Budget formulation

Capabilities

Budget formulation is the key process by which a federal agency obtains the resources it needs to carry out its mission. The decision makers are unforgiving: senior agency leadership, the Office of Management and Budget (OMB), and Congress must be presented with a convincing business case with good justification and sound costing.

The process is fast-paced and demanding. It must allow analysis using multiple criteria and be robust enough to stand up to endless iterations by numerous stakeholders. Requirements can change frequently with little notice. Deadlines are short, and the stakes are high.

The budget formulation process is followed by budget execution. Actual expenditures must be tracked back to appropriations. Most core financial systems record budget execution transactions as an integral part of recording accounting events. However, closing the loop—linking the expenditures back to the original goals, capabilities, and capacities—can be very difficult.

The budget formulation and execution processes are ripe for improvement in many agencies, driven by a confluence of change. This confluence includes the availability of sophisticated tools that integrate information (data, documents, spreadsheets) and support versions and workflow, the maturation of core financial systems (which frees up attention for related processes), and the growing interest of software vendors in providing products specifically for budget formulation.

LMI’s budget formulation and execution capability and experience includes

• reviewing and documenting existing processes;
• reengineering processes and incorporating best practices;
• defining requirements for automated support;
• conducting gap analyses between the current environment and requirements;
• assessing strategies and alternatives, including commercial off-the-shelf (COTS) systems; and
• assisting in the acquisition and implementation of systems.

CLIENTS AND SOLUTIONS

NOAA—Improving Budget Processes and Systems

The National Oceanic and Atmospheric Administration (NOAA) asked us to recommend how to best transform its budget and financial management processes within an effective new enterprise system. We assessed NOAA’s current processes, policies, and systems; assisted in developing new business, technical, and functional requirements; conducted market research into commercially available solutions; developed industry requests for information, seeking data and comments on proposed solutions; and prepared a master project plan to guide implementation. The new enterprise system will permit NOAA to align its strategic goals and performance objectives within a robust fiscal management process that better supports achievement of its mission .

Treasury—Streamlining the Budget Process

The Department of the Treasury wanted to reduce the workload required of its bureaus by simplifying the instructions for budget submissions. OMB, key congressional staff members, and senior departmental officials had to approve the process. LMI eliminated overlap in three separate budget submissions to produce a consolidated set of budget documents. We prepared a road map that shows the exhibits and tables to be included in each submission. Treasury is now able to prepare clearer, more focused budget justification materials.