is required.
b. Specific areas. In particular, revitalized efforts are needed by
many agencies in three major areas: (1) the development of accounting
systems in accordance with the provisions of the Budget and Accounting
Procedures Act of 1950, as amended, and the principles and standards pre-
scribed by the Comptroller General, and the submission of such systems to
the Comptroller General for approval; (2) the. use of cost-based budgets
internally for purposes of administration and operation as contemplated by
Public Law 84-863; and (3) the use of statistical saMpling techniques in
the administrative examination of vouchers as authorized by Public Law
88-521.
The planning, development, and installation work under (1) and (2)
above should be closely Coordinated :with agency efforts toward installation
of the Planning-Programming-Budgeting- system equired under Bulletin No. 66--3
and supplemental instructions. It should give 'recognition to the data demands
of the Planning-Programming-Budgeting System on the agency accounts, and the
agency cost-based budget execution practices should be properlyrelated to
and be made consistent withthe longer rangeprogram and financial plan
prepared in response to instrUctions isgued under. Bulletin No. 66-3.
3. Development of accounting systems. The Budget and Accounting Procedures
Act of 1950, as amended, places responsibility in the head of each agency for
developing accounting systems that are designed to meet the internal management
-e.
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needs of the agency, satisfy external requirements, and conform to the
principles and standards prescribed by the Comptroller General. In June
1965, the Comptroller General issued a restatement of accounting principles
and standards for the guidance of executive agencies. The purpose of that
restatement was to furnish a,more useful and meaningful consolidated otate-
ment that would stimulate the development of improved and more effective
accounting systems throughout the. Federal Government.
Each agency is requested to reexamine. the adequacy of its accounting
system(s) against current published requirements, review, the status of
developMental work, and take action to speed up needed improvements.
These efforts should be organized in firm projects for completion of
necessary developmental work within specified time periods, and coordinated
with plans for submission of accounting systems to the Comptroller General
for approval as soon as practicable.
4. Use of cost-based budgets internally. Public Law 84-863 provides
that for purposes of administration and operation, cost-based budgets will
be used by all.departments and establishments, and that administrative sub-
divisions of appropriations or funds will be.made on the basis of such cost-
based budgets. This involves the use of high level allotments for fund
control and more detailed cost targets for program management; the prepa ?
ration and approval of internal operating budgets that incorporate fund
limitations and cost targets to govern the conduct of the work; and the
use of reports that show performance against approved operating budgets
for effective control of budget execution..
Agencies should reexamine the adequacy of present practices in relation '
to these objectives, and take action.to bring about needed changes. Such
changes should be made as soon as practicable, through time-phased projects.
that are realiatically scheduled in relation to the developmental work on
the accounting system(s).,
5. Use of statistical sampling techniques: Public Law 88-521'authorizeth
the use of etatisticalmampling techniques in the administrative examina-
tion of vouchers for legs than $100. .Prior to the enactment of this
legislation, studies-by two agencies indicated that sizeable savings
were possible by the application of statistical sampling.. Reports in
response to Bulletin No. 65-9, however, did.not-show effective process..
Agencies are requested to expedite action in this area. ,Feasibility studies
-should be made to determine where the use of statistical' sampling for voucher
examination is appropriate. 'These studies should then be implemented as .
goon as'possiblewherever'this approach is. practicable, in order to achieve.
the inherent-savings at the earliest possible date. ' The.time schedule for
such actions., should be firmly established as part of 'the overall imprOvement-.
program.'
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6. Other improvements. Prompt action Should also be taken to bring about
needed improvements in other functional areas, in accordance with the goals
and objectives that have been established under the Joint Financial:Menage-
ment Improvement Program.
7. Reports of action. Although no immediate report is required under
this Bulletin, the specific items herein discussed Will be covered in the
annual call for reports of agency accomplishments under the Joint Financial
Management Improvement Program for fie-Cal year 1966. Firm target dates for
needed improvements and accelerated progress are to be reflected in each
agency's report under that call.
The need for more aggressive improvement action in this field requires that
the agency reports for fiscal year 1966 should not reflect any deferral of
target dates beyond those that were furnished by the agencies in response
to Bulletin 65-9. Instead, every effort will be made to move the targets
to an earlier date, with a Sim commitment for attaining the desired objec-
tives within the specified time periods.
CHARLES L. SCHULTZE
Director
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CONFIDENTIAL -
Cd e
3 March 1966
MEMORANDUM FOR: DD/I Planning Officer
DD/S&T Planning Officer
DD/S Planning Officer
DD/P Planning Officer
SUBJECT : Supplement to BOB Bulletin 66-3
1. Attached are copies of a supplementary issuance by the
Bureau of the Budget to Bulletin 66-3. The noteworthy features
of this supplement are the emphasis on "Program Outputs", i.e.,
quantitative expressions of what is produced as a result of a given
activity over a period of years and an example of what a Program
Memorandum might cover. As you know, Bulletin 66-3 calls for
the submission of Program Memoranda on each Program Category
to BOB in May.
2. After you have had a chance to look this supplement over,
it would be worthwhile for us to discuss it either directly with each
directorate planning element or in a meeting.
/3/
STAT
Chief, Planning and Programming Division
? 0/PPB
Attachments: (3) As stated
PPB /PPD jh (3 Mar 66) STAT
Distributio
1 - DD/I P1 Offic w 3 att
1 - DD/S&T P1 Offic w 3 att
1 - DD/S P1 Offic w 3 att
1 - DD/P P1 Offic w 3 att
C/CCS wo/att
1 - PPB Reading file
1 PPD Chrono
1- PPD Subj
CONFIDENTIAL.
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C e--1,711.
EXECUTIVE OFFICE OF THE PRESIDENT ro-
rpil Z6- 01/4
BUREAU OF THE BUDGET
WASHINGTON, D.C. 20503
February 21, 1966
MEMORANDUM TO HEADS OF EXECUTIVE DEPARTMENTS AND PREVIEW
AGENCIES
Subject: The Planning-Programming-Budgeting System
Attached is a supplement to our Bulletin No. 66-3 which de-
scribes in detail the two documents basic to the new Planning-
Programming-Budgeting system: The Program and Financial Plans,
and the Program Memoranda. There are three points that I par-
ticularly want to emphasize.
First, the basic documents must reflect decisions made as to
priorities, and choices made between programs on the basis of
these priorities. The Budget Bureau is not specifying overall
fiscal guidelines within which to make choices, but it is quite
clear that the resources available to the Federal Government
over the next several years will not be adequate to fund all
desirable programs. Your current planning and programming,
therefore, should not assume that a large overall increase in
funds will become available for program expansion. In laying
out programs for future years program expansion may be proposed,
but equal attention should be devoted to the reduction and
modification of relatively ineffective, obsolete or low priority
programs. It is out of such reduction that the bulk of addi-
tional funds for new programs will have to be found.
Second, while these particular documents are confidential, much
of the substance of the analyses and the background data can
appropriately be used in preparing your budget justifications
and testimony before congressional committees in support of the
President's 1968 budget.
Third, your preliminary Program and Financial Plans and Program
Memoranda will constitute your submission to us for the Spring
Preview of the 1968 budget. These documents should be sub-
mitted no later than May 1, 1966, to assure the proper schedul-
ing of the entire 1968 budget process.
Attachment
ecazace& 01-944-4:?
CHAT3LES l...,HCHULTZE
)3ire4ctOr410;
OE
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'C) EXECUTIVE OFFICE OF THE PRESIDENT d- f
BUREAU OF THE BUDGET
WASHINGTON. D.C. 20503
SUPPLEMENT TO BULLETIN NO. 66-3. February 21, 1966
TO THE HEADS OF EXECUTIVE DEPARTMENTS AND ESTABLISHMENTS
SUBJECT: Planning-Programming-Budgeting
1. Purpose. Bureau of the Budget Bulletin No. 66-3 out-
lined the concept of an integrated Planning-Programming-
Budgeting system. Pending the consolidation of all in-
structional materials on the Planning-Programming-Budgeting
system in a circular issuance, this Supplement is being
issued to provide necessary details on two of the central
documents in this system, the Program and Financial Plans
(PFP) and Program Memoranda (PM). Both the Financial Plans
and the Program Memoranda are to be forwarded by May 1,
1966, to the Bureau of the Budget by the agencies listed
in Part A of Exhibit 1 of Bulletin 66-3. These documents
will form the basis for this year's Spring budget preview.
2. Constraints. No explicit financial guidelines or con-
straints are provided to agencies. Each agency head is
to recommend the mix and level of programs for his agency.
However, the basis of program decisions is choice among
alternatives, and assessment of priorities. Future Federal
budgets, as past ones, cannot provide unlimited resources -
choices will have to be made. It is important that the
Program and Financial Plans and Program Memoranda be pre-
pared with as much attention paid to reducing and modifying
obsolete and low priority programs as expanding others
and introducing new ones.
3. Program and Financial Plans.
a. Composition. Each Program and Financial Plan should
consist of three parts:
Part I will tabulate program output. .-
Part II will tabulate program costs and other
financial data, in a format paralleling that
of Part I. ?
Part III will include special tabulations.
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The Plan will consist only of these tables, together
with such brief explanatory notes as may be necessary.
All descriptive and analytic material will be included
in the Program Memoranda.
(1) Part I. Tabulation of Program Output. The
Program Output tabulation will consist of tables showing
agency phYsical outputs. Stub headings of the tables are
the program categories, subcategories and elements of the
agency's program structure. All categories, subcategories
and elements approved by the agency head should be shown.
Activities requiring legislation should be so noted. The
column headings should be fiscal years - FY 1965 through
FY 1967, plus FY 1968 through the last fiscal year of the
planning period (FY 1972 in the case of those agencies
developing five-year plans).
One principal indicator of physical output
or services rendered will be shown for each program element.
The output measure chosen should be that which is the most
important single quantitative measure of program perform-
ance. For urban highway construction, for example, output
might be number of lane-miles of highways built. For an
on-the-job training program, it might he number of workers
trained.
Using the on-the-job training example, the.
program output table would look as follows, assuming that
the program category was "Manpower Development Assistance,"
the subcategory, "Manpower Training," and the element,
"On the-job Training":
FY
65 66 67 68 69 70 71 72
I. Manpower Develop-
ment Assistance
A
B. Manpower Training
1. . ......
2. On-the-job train-
ing
(No. of workers
trained - 000) XX XX XX XX XX XX XX XX
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In the majority of cases no single measure
of, output is satisfactory. In the Case of the urban highways,
far example, some measure of traffic-handling capacity
Might be needed as well as a statement of lane-mileage.
Similarly, in the case ?of Manpower Training, some measure.
of the number of hours of training per worker, or training
costs per worker, or the intended effect of training on
earning capacity might be shown. In all such cases, the
agency should submit, as part of the special tabulations
in Part III', additional tables showing these supplementary
measures of 'output.
(2) Part II. Financial Tabulations. The first
tabulation in this Part should be a Program Cost tabulation
which will have the same stub and column headings as the
Program Output tabulation. The total Federal program costs
shown for each year should be based cn the system cost
Concept described in the Bureau of the Budget Bulletin
No. 66-3 It should display the total agency costs, required
to achieve the comparable output shown in Part I, whether
funded through appropriations, trust funds, revolving funds,
or otherwise. Where the accounting system of the agency ?
is oriented towards the present appropriation and activity
structure and is unable to produce program cost data with
precision, costs :should be estimated as closely as possible.
The cost tabulation:for on-the-job training
would appear as follows:
FY ($ rounded to tenths of millions)
65 66 67 68 69 70 71 '72
I. Manpower Develop-
ment Atsistande
A
B. Manpower Training
1
2. Onthe-job
training., . . XX XX XX.
XX. ' XX XX XX
Totals and subtotals should be shown for pro-.
gram categories and subcategories.
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The services performed by one agency for
another should be reflected in the Plan of both agencies.
For example, administrative support services provided over-
seas to another agency by the State Department on a reimburs-
able basis would be shown as a cost in the serviced agency's
Program and Financial Plan, and as a cost and an output
in the State Department's Program and Financial Plan.
Data on the New Obligational Authority and
Expenditure implications of the proposed programs need not
be forwarded to the Bureau of the Budget, unless speci-
fically requested. Such data should be developed in the
form which is most convenient for each agency.
(3) Part III. Special Tabulations. Many agencies
will be asked to tabulate revenues received, and to show
major capital investment plans. For some agencies, tables
on Federal manpower requirements and sources of financing
may be required. As noted above, it will also be desirable
in the case of some programs to identify measures of program
output in addition to those listed in Part I. The Bureau of
the Budget will work out with each agency the special tabu-
lations to be included.
b. Other information. Other information may be re-
quired later. The schedule for developing this information
will be worked out by the Bureau of the Budget separately
with each agency. Some of the tables in this category
are:
(1) Tabulations Of state and local government
programs (or in the case of some foreign affairs agencies,
foreign programs) and in some cases activities of the pri-
vate sector (including Federal corporations) where these
are closely related to Federal Government programs.
(2) Program element data sheets - one for each
program element which will provide a brief factual de-
scription of each element. ?
? (3) A crosswalk between the, costs shown in. program
terms in Part II, and the agency appropriation accounts .
and other sources of financing, together with a reconcili-
ation of total program costs under each source of financing
to new obligational authority and expenditures. -
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4. Program Memoranda. Bulletin 66-3 provided that a Pro-
gram Memorandum is to be prepared annually on each of the
program categories shown in the Program and Financial Plan.
Certain exceptions can be made, however. Unless specifi-
cally requested, Program Memoranda need not be submitted
for any residual category; e.g., "General Support" or "Other."
Additionally, where no major program choices appear to
be open, or where a joint analysis of several program'cate-
gories appears preferable, separate Program Memoranda may
not be required. In each such case, however, the decision
should be taken after consultation with the Bureau of the
Budget.
The Program Memorandum for a particular program category
provides the analytic backup for the programs described
in the Program and Financial Plan. These Memoranda should
serve as basic planning documents not only by agency top
management and the Bureau of the Budget but throughout
the agency. Moreover, they should be regularly updated
so that at any given time they provide a current statement
of agency objectives and programs. They will provide the
focus for the Bureau of the Budget's Spring Preview.
On the basis of Bureau of the Budget comments and of con-
tinuing internal agency review, these Memoranda should
then be modified as background to FY 1968 budget proposals.
The Memoranda, as modified, together with the decisions
taken in the President's budget recommendations, will form
the point of departure for the Memoranda to be submitted
in the Spring of the following year. The Memoranda will
thus be the focal points for the continuous development,
refinement, and change of concepts and programs.
Attached is a declassified Defense Department paper on
Airlift and Sealift Forces. Though its format differs
somewhat from that required in a Program Memorandum, this
paper provides one example of the analytic method and level
of detail required.
a. Format and content.
(1) Program Memoranda should be prepared in the
form of Memoranda from the agency head to the Director
of the Bureau of the Budget.
(2) Part I should (a) state the recommendations
made, noting the relation of such recommendations to those
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of the prior year; (b) summarize the Memorandum, including
the alternatives analyzed, in not more than two pages;
and (c) include a copy of the PFP for the program category.
(3) Part II should present the factual and analytic
basis for the program proposals. It should be a hard,
quantitative analytic document, not an essay, and not merely
a budget justification. It should (a) specify national
needs in the area covered by the memorandum; (b) define
the agency's objectives with respect to those needs in
precise and concrete terms; (c) analyze the probable effec-
tiveness and the long-term costs of the programs proposed
to attain those objectives; (d) outline and compare alter-
native programs for meeting the same objectives; and
(e) make clear and precise the priorities within program
subcategories and categories and state the relative emphasis
among broad program categories. In the course of this
presentation the assumptions and the criteria used must
be made explicit. Where relevant factors have not yet
been adequately analyzed, they must be identified, and
an indication given of the nature of the data needed or
the studies still to be performed.
Where special studies or other analyses of
particular pertinence have been completed, they may be
made appendices to the Program Memoranda.
b. Length. There is no fixed requirement as to length,
but thorough coverage of an important program category,
including tables, will ordinarily take from 20 to 50 pages,
single spaced.
c. Method.
(1) In general, there are more important questions
deserving analysis than there is analytic capacity available
to do the work. The Program Memoranda should focus on
the central questions. In some cases these have been identi-
fied in the program issues posed by the Bureau of the Budget.
Choices on which subjects should be given highest priority
should be decided after consultation with Bureau of the
Budget staff.
(2) The Memoranda should be as specific and as
quantitative as possible. Broad, general statements of
national needs', such as the "development of a safe and
efficient civil aviation system" or the "elimination of
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poverty," though adequate for some purposes, cannot form
a basis for analysis. The adequacy of specific programs
cannot be adsessed unless their goals are stated precisely -
quantitatively wherever possible - and the time span for .
their accomplishment is specified. Correspondingly, specific
goals should not be adopted until the costs of achieving
them have been assessed. The Airlift-Sealift Memorandum,
for example, does not start with an arbitrary lift capability
as a goal. It starts with an examination of the relative
value of various levels of lift capability, and it compares
these with the various related costs.
(3) In many cases program analysis can be greatly
assisted by a development of 'a formal program model. Such
a model would show, usually on the basis of statistical
data, the relationship of outputs the program inputs. All
such models are simplified versions of the phenomena being
described, but they help clarify the effectiveness of ex-
isting programs, and of possible new programs.
(4) The Memoranda must carefully identify assump-
tions. Some assumptions will be about facts; for example,
the level of economic activity or the rate of family for-
mation. Others will be assumptions about values; for ex-
ample, the specific level of health to which our Indian
population should be brought. Some indication should be
given of the degree to which alternative assumptions affect
conclusions.
(5) It will often be desirable to analyze expli-
citly the effect on program choice of making alternative
assumptions. The three cases described at pages 20-21
of the Airlift-Sealift paper provide examples.
(6) It is often useful to discuss program uncer-
tainties about future programs. In general, the further
into the future a program is projected, the greater the
uncertainty about needs and objectives - but also the greater
the range of options. For this reason it may be useful
to outline a strategy in which certain actions are taken
now which both keep open future options and help provide
the data or analysis needed to eventually choose between
them. The reduction of uncertainty by data gathering,
by research or simply by the passage of time may then make
possible wiser choices than could now be made, and those
choices will still be open because the decisions made now
were designed to keep them open.
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(7) Where estimates of effectiveness or cost are
uncertain, it is sometimes illuminating to do a "break-
even analysis," that is, an analysis which compares the
uncertain program with one on which there are adequate
data. For example, an unproven mail sorting machine of
known costs might be compared with existing mail sorting
methods by calculating the performance which would make
the new machine just competitive with the old methods.'
Conversely, if the mail sorting ability of the new machine
were specified, one could calculate how much the Post Office
could pay for it and be as well off as with existing methods.
(8) Quantification should not be attempted where
it is inappropriate or meaningless. In many cases, the
effectiveness of programs is difficult to quantify; for
some activities, it is impossible. Even in these cases,
however, cost can be estimated, and a more precise knowledge
of program costs can provide a partial basis for the overall
judgments which are made in any event. As in the case
of the Program and Financial Plan, all costs shown should
be systems costs; i.e., all costs incurred in the production
of a given output or service.
d. Legislative implications. New programs proposed
in the Program Memoranda will often require authorizing
legislation. The Program memoranda should, where possible,
outline the essential features of the required legislation
including timing.
5. Handling of documents. The Program and Financial Plans
and Program Memoranda will be submitted to the Bureau of
the Budget in 25 copies. These documents will be handled
in accordance with Bureau of the Budget Circular No. A-10,
"Responsibilities with Respect to the Budget."
6. Inquiries. Questions on, format and substance that
arise during the course of preparing'agency Program and
Financial Plans and Program Memoranda should be brought
to the attention of Bureau 'of the Budget examining staff
for assistance and advice.
CHARLES L. SCHULTZE
Director
Attachment
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ATTACHMENT
SUPPLEMENT TO BULLETIN NO. 66-3
DRAFT
December 21, 1965
MEMORANDUM FOR THE PRESIDENT
SUBJECT: Recommended FY67-71 Airlift and Sealift Forces (U)
I. Summary and Recommendations.
I have recently completed my review of the airlift and sea-
lift forces for FY67-71. The program recommended herein will
form the basis for preparing the FY67 budget. This memorandum
summarizes the main factors I have taken into consideration in
determining United States requirements for these forces.
I recommend that you approve for inclusion in the FY67 budget
development and procurement of the following aircraft and ships
to augment our airlift and sealift forces.
FY67 TOA
(in millions)
Procurement of H C-141's a/
Continued Development of C-5A
Procurement of first C-5A's a/
Procurement of Fast Deployment Logistic
Ships
Modernize MSTS Tankers
Activate Victory Ships for Forward
Floating Depot Use
These development and procurement actions are in support
of an overall program to enhance considerably our rapid deploy-
ment capability. The principal features of this program, which
I recommend to you, are as follows:
a. continue the development of the C-SA transport and plan
an interim force objective of . The development and invest-
ment cost of C-SA is estimated to be . The investment
cost of the next aircraft is estimated to be . A firm
decision on ultimate force size can be made next year.
b. Terminate the C-141 program at aircraft
c. Increase by approximately personnel the manpower
strength of the airlift forces in FY 1967 so that increased
a/ Cost includes flyaway cost, initial Spares, ground support
equipment and modifiOations less Credits from Previous year,
if any.
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utilization rates in both peace and war can be sustained. These
manpower augmentations are being applied on a selective basis
to the most productive aircraft: C-141, C-135, and C-130E in
order to raise their peacetime flying hour rates. Together
with the recommended force structure changes, increases in the
military work week, and other ancillary actions, these added
personnel will provide about percent more capability in
peacetime in FY 1967 and about____percent more strategic lift
capability in wartime than prey3111y available.
d. The overall improvement in wartime surge capability is
summarized in the table below.
Airlift Capability
(Thousands of Tons in 30 days - By Fiscal Years)
Wartime Surge/ 61 62 63 64 65 66 67 68 69 70 71
Previously Approved
SecDef Recommended b/
e. Continue advanced development on a CX- transport,
but do not commence either full scale development or contract
definition. Neither the cost-effectiveness analysis nor the
technology are yet available which would make this system a pre-
ferred alternative for intra-theater delivery.
f. Procure____of the large, efficient, high-speed Fast
Deployment LogistFDL) ships in FY and raise the interim
force objective from to ships at an investment cost
of approximately
a/ Strategic lift capability is computed on the basis of programmed -
active, guard and reserve forces excluding units deployed
overseas and aircraft withheld for special missions.
In FY66 and beyond I assume the wartime utilization
rates'increase from to hours for the C-141 and
C-SA and from____to hours on the C-130E's . (plus
some other smahangss for other aircraft). The manpower
and TOA augmentations associated with supporting bur forces
will insure these wartime rates through FY . I am
asking the Air Force to determine the manpower requirements
and peacetime flying hour,prograth necessary to support these
Wartime rates in FY and beyond.
b/ By end FY - , the recommended program .will produce a 30-day.
wartime surge capacity oftons, of .which will be .
provided by the C-SA. If 177Fought squadrons. of C-SA,
the FY capacity would be. tons.
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3
g. Raise the Forward Floating Depot (FFD) objective from ?
to ships and hold this forward, sea-based prepositioned
force on station during the Jr -period while our much more ef-
ficient deployment mil: ofFDETi-and C-5A's is being created.
Moreover, I recommend that we adopt for planning purposes
the force structure summarized in Table I. Where they differ
from my recommendations, the forces proposed by the Services
are shown beneath mine in parentheses. The financial and pro-
curement summary for these forces is shown in Table II. '%.?
These forces, together with programmed sea- and land-based ,
prepositioned Army equipment and commercial sealift augmentationai,
have tonnage movement capabilities as summarized in Table III.
This rapid delivery capability, however, does not take into
account many other factors which affect our ability to close
and support our combat forces. Such factors include our force
readiness posture, the adequacy of the CONUS transportation
system, the capacity of theater port facilities and lines of com-
munication, and the ability of theater commanders to assemble
and commit large forces rapidly. Recently completed strategic
mobility studies indicate the necessity to incorporate such
factors into an overall movement capabilities plan which is main-
tained on a current basis. Moreover, we must continuously'devise
specific programs to insure that our rapid deployment forces
can be fully and efficiently utilized.
Two basic management tools are being developea: .(1) a
five-year program of balanced airlift, sealift, prepositioned
stocks, and other mobility resources; and (2)fra five-year plan
showing our movement capability for typical forceb-to'selected
areas. These will be available in time for my next Memorandum
on Airlift and Sealift Forces.
a/. Commercial airlift augmentation provided by the Civil
Reserve Air Fleet (CRAF) is not included in the calculations.
These aircraft will be utilized to carry troops and to re-
place diverted military aircraft in resupplying forces
deployed in areas other than the theater of war. The
present CRAF fleet consists of 140 international cargo
aircraft, 120 international passenger aircraft and 83
domestic aircraft.
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4..Q
TABLE I
?
AIRLIFT FORCES
. FISCAL YEAR 1961-74
(Number of U.E. Aircraft at End FY)
?
Active Force
C-97
C-118
C-121
C-123
C-124
C-130
C-133
C-135
C-141
C-5A
CX-VSTOL
Total Active
Air Force Reserve
.C-119
C-123
C-124
C-130
Sub-total Reserve
FY61 FY74
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TABLE I
. _ .
? ;AIRLIFT -FORCES
, FISCAL YEAR-1961-74--
( Cont d)
FY 61 FY74 ?
Air National Guard
C-97
C-123.
C-123
C-124
C-130
Sub-total Guard
Total Guard + Reserve
30 Day Lift Capability in
Thousands of short tons to:
Trans Atlantic
Previously Approved
SecDef Recommended
Trans Pacific
Previously Approved
SecDef Recommended
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TABLE I ?
SEALIFT FORCES
FISCAL YEAR 1961-1974
(Number of Ships at End FY)
FY61 FY74
MSTS Nucleus Fleet
Transports
T-AP (Active)
T-AP (RRS)
Sub-Total
Tankers
T-AO
T-AOG
Sub-Total
General Cargo
T-AK (Large) (Cargo .Ship)
T-AK (Medium) (Cargo Ship)
T-AF (Medium) (Store Ship)
T-AF (Small) (Store Ship)
T-AKV (Cargo/Aircraft Ferry)?
T-AKL (Light Cargo Ship)
T-LST (Tank Landing Ship)
T-LSM (Medium Landing Ship)
T-AKD (Cargo Ship (bock))
T-APC (Small Coastal Transport)
T-AKA (Attack Cargo Ships)
Sub-Total
Roll'on/Roll off ?
T-LSV .
Forward Mobile Depots and Rapid Deployment Ships'
T-AG (FFD)
T-AG (FDL)
Sub-Total
TOTAL NUCLEUS FLEET
a/.Actual delivery schedule may vary from numbers shown, which
.
should, be regarded as planning figures only.
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TABLE II 7
AIRLIFT AND SEALIFT FINANCIAL AND PROCUREMENT SUMMARY
Net Airlift and Sealift Costs
(TOA in Billions of Dollars by Fiscal Year)
Total
FY65 FY71 1967L1971
Previously Approved Program
SecDef Recommended Program
Service Proposed Program
Number of Aircraft and Ships to be Procured by Fiscal Year
C-130
Previously Approved
C-135
Previously Approved Program
C-141
Previously Approved Program
SecDef Recommended Program
Service Proposed Program
C -5A
Previously Approved Program
SecDef Recommended Program
Service Proposed Program
C -X VSTOL
Previously Approved Program
SecDef Recommended Program
Service Proposed Program
Roll-on/Roll-off Ship
Previously Approved Program
SecDef Recommended Program
Service Proposed Program
Tankers (Conversion)
Previously Approved Program
SecDef Recommended Program
Service Proposed Program
Fast Deployment Logistic Ship
Previously Approved Program
SecDef Recommended Program
Service Proposed Program
Procurement Costs in Millions of Dollars by Fiscal Year
Total Procurement Cost of Aircraft
Previously Approved Program .
SecDef Recommended Program
Service Proposed Program
?
)retaI Procurement Cost of Ships
Previously Approved Program
SecDef Recommended. Piogram ?
.Service Proposed Program
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TABLE III ' 8 0
STRATEGIC DEPLOYMENT CAPABILITIES TO SELECTED AREAS,
INITIAL THIRTY DAYS, FY 1966-1971
(Thousands of Short Tons)
I. Deployment Capability, Programmed
Airlift Forces and Prepositioned
Equipment
A. Prepositioned Army Equipment
Europe
Department of the Army
Forward Depot, Total
Location A
Location B
Location C
Department of the Army
? Forward Floating Depot
B. Deployment Capability, Airlift
? Forces and Prepositioning
II. CARGO SEALIFT CAPABILITIES
A. Tonnage in Theater
B. Tonnage Deployed Forward
FDL CAPABILITIES
IV. GROSS DEPLOYMENT CAPABILITIES:
AIRLIFT, SEALIFT AND
PREPOSITIONING
A. Tonnage in Theater
B. Tonnage Deployed Forward
See footnotes on following page.
FY66 FY71
[Page deleted for purpose.of-
this exhibit.1
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II. General Basis for Force Level Recommendations
A. Introduction
Rapid deployment requirements are influenced by the loca-
tion of an attack, the size and type of enemy forces, the
'friendly forces already on the scene, the amount of warning we
have of the impending attack, and how well we utilize that warn-
ing. The possible variations in these factors add up to a wide
spectrum of military contingencies: there are no unique specific
deployment requirements against which we can program combat and
lift forces. In our analyses we look for. typical or likely
cases, examine what appear to be peak requirements, and test all
of these for their sensitivity to possible changes in the various
relevant factors.
To determine the weight and speed of our response, we must
answer questions such as the following: Do early and heavy de-
ployments actually result in shorter and less costly wars? And
assuming there are significant tactical adVantages to early,
heavy reinforcement of threatened friendly forces, what are the
costs of achieving the necessary level of rapid deployment capa-
bility? Are these costs commensurate with the benefits? At
what point do diminishing returns begin to operate strongly
with respect to the costs and benefits of rapid deployment?
Even after approximate answers to these questions have
been obtained, there is the further problem (which clearly
interacts with the original one) of determining the mix of
deployment modes which will accomplish any particular deploy-
ment strategy at least cost. But even here there are further
uncertainties. While two different mixes of airlift, sealift,
and prepositioning may provide "equal" gross capabilities for a
specific deployment, and perhaps even the same delivery time
profile, there will be different degrees of risk, flexibility,
and spill-over effects associated with each of the mixes. These
considerations have been difficult to quantify and to trade off
against the more obvious direct cost differences, but much pro-
gress has been made over the past year.
B. What Kind of Deployment Strategies?
One way of attacking the problem of optimum deployment
strategies is to set as an objective the restoration of the
status quo ante following an attack on some allied nation, and
to compare the alternative ways of achieving it: we can send
U.S. reinforcements rapidly to the threatened point; or we can
send larger forces on a slower schedule. Each strategy, if
followed up in an appropriate manner, can be made to produce
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10
the same effect -- driving the invading force out of the attacked
country and restoring the pre-attack status -- but some can do
this at less cost than others. Costs in this sense must be reck-
oned in terms of: (a) the peacetime cost of owning the rapid
deployment capability; (b) the peacetime cost of owning the
combat forces; (c) the actual out-of-pocket costs of fighting
?the war; (d) the duration of the resultant conflict; (e) the
casualties suffered by both the indigenous forces and our own;
and (f) the land and its assets -- human, material, political
and psychological -- lost during the campaign.. Analytically,
of course, some of these costs -- e.g., the peacetime costs of
the forces and of the deployment capability -- are certain,
whereas wartime costs are incurred only if an attack actually
Occurs.
While we have not answered this problem to our complete
satisfaction, we do believe this is the right way to pose the
question. Furthermore, we now have completed a program of
studies that give us answers which, although subject to further
verification and refining, are a marked advance over our previ-
ous efforts.
The first of these studies was completed in the summer of
1964 by the Chairman of the Joint Chiefs of Staff's Special
Studies Group. One of their specific tasks was to determine
the costs and advantages of various time phasings of forces
required to implement alternative military strategies designed
to meet limited war situations.
The results for one of the areas studies are presented in
outline form in Table IV on the following page. Three strategies
are examined, each divided into a containment phase, during which
the enemy's advance is halted, and counter-attack phase, during
which the status quo ante is restored. The forward defense
strategy calls for a .substantial rapid deployment capability in
the containment phase, requiring that ?personnel and equip-
ment be in position well forward in the eatre by days
after D-day. The median defense strategy imposes a less demand-
ing deployment schedule; the perdonnel and equipment requirements
for the containment phase are unchanged, but they now need to
reach defensive positions in the theatre only by_____days after
D-day. In the minimum defense strategy, .the contrbt objective
is merely to hold defensive perimeters around major population
centers. This permits a still slower deployment rate but re-
quires substantially larger ground and air forces, both for
initial stabilization and for? the eventual counter-attack..
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TABLE IV 11
IMPLICATIONS OF VARIOUS DEPLOYMENT STRATEGIES IN SOUTHEAST ASIA
Strategy
U.S. Combat Force
Requirements
Land Forces
Containment
Counterattack
Fighter & Recon
Aircraft
Duration of Combat
Days
Force Unit-Days
Personnel Losses
()Territorial Losses
(Square Miles)
Rapid Deployment Deliberate Deployment
Forward Defense Median Defense Minimum. Defense
("Alpha") ("Bravo") ("Charlie")
? Cost of Fijhting
the Ward/ A
d/ Prediction of such magnitudes obviously involves very great uncertainty.
However, the relative values of these estimates are probably reliable
enough to support the conclusions that rapid deployment can reduce
greatly the cost of restoring the status quo. Editors note: B is
approximately three times as large as A and C is approximately twice
as large as B.
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There are a number of reasons why trading space for time
results in larger force requirements. First, in the defensive
perimeters around major population centers the lines must be
continuously and deeply manned; the enemy has the ability to
concentrate his forces and a break-through anywhere would be
fatal. 'Second, the length of these defensive lines is long
compared to the frontage which must be defended further
forward where the task is one of blocking approach route's
and lines of communication (LOCs) in a more fluid situation.
Third, the indigenous units will have been badly attrited by
a long campaign with very little augmentation by U.S. forces;
and fourth, the constricted space within the defensive peri-
meter eliminates critically needed airfields for tactical
fighter and transport operations. In fact, some of the
tactical fighter units must be re-based some distance away
with a consequent major degradation in their combat effective-
ness.
There are other consequences of the various strategies
and related rates of deployment. Table IV shows that there
are major reductions in time, force unit-days of combat,
casualties, and territory lost associated with the rapid
deployment strategies. The estimates of the money costs of
fighting the campaigns which result from the various strategies
are subject to a wider range of uncertainty (as far as the
absolute values are concerned) than the other portions of the
analysis, but their values are in a correct relationship.
The CJCS/SSG stuay concentrated on developing scenarios
for three theaters: . The analysis serves
as a useful basis for establishing tradeoffs among deployment
forces and the implications of various force mixes using
realistically derived requirements. The time phased force
requirements for the forward strategy, in Southeast Asia and
Korea and for the median defense strategy in Iran were convert-
ed into 30-day tonnage delivery profiles.
Detailed analysis of rapid deployment requirements in other
likely theaters of conflict is necessary in order for a complete-
ly satisfactory estimate of the demand for rapid deployment
systems to be made. a/
' Our analyses have been directed toward determining the
rapid deployment posture which provides the capability to meet
deployment requirements in any one of these pertinent theaters:
.a/ Editors note: Details of pertinent theaters and their .
specific force and logistics requirements have been deleted.
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C. Alternative Systems: Costs and Capabilitiea
A variety of transport aircraft, cargo ships and pre-
positioning sites was considered in determining the most
?
economical mix of airlift, sealift and prepositioning which
provides the capability to meet the rapid deployment require-
ments which I described in the preceding section. The costs
and capabilities of the airlift and sealift systems are ?
summarized in Table VI.
Up to squadrons of C-130Es,squadrons of C-141s,
and FFDs are considered to have Their investment costs
sunk inwith the C-SA and the FDL. Their (undiscount-
ed) costs consist of 10 years of annual operating costs. Ad-
ditional C-130s, C-141s? and FFDs can be procured at their pro-
?
curement cost plus 10-year annual operating costs.
All C-5As and FDLs are considered on a new procurement
basis, with systems costs including RDT&E, investment and
10-year annual operating costs. The FDL cost and capability
are estimates for analytical purposes ?only. Current Navy
studies will assist us in determining the optimum design for
a fast deployment logistic ship configured to deploy and
support Army forces. The Navy is also studying the desirability
of series production of FDL ships using a standardized design in
order to take advantage of economies of scale in ship production
similar to those which we obtain in the procurement of aircraft.
Studies are also underway concerning possible economies in FDL
construction technology, including the use of automated flow-
line production methods.
? Additional information on the capabilities of these de-
ployment systems is presented in the Appendix.
In addition to the transport aircraft and deployment ships,
the desirability of prepositioning Army equipment at sites near
potential theaters of conflict was considered. It is assumed
in the analysis that the procurement costs of the prepositioned
equipment shown in Table III above are sunk. ?a/ Hence, the cost
of existing prepositioning was assessed at the 10-year operating
and maintenance cost of the facilities and equipment plus a
five percent annual replacement allowance: $3.0 million per
thousand short tons.
a/ In addition to the European prepositioning shown in Table III.
above , additional materiel may be in place in Europe by
FY. . Hence, our analyses will consider cases assuming -
two different levels of prepositioning available in Europe:
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TABLE VI
System
, COSTS AND CAPABILITIES OF AIRLIFT AND SEALIFT SYSTEMS
c/
Tons in 30
Investment Cost 10-Year Annual Operating days from
per Ship or U.E. a/c? Cost per Ship or U.E. a/c CONUS to:
(Millions of Dollars) (Millions of Dollars) Europe SEA
fTh
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New prepositioning could be located in
. Its cost was the full acquisition
cost of the equipment, the cost of dehumidified storage facili-
ties, 10-year facility operating costs, residual equipment inspec-
tion and maintenance costs, and five percent annual replace
allowance: $6.2 million per thousand short tons.
Prepositioned equipment could be picked up and delivered
by any of the ships or aircraft.
D. Some Key Factors and Assumptions Affecting Cost and
Productivity
1. Operational Concept
All of the transport aircraft and deployment ships can
operate from CONUS bases or any of the available prepositioning
sites to any of the objective areas over appropriate routes.
However, several additional modes of operation for ships and
aircraft were considered in order to insure that the deployment
systems were evaluated in their most productive uses.
a. Basing FDLs with Pre-loaded Equipment
FDL ships can be pre-loaded with Army equipment and stationed
forward at, for example, locations A, B, and C in the theater.
After unloading at objective area ports or beaches, these ships
can shuttle to prepositioning sites or to CONUS within the time
available for the deployment.
Whether it is more economical to base FDLs empty on the
coasts of the U.S. or to base them forward with pre-loaded
equipment will depend upon whether the cost of the pre-loaded
equipment represents an extra cost chargeable entirely to the
rapid deployment mission or whether the equipment is in whole or
in part from reserves.
b. Using All Air Lines of Communication
The C-SA will be capable of delivering cargo to support area
airfields relatively close to the forward edge of the battle area.
By eliminating the need for a lengthy ground LOC, C-5A forward
area deployments can do away with the need to deploy forces whose
function is the maintenance of the ground LOC.
A study undertaken by the Research Analysis Corporation
estimated the support forces required for air and for surface
lines of communication. The study took account of the need ?for
additional engineer and medical units in the combat zone if an
all air LOC were used but offset this with the much, reduced re-
quirement for quartermaster, ordnance, medical, and MP units in.
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the communications zone. Account was also taken of the difference
in on-hand stockage levels which would result from a more re-
sponsive all-air resupply system. The aggregate of these effects
in one theater was that in the containment phase, a unit deployed
and supported overland required the movement of about 40 percent
more tonnage than the same basic unit deployed and supported by
air. These tonnages were found to be a function of the length
and condition of the ground LOC, or effectively, LOC travel time.
Analysis of several theaters indicated that, a general factor of
percent additional tonnage per LOC-day: was appropriate where
UiFloyed units moved over and were supported by a ground LOC.
In our analysis, the large in-transit inventory associated
with the ground LOC applied principally to Ship-delivered forces
which did not utilize the C-5A in a tandem bperation. However,
a similar increase was also applied to aircraft-delivered forces
to account for the ground LOC from the terminal airfield to the
points of commitment.
The extra tonnage that must be deployed when a force utilizes
a ground LOC rather than an all-air LOC was explicitly accounted
for in our analyses; the extra personnel costs were not. The
extra tonnage and personnel in the ground LOC can be quite sub-
stantial, particularly in the counter-attack phase. To the
extent that the C-SA makes an all-air LOC not only feasible but
a standard operating procedure, these personnel, with a 10-year
cost of about , would be available for elimination or to en-
hance the ArmyTrieadiness and combat power. The effective use
of out rapid deployment capacity will require that a substantial
part of these personnel be used to increase the readiness of
combat units, although some net saving is likely to result.
c. Using FDLs and C-5As in Tandem
An additional mode of operation: involved the tandem combina-
tion of ships and C-5As. Ship deliveries can be scheduled to
major ports and beaches in or near the objective countries. Once
unloaded, the Army units, instead of moving to the point of
commitment over 'a ground LOC; can move to an airfield adjacent
to the ship unloading areas to be picked up by C-5A and flown 'to
the regular terminal airfields in the rear- of the combat zone.
In our analyses, ports and beaches in the objective countries
were utilized, since that minimizes the demand for C-5A sorties.
However, in the event of port congestion, 'or denial throUghe
sabotage or mining, the same operation could be carried out. ?
using transfer points outside of.the theater.
The tandem FDL/C-5A operation provides an efficient combina-
tion of low-cost delivery of Army units from COriUS (in lieu of
prepositioning) plus the flexibility, reduced support force re-
quirements, and speed of in-country movement afforded by aircraft
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delivery. In our analysis, the tandem operation was restricted
to the C-SA for several reasons: transfer point airfields,
particularly in the vicinity of beaches or smaller ports, would
not accept C-141s; and even at the maximum daily sortie rates,
C-130s simply could not clear away any substantial ship-
delivered force. For example, 400 C-130 sorties would be required
to haul away (leaving aside its inability to carry most items
because of their size) what 40 ?C-5A sorties could do. Much of a
ship delivered load is composed of equipment outsize to the two
smaller transports. It simply would not be practical to split
up the units involved and move the outsize fraction slowly up
the ground LOC while the non-outsize fraction was flown to its
destination, there to await a second marry-up with its slower-
moving outsize counterpart.
2. The Economic Value of Peacetime Airlift Services
In the course of normal peacetime training, C-5As and C-141s
generate the capability to provide logistical support to forces
stationed overseas. An efficient utilization of this by-product
capability can reduce the total costs of peacetime logistics
activities as compared to reliance on alternative modes of cargo
movement. Neglect of these spillover benefits would lead to an in-
efficient allocation of strategic lift resources.
Estimates of the peacetime economic value of the services
provided to peacetime transportation users by both the C-141 and
the C-5A were generated under a variety of assumptions. The
marginal peacetime value for successive increments of either
C-141 or C-SA capability declined and, for very large forces,
finally disappeared altogether, since there is a finite amount
of Departmental peacetime traffic available for movement by air.
Conservative estimates (i.e., if anything, low) of the marginal
value of the productive hours generated incident to normal training
were subtracted from the basic C-141 and C-5A costs. The wartime
rapid deployment mission was charged with the remaining costs.
In this way, force mixes which minimize rapid deployment costs
simultaneously minimize the sum of the costs of rapid deployment
and peacetime resupply operations. (As a sensitivity test,
however, analyses were conducted in which the aircraft competed
without any credit for peacetime economic benefits.)
3. Limitations on Port, LOC and Airfield Throughput Capacities
A number of limiting constraints and other assumptions affect
the productivities of deployment systems and modes of operation.
These include limitations on the daily throughput capacities of
ports, beaches, ground LOCs and airfields; time delays associated
with loading and unloading ships and aircraft, marrying up troops
and equipment at assembly areas near ship and aircraft unloading
points, refueling, canal transit, and moving forces over-land to
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points of commitment; and the necessity to deploy enroute sup-
port and airfield maintenance units for airlift systems. In
computing the costs and productivities of alternative rapid de-
ployment systems, estimates were made of these various factors.
These are summarized in the Appendix tables. We also examined
the sensitivity of our conclusions to changes in the basic
assumptions.
? E. Some Key Uncertainties Affecting Cost and Productivity
1. The Relative Vulnerability of Deployment Systems
The relative vulnerability of different deployment systems
to enemy countermeasures has not been determined. Assuming a
given enemy threat, the vulnerability of airlift deployments
? depends, among other things, on the distance of the terminal air-
fields from the FEBA, on the length of time during which the
aircraft are exposed to attack and on the size or payload of the
aircraft. The vulnerability of surface deployments depends, for
example, upon the length and capacity of the LOC. The present
analysis assumes that neither airlift nor sealift systems have
significant disadvantages of vulnerability relative to alternative
deployment modes. Some studies are being completed on the
vulnerability problem which should resolve some of the major
'uncertainties. However, much additional study effort is needed.
2. The Value of Strategic Warning
The analysis summarized in this Memorandum assumes that de-
ployment systems are activated simultaneously. However, if ships
can be loaded and movement initiated prior to D-day on the basis
of strategic warning, the productivity of sealift alternatives
may be enhanced relative to that of quick reacting airlift
systems. Unlike aircraft, ships and their loads can be moved
significantly closer to the theater prior to D-day. The earlier
arrival of deployment ships improves their capability to satisfy
very early delivery requirements. In addition, the ships can
*achieve a greater number of round trips between prepositioning
sites, or even CONUS, and objective areas. However, because of
the complementarity between ships and aircraft associated with
tandem operations, and because of the insurance value in owning
more than one deployment system, a more detailed analysis of
6trategic warning is unlikely to affect sharply our conclusions
concerning the preferred mix of deployment systems.
3. The costs of Deployment Systems
Additional analysis of system costs needs to be undertaken
in some cases. Studies underway on the potential costs of FDL
construction were mentioned above.
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The analytical basis for charging rapid deployment systems
With the costs of land-based and sea-based prepositioned Army
equipment also needs to be refined. The present analysis charges
the full costs of this equipment to the rapid deployment use.
To the extent that this equipment also has a residual value as
war reserve stocks, a different allocation of its cost is appro-
priate. Clearly, this will affect the cost-effectiveness of those
deployment systems and operating modes which utilize prepositioned
equipment. The desirability of forward basing FDL ships and the
economies associated with land-based prepositioning are likely
to be enhanced.
4. Operational Feasibility
Deploying forces rapidly and sustaining them in combat using
new, efficient delivery modes can significantly reduce the duration
and overall destructiveness of a conflict. Operational concepts
and doctrine must be compatible with the attainment of this
objective or else the value of owning a rapid deployment capability
will be dissipated. Concepts such as force tailoring, for example;
are designed to improve significantly our rapid deployment posture
without seriously degrading the combat effectiveness of the
deployed forces. Force readiness, all-air lines of communication,
Port/beach and air terminal operations, and post deployment re-
supply of deployed forces, including bulk POL, must be examined
in considerable detail using realistic scenarios to ?insure that
the concepts employed in our rapid deployment analyses are practical
and that their costs and risks are properly evaluated. The study
program which the Services will undertake this year should greatly
improve our understanding of how our deployment capability can
be most efficiently utilized.
a/
F. Least Cost Fleet Mixes
Editor's note
The original text for this section occupied 9 pages. All of
this text has been deleted due to the sensitive nature of the
specific data used in the actual analysis. A general description
of methodology used in this analysis is supplied below by the
editor.
A very large number of possible combinations of land-based and
sea-based prepositioning and airlift and sealift forces could be
chosen. Of these possible combinations, many would perform rapid
? deployment missions efficiently. .It was necessary, therefore,
to search syStematically among them to locate the "best" one or
ones. .Among these rapid deployment postures that would do the
0 ? job more or less equally well, the "best" ohe?WaS defined as
that one which had the lowest total 10-year systems cost. As
a/ A linear programming model was used in performing actual
? -calculations.
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the footnote states, "A linear programming model was used in per-
forming actual calculations." The word "model" here refers to a
set of mathematical equations developed by the analyst and used
to express the relationships between the mixes chosen and the
10-year system costs that characterized each of the mixes. The
words "linear programming" refer to a mathematical technique
employed in this particular analysis in order to examine alter-
native mixes systematically and insure that no low cost ones
were omitted from the search for the best one, while at the same
time avoiding the need to examine many combinations or mixes which
could be ruled out without making actual calculations. In short,
it was an efficient way to find the least cost mix. Use of such
well defined mathematical techniques of analysis will not always
be possible, since they demand thorough problem definition and
good input data. What is important is that the analysis is
systematic; it need not be highly sophisticated.
Several different assumptions as to on-hand land-based pre-
positioning were used during the analysis. For each case the
"best" mix of airlift and sealift and new prepositioning was
then calculated using the linear programming model. A more
specific discussion of these basic postures follows below. As
a second part of the analysis two of the major cost elements
in the model were given different values in order to determine
how sensitive the least cost solution ini4ht be to variation in
the costs of various force elements. A discussion of some
specifics of this "sensitivity analysis" also follows.
The least cost fleet mixes were determined using the linear
programming model for the following cases:
(1) Base Case. The mix of airlift and sealift and pre-
positioned equipment, by type or location and by amount, required
to meet the tonnage requirements for the multi-theatre system
discussed in section B above constitutes the solution to this
base case. The lower of two levels of on-hand prepositioning
in Europe was used for this case. The ten-year systems cost of
the resulting mix was also computed. This, and all subsequent
total systems cost estimates, includes only the strategic lift
forces, excluding the costs of tactical airlift, reserve and
guard airlift units, and the non-FDL elements of the MSTS Nucleus
Fleet.
(2) Case II. This case used the same input data as the -
base ease except that a higher level of on-hand prepositioning.
iii Europe was assumed. This higher on-hand prepositioning pro-
duces some reduction in 10-year systems cost. The resulting
least cost mix shifted slightly from airlift to sealift forces
as compared to the, base' case solution.
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(3) Case III. This case eliminated one area as a possible
PrepositioRtiii-iite. The mix of forces changed only slightly
from the base case and the 10-year systems cost increased some-
what. The resulting increase in total systems cost can be
interpreted as the value of the eliminated area as a preposition-
ing site over the 10-year period considered by the analysis.
Such analysis can also be extended to include determination of
the values of given routes, in particular the value of the over-
flight and transit rights, and of any site assumed to be available
during a deployment.
(4) Non-availability of C-SA. The least cost mix was
also computed assuming the C-5A was not a candidate for inclusion
in the force. As a result, large numbers of C-141 aircraft
were included in the force, and the total 10-year systems cost
was nearly double that of the base case. The least cost mix also
contained fewer FDL's than the base case mix. This result
emphasizes the value of the efficient tandem C-5A/FDL combination.
More emphasis is also placed on land-based prepositioning when a
large, inter-continental airplane is not available.
It should be noted, however, that the C-141 was not used in
tandem with FDL because of its limited forward area airfield
0 landing capabilities, limited outsized capability and a much
greater number of sorties required to clear ship-delivered tonnages
from transfer point airfields. Before conclusions regarding the
C-141 are accepted, however, a C-141 modified with a high flatation
landing gear to allow its extended use in airfields close to the
battle area should be evaluated.
(5) Case V. This case limits the airlift fleet to existing
C-130E's aRU?C1411s. The shortfall in deployment capability
must be made good entirely by additional sealift forces. However,
the total required deployment could not be accomplished with
existing C-141's and C-130E's unless some of the constraints
imposed on the previous cases were relaxed. The result showed
that even when the C-SA is not available, the C-130E is not in-
cluded in the least cost solution, constituting further evidence
that the future value of this aircraft in strategic rapid deploy-
ment missions is negligible.
(6) Cases VI and VII. These two cases involved redoing the
base case computations, each time with the elimination of the
deployment requirements for one theater. The reduction in
10-year systems cost with a single theater omitted provides an
estimate of the incremental cost of meeting the requirement of
that theater. It was found that requirements in two of the
theaters could be met at no extra cost with a force which could
meet requirements in the other three theaters. Thus, the analypis
can be used to reveal which "requirements" exert a drain on re-
sources, and hence should be carefully evaluated, and which can.
be met at little or no extra sacrifice.
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(7) Cases VIII and IX. Each of these two cases examined
the solution for maintaining a rapid deployment capability to
meet the requirements of only one theater. The resulting
solutions show that if we know in advance where a contingency
will arise, the best posture depends more heavily on preposi-
tioning as near to the expected conflict as is practical. If,
however, we desire to prepare to meet a variety of possible
deployment requirements, distributed world-wide, as in the base
case, we will rely more on flexible systems such as the C-5A
and the FDL and less on land-based prepositioning.
All of the above cases include in the analysis an early
tonnage requirement to be met in all theaters. Minimum .require-
ments for tonnage delivered within a short period of time after
D-day were specified beforehand for all theaters. In virtually
all cases, however, the least cost mixes more than satisfied these
early requirements. In other words, none of the deployment aircraft
or ships were bought for the sole purpose of meeting these early
requirements.
(8) Cases X, XI, XII. These cases constitute a sensitivity
analysis on deployment requirements and the costs of forces.
Case X repeats the analysis with the deployment requirements
for three theaters reduced by two-thirds of their base case
values. Case XI examines the effect of a reduction in the cost
of FDLs. Case XII examines the effects on the least case mix
?
of an increase in the cost of C-5As. The results of these three
cases provide an opportunity to examine the implications of the
estimates made for tonnage requirements and equipment costs on
the least cost rapid deployment force mix.
a/
G. Conclusions:
As a result of all of the analyses that we have undertaken
during the past year, I have concluded that:
1. A deployment force capable of rapid, world-wide response
at least cost consists of a mix ?of aircraft ?and fast deployment
logistic ships, plus limited land and sea-based prepositioned
stocks at a variety of locations.
2. Under present assumptions as to optimal deployment '
strategies and requirements and the costs and capabilities of
alternative deployment modes, the least cost mix of deployment
systems consists of to
tons land-based prepositiaang plus
existing prepositiFHIng.
C-5A, FDL..
ships and
? a/.? Editors comment: Because of the sensitivity of materials
from which this document was ?derived, it was necessary to
delete and alter some information. The result p:rOduces
some conclusions which are less on4rply drawn an4 less
quantitatively supported than -those contained in the, ?
priginal document'.
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3. Such a force has a 10-year systems cost of about
dollars after recognizing the value of the peacetime economic
benefits which accrue as spillovers from normal training of the
airlift portion of the force.
4. The precise mix of ships and aircraft in the total force
is sensitive to system costs. However, it is apparent from
C-5A/FDL trade-off analysis that the complementarity between
C-5As and FDLs attributable to the efficiency of the tandem
operation insures against single system postures. A posture
relying on sealift cannot achieve rapid deployment objectives
because of port and surface movement constraints in many areas
of potential conflict, as case five indicated. The procurement
of less efficient aircraft to serve as the backbone of an air
line of communications is a costly alternative and requires
extensive prepositioning in less developed areas. Moreover, the
lack of?an outsize cargo capability in these aircraft would
necessitate dependence on a surface LOC for full TOE deployments.
5. Total systems costs are relatively insensitive to varia-
tions in individual system costs and to variations in other
assumptions as well. Hence a number of rapid deployment postures
are consistent with our objective of providing a deployment
capability at least cost.
6. Whether it is more economical to base FDLs empty on the
coasts of the U.S. or to base them forward with pre-loaded
equipment depends upon whether the cost of the equipment repre-
sents an extra cost entirely chargeable to the rapid deployment
mission or whether the equipment is available in whole or in
part from war reserves.
7. Recognition of the peacetime and post deployment economic
benefits of airlift forces is essential to an efficient alldcation
of resources among alternative deployment systems. However, even
if these effects were ignored completely, C-5As would still be
required in a least cost fleet mix.
8. Our present land-based prepositioning makes a valuable
contribution to our rapid deployment posture.
9. In those cases where earlier studies came to different
conclusions, the disagreement can be ascribed almost entirely
? to one or more of the following factors:
? . a. Use of the C-141 or an early version of the C-5A as
the basic transport aircraft. Competitive procurement policies
? and explicit application of cost-effectiveness criteria during
? the Phase Zero and Contract Definition Phase work during the
last year have resulted in an aircraft of sharply improved
efficiency. The C-5A can compete successfully for a place in
. least cost fleet mixes that neither the C-141 nor the olft.17
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proposed version could manage. This is because, besides being
able to carry 100 percent of the Army's equipment and its short ?
field capability, the 10-year systems cost per ton deployed is
X percent/ of the C-141.
' b. Neglect of the in-theater delivery problem. Sub-
stantial time penalties are involved and major increases in
supporting forces are required to move combat forces into
position and to sustain them over the long, primitive.ground
LOCs typical of underdeveloped areas.
c. Focusing on the requirements of a single theater
or geographically proximate group of theaters. In these cir-
cumstances, least cost solutions appear to call for very large
amounts of prepositioning and quite small deployment forces.
However, if world-wide requirements are considered;and the fleet
mix is optimized over the entire range of potential theaters,
then the sum of even two of the narrowly focused one-theater
solutions becomes more costly than a more flexible aircraft/
ship-rich mixture capable of world-wide response independent
of extensive prepositioning. A deployment fleet broadly optimized
to meet multi-theater requirements at least cost looks quite dif-
ferent than one narrowly focused on a single theater.
d. Neglect of the peacetime economic value of airlift
services. Previous studies have not accounted for the value of
airlift in moving cargos in peacetime. Neglect of this important
spillover benefit leads to underestimates of the overall value
of airlift to the Department of Defense.
It is clear that before proceeding to a still more ambitious
program, it is essential to retest our conclusions with respect
to ultimate force size and to reduce further residual areas of
uncertainty. The major points which warrant additional study
effort are as follows:
(1) Analysis of our capability to use our rapid deployment
resources efficiently considering (a) the capacity of the theaters
to receive and commit forces to combat, (b) the readiness of Army
and TAC Air and Marine Corps units, (c) the adequacy of the CONUS
transportation network. Such analysis is essential for the
development of a five year movement capabilities plan and 'a five
year program of airlift, sealift, prepositioned stocks and
other mobility resources which can insure that our movement
capabilities reflect an efficient use of the Department's mobility
resources. ?
(2) A reevaluation of the original CJCS/SSG strategies with
the particular objective of undertaking parametric sensitivity
tests of key assumptions. The CJCS/SSG also needs to develop a (:)
a/ Editor's comment: X is less than 100.
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25
series of scenarios, strategies, and deployment profiles for
Other areas of interest for use with the least-cost fleet mix
analyses. are areas of particular interest.
(3) Studies and evaluation by the services of operational
concepts and doctrine which employ large numbers of FDL ships
and C-5A aircraft to deploy and assist in resupplying combat
and support forces. Among these studies, which are necessarily
inter-related, are the following:
(a) A comprehensive review of ground and air lines of com-
munication during the deployment phase, to include evaluation
of the operational procedure, costs, force requirements and
risks associated with forward area air terminal operations,
administrative over-the-beach deployments, and operations
linking ports/beaches and airheads in an FDL/C-5A tandem
operation.
(b) A thorough analysis of ground and air lines of com-
munication in the post-deployment resupply phase, with special
emphasis on force tailoring appropriate to each, in-theater
stockage policies, out-of-theater facilities required, medical
evacuation, resupply of high value war consumables, and a
determination of the most efficient means of retailing supplies
to field Army, corps, division and brigade levels under a variety
of combat conditions (such as large scale redeployments) including
an assessment of the effect of the C-SA/FDL combination on the
required number and characteristics of future, intra-theater,
retail delivery vehicles.
(c) An analysis of the relative vulnerability of airlift
and surface deployments and resupply operations, the risks
associated with particular operational concepts, and the
critical parameters essential to evaluating vulnerability under
a variety of combat conditions.
(4) Analysis of simultaneous contingencies and the denial
of transit rights. An analysis of the reinforcement of NATO
simultaneously with a deployment to other theaters is of particu-
lar importance.
(5) A study in detail of the costs and criteria for
moving the Department's peacetime cargo by air and sea. A
common ?data base on Army, Navy and Air Force cargo movements
should be assembled to facilitate a line item analysis of the
factors which govern transport costs. Analysis of this data
should be used (a) to determine the economic value of the
services provided by various mixes of organic airlift and sealift
for the purpose of assisting in sizing the fleet and (b) as a
basis for establishing tariffs for airlift and sealift services
which accurately reflect the costs to the department of moving
cargo by these modes.
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26Q?
:(6), An analysis of the role, if any, of merchant shipping
in performing rapid deployment tasks. This study 'should consider
the costs and benefits of all alternatives available to the
Department of Defense as well as the total costs and benefits
of merchant shipping to the. Federal government.
(7) A study of the casts and benefits of serial production
and highly -automated operation of standardized FDL ships.
(8) An examination, of the new alternatives which become
available in the context of a large, efficient airlift/sealift
force.
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TABLE A-1
? AIRCRAFT CHARACTERISTICS
C-130E C-141 C-5A
Cruise Speed
Penalty per Stop
Utilization, Hours per day
Allowable Cabin Load (s/t)
Average Payload (s/t)
En-route Support (s/t)
Allowance for Differential
Airfield Maintenance
Effort (s/t)
Net Effective Payload (s/t)
27
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28 0
TABLE A72
AIRCRAFT DELIVERIES PER 20 DAYS
Destination
Origin
CONUS
C-SA
C-141
C-130E
OKINAWA
C-SA
C-141
C-130E
GUAM
C- 5A
C-141
C-130E
PHILIPPINES
C-5A
C-141
C-130E
TURKEY
C-5A
C-141
C-130E
ITALY
C-5A
C-141
C-130E
HAWAII
C-5A
C-141
C-130E
Based on the
cruise speeds
C-5A
C-141
C-130E
following wartime hourly utilization rates and
(adjusted subsequently for wind and block times)
U.R. Cruise Speed
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TABLE A-3
SAMPLE AIRCRAFT CAPABILITY COMPUTATIONS
C-SA AIRCRAFT FROM CONUS TO IRAN
Base
Turner AFB to:
Gander
Chateauroux
Cigli
Hamadan
Time for First Delivery
Abadan
Mildenhall
Turner AFB
Equivalent Ground Time Time
Air Distance Speed (Knots) TREIUFFT +0.25 Hr.
,Round Trip Time
Available time =
Minus time for First Delivery
?Additional _
Round Trips -
Deliveries Per 30 Days =
McChord AFB to:
Hickam
Wake
Andersen
Clark
Korat
Time for First Delivery
Don Muang
Iwo Jima
McChord AFB
Round Trip Time
Available time =
Minus time fok first delivery
Additional . _
Round Trips -
10DeliVeries Per 30 days =
r.
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TABLE A-4
SHIP CHARACTERISTICS
Item FFD FDL
Average Payload, sit
Speed, Knots
Delay Times, Days:
Load (CONUS Based)
Load (Shuttled)
Marry-up
Refuel, per 6,000 n.mi.
Canal Transit
Unload
Available Locations:
30
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TABLE A-5
.ADDITIONAL TONNAGE REQUIRED
FOR GROUND LOC IN THEATER
Theater Percentage Increase
, TABLE A-6
GROUND FORCE TRAVEL TIMES OVER SURFACE LOCs (DAYS)
(From Respective Points of Arrival in Theater. to Point of Commitment)'
Theater
Theater
C-5A C-141 C-130 Ship
Airfields Airfields Airfields Ports & Beaches
TABLE A-7 .
DAILY THROUGH-PUT, CAPACITIES
(Thousands of Tons)
Port LOC
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i.g.i.d...bta,h4L
.EXECUTIVE OFFICE OF THE PRESIDENT
BUREAU OF THE BUDGET
WASHINGTON. D.C. 20503
. BULLETIN NO. 66-3 October 12 1965
? TO THE HEADS OF EXECUTIVE DEPARTMENTS AND ESTABLISHMENTS
SUBJECT: Planning-Programming-Budgeting
1. Purpose. The President has directed the introduction of an integrated
Planning-Programming-Budgeting 'system in the executive branch. This
Bulletin contains instructions for the establishment of such a sYstem.
It will be followed by additional instructions, including more explicit
policy and procedural guidelines for use of the system in the annual
Budget Preview.
2. Application of instructions. This Bulletin applies in 411 respects
to the agencies listed in Section A of Exhibit 1. The agencies listed
in Section B of that Exhibit are encouraged to apply the principles
and procedures for the development and review of programs to the extent
practical. (In this Bulletin, the word "agency" is used to designate
departments and establishments; the word "bureau" is used to designate
principal subordinate units..)
3. Background and need. A budget is a financial expression of a program
plan. Both formal instructions (such as those contained in Bureau of
the Budget Circular No. A-11) and training materials on budgeting
have streesed that setting goals, defining objectives, and developing
planned programs for achieving those objectives are important integral
parts of preparing and justifying a budget Submission.
Under present practices, however, program review for decision making
has frequently been concentrated within too shorta period; objectives
of agency programs and activities have too often not been specified
with enough clarity and concreteness; accomplishments have not always
been specified concretely; alternatives have been insufficiently pre-
sented for consideration by top management; in.,st number of cases the
future year costs of present decisioni have not been laid out systematically
-enough; and formalized planning and systeMe analysis have had too little
effect on budget decisions.
To helP remedy these shortcomings the planning and budget system in each
.agency should be made to provide more effective information and analyses to
? assist line managers, the agency head, and the President in judging
needs and in deciding on the use of resources and their allocation
among competing claims. The establishment of a Planning, Programming,
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. 2'
and Budgeting System in accordance with this Bulletin will make needed
improvement possible.
While the improved system is intended for year-round use within each
agency, its results will be especially brought into focus in connection
with the spring Preview.. It should lead to more informed and coordinated
budget recommendations.
4. Basic concepts and design.
a. The new Planning-Programming-Budgeting system is based on three
concepts:
(1) The existence in each agency of an Analytic capability which
carries out continuing in-depth analyses by permanent specialized staffs
of the agency's objectives and its various programs to meet these objec-
tives.
(2) The existence of a multi-year Planning and Programming pro-
cess which incorporates and uses an information'system- to present data
in meaningful categories essential to the making of major decisions by
agency heads and by the President.
(3) The existence of a Budgeting process which can take broad ?
program decisions, translate them into more refined decisions in a
budget context, and present the appropriate program and financial data
for Presidential and Congressional action.
b. Essential to the system are;
(1) An output-oriented (this term is used interchangeably
with mission-oriented or objectives-oriented), program structure (some-
times also called a program format) which presents data 'on all of the
operations and activities of the agency in.eategoiies which .reflect
the agency's end purposes or objectives. This is, discussed in more
detail in paragraph 5, below. '
(2) .Analyses of possible alternative objectives of the agency
and of alternative programs for meeting these objectives. Many dif-
ferent techniques of analysis will be. appropriate, but central should
be the carrying out of broad systema analyses in which alternative
programs will be compared with respect to both their costs and their
benefits. ?
0.
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3
(3) Adherence to a time cycle within which well-considered
information and recommendations will be produced at the times needed
? for decision-making and for the development of the President's budget
and legislative program. An illustrative cycle which does .this ie
described in paragraph 9.
(4) Acceptance by line officials (from operating levels up to
? the agency head), with appropriate staff support, of responsibility for
the establishment and effective use of the system. .
c. The products of the system will include:
(1) A comnrehensive multi-year Program and Financial Plan
systematically undated. .
. .
(2) Analyses, including Program Memoranda, prepared annually
and used in the budget Preview, Special Studies in depth from time to
time, and other information which will contribute to the annual budget
process.
d. The overall system is designed to enable each agency to:
(1) Make available to top management more concrete and specific
data relevant to broad decisions;
(2) Spell out more concretely the objectives of Government pro-
grams;
(3) Analyze systematically and present for agency head and Presi-
dential review and decision possible alternative objectives and alterna-
tive programs to meet those objectives; .
(4) Evaluate thoroughly and compare the benefits and costs of
programs;
(5) Produce total rather than partial cost estimates of programs;
. (6) Present on a multi-year basis the prospective costs and
accomplishments of programs;
(7) Review objectives and conduct program analyses on a con-
,tinuing, year..round basis, instead of on a 'crowded schedule to meet
budget deadlines.
. e. The entire system must operate within the framework of overall
policy guidance -- from the President to the agency head, and from the
agency head to his central planning; programming, and ;budgeting staffs..
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and to his line managers. Fiscal policy considerations and other
aspects of Presidential policy will be provided by the Bureau of the ?
Budget in accordance with the President's program. Wodifications will
also have to be made from time to tine. to reflect changing -external ?
conditions, Congressional action, and other factors,
5. The program structure.
a. An early and essential step for each agency is the determination
of a series of output-oriented categories which, together, cover the
total work of the agency. These will serve as a basic framework for
the planning, programming, and budgeting processes (including work on
systems analysis, reporting, evaluation of accomplishments, and other
aspects of management) and for relating these processes to each other.
The following principles Should guide the development of such output
categories.
(1) Program categories are groupings of agency programs (or
activities or operations) which serve the same broad objective .(or mis-
sion) or which have generally similar objectives. Succinct captions or
headings describing the objective should be applied to each such group-
ing. Obviously, each program category will contain programs which are.
compleftentary or are close substitutes in relation to the objectives
to be attained. For example, a broad program objective is immrovement
of higher education. This could be a program category, and as such would
contain Federal programs aiding undergraduate, graduate and vocational
education, including construction of facilities, as well as such auxiliary
Federal activities as library support and relevant research programs. For
purposes of illustration and to aid understanding, Exhibit 2 shows some
program structures as they might be applied to two organizational units
within different agencies; the same approach, of course., applies to the
agency as a whole. -
(2) Program subcategories are subdivisions which should be
established within each program category, combining agency programs (or
activities or operations) on the.basis of narrower objectives contributing
directly to the broad objectives for the program category as a Whole.
Thus, in-the example given above, improvement Of engineering and science
and of. language training could be tWo program subcategories within the .
program category of improvement of higher education.
(3) Program elements are usually subdivisions Of program sub-
categories and comprise the specific products (i.e., the goods and ser-
vices) that contribute to the agency's objectives. Each program element
is an integrated activity which combines personnel, other services,"
eouipnent and facilities. An example of a program element eipressed. ?
in terms of; the Objectives served would be the number of teachers to be
trained in using new mathematics.
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t- b. The program structure will not necessarily reflect organization
structure. It will be appropriateCnd desirable in many cages to have
the basic .program categories cut across bureau lines to facilitate com-
parisons and suggest possible trade-offs among elements which are close
substitutes. It is also desirable to develop program formats which
facilitate comparisons across agency lines (e.g., in urban transporta-
tion and in recreation).
c. Basic research activities may not be and frequently are not
mission or outpaic oriented. Whenever this is the case, such . activities
should be identified as a separate program category or subcategory as
appropriate. However, applied research and development is usually
associated with a specific program objective and should be included in
the same program category as the other activities related to that objective.
d. To facilitate top level review, the number of program categories
should be limited. For example, a Cabinet Department should have as
many as .15 Pragram categories in only a rare and exceptional case.
. ?Program categories and subcategories should not be restricted
by the .present approPration pattern or budget a_ _Sy structure.
(Eventually, howeveirrat may be necessary and desirable for the
by Activity" portion of the sehedules in the Budget Appendix to be
brought fao line with the program structure developed according to this
Bulletin.)
6. The Multi-year Prosram and Financial Plan..
a. The entire process is designed, to provide -information essential
to the making. of major decisions in a compa.ct and logical form. A
principal product of the process will be a 'document, the Multi-Year
Program and Financial Plan of the agency.
b. Thus, the process is concerned with developing for Agency head
review, and, after his official approval or modificatiog, for Bureau
of the Budget and Presidential review (es 'summarized in Program Memo-
randa, per paragraph 7c) a translation a concretely 'specified agency
objectives into combinations of agency activities and operations designed
to reach such objectives in each Of the stated time reriods.
. The Program and Financial Plan ?
? (1) Be set forth on ?the basis of the program structure described
in paragraph 5, above.
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(2) Cover a period of Years, usually five, although the number
will vary with the considerations pertinent to particular agencies; for
example, a longer time span would be appropriate for timber production
and for large multiple-purpose water resource projects. The multi-year
feature is not to be compromised by the expiration of legislation at an
earlier date, since extension or renewal, with possible modification,
of the legislation should be reflected in the Plan.
(3) Include activities under contemplated or possible new legis-
lation as well as those presently authorized.
(4) Show the program levels which the agency head thinks will
be appropriate over the entire period covered by the multi-year plan.
, (5) Express objectives and planned accomplishments, wherever
possible, in quantitative non-financial terms. For example, physical
description of program elements might include the additional capacity
(in terms of numbers to be accommodated) of recreational facilities to
be built in national forests, the number of youths to be trained in Job
Corps camps along with measures of the kinds and intensity of training,
the number of hours of Spanish language broadcasts of the Voice of
America, the number of children to receive pre-school training, and the
number of patients in Federally-supported mental hospitals. In sone
programs, it may not be possible to obtain or develop adequate measures
in quantitative physical terms such as these but it is important to do
so wherever feasible. In any case, objectives and performance should
be described in as specific and concrete. terms as possible.
(6) Where relevant, relate the physical description of Federal
programs to the entire universe to be served. For example, a poverty
program plan directed at aged poor should describe not only the numbers
receiving specific Federal benefits but might well show what proportion
of the entire aged poor population is being benefited.
(7) Associate financial data with the physical data to show the
cost of carrying out the activity described. Cost data should be expressed
in systems terms. That is, all costs --such as capital outlay, research
and development, grants and subsidies, and current costs of operations
(including maintenance) -- which are associated with a program element
should be assigled to that element. These component costs generally
can be derived from existing appropriation and accounting categories.
Where there are receipts, such as the collection of user charges or pro-
ceeds from sales of commodities or other assets, an estimate of receipts
should also be included.
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? (8) Translate the ccsts and receipts used for analytic purposes,
as described in the preceding subparagraph, into the financial terve
Used in Federal budget preparation, presentation, and reporting.
d.. The Program and Financial Plan as approved by the agency head
will be submitted to the Bureau of the Budget. The Bureau of the Budget
will also be kept abreast? of significant revisions and updatings .(see
subparagraphs e and f, imnediately below).
e. The Program and Financial Piano as approved or modified by the
agency head in conformity with guidance received from the Bureau of the?
Budget and the President (usually following the annual spring Preview) ,L
will form the basis for the agency's budget requests. Therefore, it
should not be changed except in accordance with a procedure approved by
the agency head. Appropriate arrangements should be, made for partici-
pation of the-Budget Bureau in significant changes. ?
f. Provision will be made for a thorough reappraisal and updating
of the Program and Financial Plan annually. In this process, one year
is added on to the Plan. Other changes to the Plan are to be expected
from time to time and a procedure may be useful for making minor changes
to the Plan without requiring agency head approval.
7. Analysis. An analytic effort will be undertaken to examine deeply
program objectives and criteria of accomplishments. Whenever applicable
this effort will utilize systems analysis, operations research, and
other pertinent techniques. The analysis should raise important ques-
tions, compare the benefits and costs of alternative programs and explore
future needs in relationship to planned programs. The sources of
data used will be many, including most importantly, the Program and Financial
Plan, special studies done throughout the agency, and budget, accounting
and operating data. It is important to hate continuity in the work of
staffs doing this work and to build expertise in them over a period of
years. As expertise is developed, more and more of the agency's activi-
ties can be subjected to these analytical techniques.
a. Special Studies on specific topics should be carried out in
response to requests by the agency top management, the Budget Bureau, or
at the initiative of the analytic staff itself. Suggestions should
also be made by line operating managers. The special studies may involve
intensive examination of a narrow subject or broad review of a wide
-field. The broad program studies envisioned here will often be hampered
by a dearth of information and gaps in our knowledge which can be filled
only by project studies and other micro-economic studies. Nevertheless,
these broad studies should be assigned top priority in the agency's
analytic effort.
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b. Questions should be posed by the analytic staffs to other
elements of the agency on program Objectives, measures of performance,
'tickets and the like.
' c.. A broad Program Memorandum should be prepared annually on each
of the program categories of the agency, The Program Memorandum will
summarize the Program and Financial .Plan approved by the agency head
for that category and present a succinct evaluation and justification.
It should appraise the national needs to be met for several years in
the future (covering at least as many years as the Program and Financial
Plan), assess the adequacy, effectiveness, and efficiency of the pre-
viously approved Plan to meet those needs, and propose any necessary
modifications in the previously approved Plan, including new legislative
proposals. Thus, the Program Memorandum should: .
(1) Spell out the specific programs recommended by the agency
head for the multi-year time period being considered, show how these pro-
grans meet the needs of the American people in this area, show the total
costs of recommended programs, and show the specific ways in which they
differ from current programs and those of the past several years.
(2) Describe program objectives and expected concrete accom-
plishments and costs for several years into the future.
(3) Describe program objectives insofar as possible in 'quantitative
Physical terms.
(4) Compare the effectiveness and the cost of alternative objec-
tives, of alternative types of programs designed to meet the same or com-
parable Objectives, and of different levels within any given program
category. This comparison should identify past experience, the alterna-
tives which are believed worthy of consideration, earlier differing recom-
mendations, earlier cost and performance estimates, and the reasons for
change in these estimates.
(5) Make explicit the assumptions and criteria which support
recommended programs.
(6) Identify and analyze the main uncertainties in the assump-
tions and in estimated program effectiveness or costs and show the
sensitivity of recommendations te these uncertainties: ?
d. In sum, the analytic effort will: .
(1) Help define major agency objectives and subobjectives. ?
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(2) Analyze and review criteria by which program performance is
? measured and judged, and help to develop new, improved criteria.
. (3) Compare alternative programs, both in teres of their effec-
tiveness and their costs, old as well as new:
(4) Develop reliable estimates of total systeue costs of alterna-
tives over the relevant span of years.
(5). Analyze the validity of. cost data..
(6) Identity and analyze program uncertainties; test the sensi-
tivity of conclusions and recommendations against uncertain variables.
(7) Carry out systems analyses to aid in: making prOgram choices.
S. Relation of the system to the budget process.
a. Two products of the system will be utilized in the spring Budget
Preview: the Program Memoranda (which incorporate in summarized form
the relevant portions of the Program and Financial Plan) and Special
Studies.
b. All annual budget requests in the fall will be based an and
? related to the first year of the current multiyear Program and Financial
Plan, subject to such modifications as may be required by changing cir-
cumstances since the Plan was last reviewed and approved by:the agency
head. Within this framework the detailed formulation and review of the
budget will take place.
c. The introduction of the Planning, Programming, and Budgeting'
system will not, by itself, require any changes in the form in which budget
appropriation requesta are sent to Congress. Further, this Bulletin is.
not to be interpreted to set forth changes in the formatof annual
budget submissions to the Budget Bureau. Circular No. A-11 will be
revised as needed to provide guidance on such budget submissions'.
U. Over the next few years agency. operating budgets used to allocate
resources and control theday to day operations are to be brought into
consistency with the Program and Financial Plan. Performance reports
that show physical and financial accomplishments in relation to operating
budgets should also be related?tb:the basic plan.
e. .The Planning, Programming and Budgeting functions are closely
related and. there must be close coordination in the work of. the various.
staffs.
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9. An illustrative annual cycle. Program review is a year-round
process of reevaluating and updating program* objectives, performance,
and costs. She annual cycle described below is presented for purposes
of illustration and will be refined and changed over tine. It is intended
to identify check-points to assure that essential 'steps are taken and
that current reviews, revisions and recommendations are given considera-
tion at appropriate times in the budget cycle. Insofar as this schedule
affects internal agency operations and does not affect Bureau of the
Budget scheduling, it may be modified by .each agency head to suit his
needs. The illustrative annual cycle shows in outline 'form how the
system would work after it is established and operating for an agency
participating in the Preview.
January. Changes are made by the agency to the prior Multi-year program
plan to conform to Presidential decisions as reflected in the budget sent to
the Congress.
March. By March bureaus or similar major organizational units Within the
agency will submit to the agency. head their current appraisals of approved
. program objectives and multi-year plans .and their proposals for (a) needed
modifications, including measures to meet new needs and to take account.
of changing and expiring needs, and (b) extension of plans to cover an
added year (e.g., 1972). The Director of the Bureau of the Budget will
advise the agency head' of .ony change in the overall policies and objectives
upon which the currently approved plan, is based. ?
.April. On the basis of instructions from the agency head following his
review of bureau submissions, bureaus develop specific program plans.
az.. . Analytic staffs complete Program Memoranda. Agency head reviews pro-
gram plans and approves Program Memoranda for submission to the Bureau of
the Budget. He may want to assign additional studies on the basis of this
review.
['lay-June. ? The budget preview is: conducted by the Bureau of the Budget.
The basic documents for this preview :are the Program Memoranda prepared
by agencies which are to be submitted to the Bureau of the Budget by
May 1, 'and Special Studies to be submitted over a period 'of several
months preceding this date. Presidential guidance will be obtained,
where necessary, ,on major policy. issues and on "the fiscal outlook.
July-August. Appropriate changes to program plans are made on the basis
of the guidance received and of congressional legislation and appropriations.
Budget estimates, including those for new legislative proposals, are de-.
veloped on the basis of the first year of the currently approved program
plans (e. g. , 1968).
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September. Budget estimates and agency legislative programs are submitted
to the Bureau of the Budget.
October-December. Budget Bureau reviews budget estimates, consults with
agencies, and makes its .recommendation tothe President. Presidential
decisions are transmitted to agencies, the budget is prepared for sub-
mission to Congress, and the legislative program is prepared.
January. Changes are again made by the agency to the multi-year program
plan to conform to Presidential decisions as reflected in the budget sent
to the Congress.
10. Responsibility and staffing"
a. Personal responsibility for the Planning, Programming, and Budgeting
system rests with the head of each agency. Since planning, programming, and
budgeting are all essential elements ormanagement, line managers at apprO-
.priate levels in the agendy must also take responsibility for, and partici-
pate in, the system. Responsibility should be so fixed that the agency
head receives the recommendations of his principal managers (e.g., bureau
chiefs) on program plans as well as on the findings and recommendations
of centrally prepared analYtical studies. Similarly, arrangements should
be made for obtaining original suggestions, recommendations, and views'
from other echelons in a manner consistent with the assipment of responsi-
bility and authority.
b. Specialized staff assistance is also essential in all but the
smallest agencies. Such assistance will be especially useful in the prepara-
tion and review of Program and Financial Plans and in the preparation of the
appropriate analytical studies. Each agency will., therefore, establish an
adequate central staff or staffs for analysis, planning and programming.
Some bureaus And other subordinate organizations should also have their own
analytical planning and programming staffs.
c. No single form of organization is prescribed since agency circumatances-
differ. Planning-Programming-Budgeting activities are functionally linked
but it is not essential that they be located in the same office so long
as they are well coordinated. However, it is important that the head of
the central analytic staff be directly responsible to the head of the -
agency or his deputy. ? ?
11. Initial action under this. Bulletin. . The head of each agency listed in
-Ekhibit 1 should see.that the following steps are taken by the dates'in-
dicated. It is recognized that this is a tight schedule. Nonetheless,
the President's'interest'in the prompt establishment of the new Program-
ming, Planning, and Budgeting system requires that each agency exert.
every possible effort to adhere to this schedule.
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a. Within 10 days after issuance of this Bulletin -- the agency head ?
should designate an official te be responsible for the development of the
Planning-Programming-Budgeting system for the entire agency and inform the
Bureau of the Budget of his choice.
b. By November 1, 1965 -- eaCh agency head should have tentatively
decided, in cooperation with the Bureau of the Budget, the broad .program '
categories to be used initially in the system. Bureau of the Budget staff
are prepared to make suggestions on these categories.
c. By December 31, 1965 -- agency instructions* procedures, or
regulations for the Planning-Programming-Budgeting system should .be issued,
and a copy forwarded to the Bureau of the Budget. If it is not possible to
have these in polished form by this date* they should be issued at least in
such form as will allow the agency to proceed without delay on the steps
necessary to produce the material required by May 1, 1966, with the more '
complete and polished instructions or regulations issued as soon as feasible
but not later than March 31, 1266.-
? d. By February 1, 1266 -- each agency head should have approved the
basic program structure (including program categories, program subcategories,
Program elements, and the nonfinancial units for measuring program objec-
tives and accomplishments in quantitative 'terms) to be used in the program
. plan. '
e. By April 1, 1966 -- a comprehensive, multi-year Program and
FinanCial Plan should be completed for consideration and review by the
agency head. The Program and Financial Plan, as approved by the agency
head, will be forwarded to the Bureau of the budget. '
f. By MAY 1, 1966 -- for the spring Preview, Program Memoranda
described above will be forwarded to the Bureau of the Budget. By this
date or earlier, Special Studies will also be forwarded. More specifid
guidance and instructions will be provided by the Bureau of the Budget.
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Exhibit 1
0 BULLETIN NO. 66-3
A. AGENCIES TO BE COVERED BY THE PREVIEW
Department of Agriculture
Department of Commerce
Department of Defense - separate submission for:
Military functions (including Civil Defense)
Corps of Engineers, Civil functions
Department of Health, Education, and Welfare
Department of Housing and Urban Development
Department of Interior
Department of Justice
Department of Labor
Post Office Department
Department of State (excluding Agency for International Development)
Treasury Department
Agency for International Development
Atonic Energy Commission
Central Intelligence Agency
Federal Aviation Agency
General Services Administration
National Aeronautics and Space Administration
National Science Foundation
C. Office of Economic Opportunity
?Peace Corps
United States Information Agency
Veterans Administration
B. OTHER AGENCIES FOR WHICH A FORMAL
PLANNING-PROGRAMMING-BUDGETING SYSTEM IS ENCOURAGED
Civil Aeronautics Board
Civil Service Commission
Export-Import Bank of Washington'
Federal Communications Commission
Federal Home Loan Bank Board
Federal Payer Connitsion
Federal Trade Commission
Interstate Commerce Commission
National Capital Transportation Agency
National Labor Relations Board
Railroad Retirement Board
Securities and Exchange Commission
Selective Service System
Small Business Administration
Smithsonian Institution
Tennessee. Valley Authority
United States Arms Control and Disarmament Agency
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ahibit 2
BULLETIN NO. 66-3
PROGRAM CATEGORY EXAMPLES
. Coast Guard '
Present Appropriation Structure
General and Special Funds:
Operating expenses
Acquisition, construction and improvements
Retired pay
Reserve training
Intragavernmentai Funds:
Coast Guard Supply Fund
Coast Guard Yard Fund
Present Activity Schedule ?
Vessel Operations..
Aviation Operations
Shore Stations and Aids Operations
Repair and Supply Facilities .
Training and Recruiting Facilities
Administration and Operational Control
Other Military Personnel Expense .
.Supporting Programs
Proposed Prcg ram Structure
Search and Rescue
Aids to Navigation
Law Enforcement
'Military Readiness
Merchant Marine Safety
. 'Oceanography and Other Operations ?
Supporting Services
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ichibit 2 ( Cont' '
BULLETIN NO. 66-3
PROGRAM CATEGORY EXAMPLES
Forest Service
Present Appropriation Structure
Forest protection and utilization
Cooperative range improvements
Forest roads and trails
Access roads
Acquisition of lands for national forests:
Superior National Forest
Special Acts
Cache National Forest
Wasatch National Forest
Assistance to States, tree planting
Expenses, brush disposal
Roads and trails for States
Other Forest Service permanent appropriations
Proposed Program Structure
Timber Production
Outdoor Recreation
Natural Beauty
Wildlife
Water
Forage
Minerals and Mining
Research
Other
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