Winning in the 21st Century: A Point Paper to the US congress for FY26 NDAA

1.0 Strategically Aligned Capability Portfolio Management Structure   

Both the FoRGED Act and the SPEED Act[1] as they appear in the FY2026 National Defense Authorization Act (NDAA) Chairman’s marks for the Senate and the House provide great opportunity for the United States Congress to align the Department of Defense (DoD) requirements, acquisition, and resource decisions support systems (DSS) to a strategic capability-based portfolio structure. This will allow the DoD to embrace industry best practices as outlined in American National Standards Institute (ANSI) Standard for Portfolio Management.  As the Senate and the House merge the two versions of the NDAA, the Project Management Institute recommends the following be considered: 

1. As the FY26 NDAA directs the DoD to “transition from a program-centric execution model to a portfolio execution model,” as recommended by the Section 809 Panel (Recommendations #36) we recommend that the NDAA also direct Recommendation #38, “implement best practices for portfolio management,”[2] and call out ANSI Standards for Portfolio, Program, Project, and Earned Value Management.
2. To improve effectiveness and efficiency with a strategic portfolio management implementation, we recommend Congress direct the Commission on Planning, Programming, Budgeting, and Execution (PPBE) Reform recommendations #4.  This was one of the commission’s highlighted key required changes “Transform the Budget Structure” with the “key change in this transformed budget would involve presenting, authorizing, and appropriating funds using Major Capability Activity Areas (MCAA).”[3]  Along with Capability Capstone requirements documents, this approach enables the PPBE to be aligned with Requirements and Acquisition at the capability portfolio level. 

The NDAA Chairman's mark versions already are directing the move from program-centric to portfolio management, which has been the recommendation of several DoD studies. What is critical is for Congress to define portfolio management, at a minimum, with the industry ANSI standard, which we will refer to as strategic portfolio management —the current industry best practice, as outlined in the current ANSI Standard for Portfolio Management (ANSI PMI- 08-003-2017), which PMI already provides to the Federal Government free use via the Office of Management and Budget (OMB) website MAX.gov. 

Both the Senate version (Section 801) and the House version (Section 1802) recommend moving to a portfolio management approach.   Whether Congress decides to use the Section 809 Panel Portfolio Acquisition Executive (PAE) language, as in the Senate version, or stays with the PEO term, we would recommend that, at a minimum, the “P” mean Portfolio, vis-à-vis Program, to make it clear the DoD is to move to a portfolio-centric approach. 

Additionally, several other areas could use some clarification or additions to help DoD break the 40-year history of inefficient alignment across the DSS (see Appendix).  Industry has learned these lessons and PMIs, through its voluntary consensus standards work with the American National Standards Institute (ANSI) codify best practices within ANSI standards.  We offer the following:

A, Portfolio Acquisition Executives (PAE) or Portfolio Executive Officers (PEOs) may have several capability portfolios for which the requirements process has developed a capstone requirements document (Senate Section 802) or a joint capability requirements (House Section 1811). What is key is that the requirement document aligns with the capability portfolio(s) within each PAE/PEO, which in turn aligns with how the budget is structured within the budget Major Capability Activity Area.  Efficiency, as well as clarity, will be more likely achieved with an aligned capability ontology. As the Commission on PPBE Reform notes, each service might define these capabilities differently.   Navy PEO Fighter won’t necessarily have the same capability portfolios as the Air Force PEO Fighter and Advanced Aircraft.   The structure needs to align with the Service and PAE/PEO management approach, as this is where investments are being managed. PAE/PEO structures have undergone significant changes over the last 40 years, and they will continue to evolve.  As they do, the structure of the DSS common capability-based top-level ontology should also evolve to maintain alignment across the requirements, resource, and acquisition systems.  

B.  Create strategic Portfolio Management positions (PfM) below the PAE/PEO. Making a distinction between the types of Portfolio Managers (PfMs) is necessary.  PEO/PAEs have been implementing what the industry would call either “tactical” or “project” portfolio management for years.  This involves having a span of control over the programs and projects within the portfolio.  There are many within the DoD who call themselves a portfolio manager, and they are correct, as they are indeed practicing some form of project portfolio management.  They have a collection of “effort” they are managing.  What DoD needs within the military weapons investment “efforts” are strategically oriented PfMs who develop a strategy with roadmaps (robust challenge-informed schedule models) that allow active capture of synergies across the capability (or missions, systems, or technologies) portfolios they manage. Strategic Portfolio Managers should be expected to deliver more value than the sum of their parts.  As an example, the senior manager, who works for PEO C3BM, overseeing the Air Force Air Battle Management System, which comprises a collection of programs of record, or the senior manager for the F-16 within PEO Fighter and Advance Aircraft, who oversees the dozen-plus F-16 programs of record, should be required to practice strategic portfolio management.  Many of the senior acquisition leaders are doing just that, but the DoD and Service policies don’t require it, the portfolio strategies are not baselined nor measured, and the budgets are managed at the program of record level.  Additionally, this is not a one-size-fits-all structure.  What they are managing strategically may be different, such as ships, fighters, command and control, or propulsion systems, and they may be working for a higher-level portfolio manager, like the PEO/PAE.  What is key is to designate them also as PfM, not Program Manager, who are officially focused on a specific program of record.[4] 

Within the industry, there has been a growing expansion of Strategic Portfolio Management (SPfM).[5] “SPfM focuses on aligning project portfolios with strategic objectives and maximizes the contribution of existing and proposed projects to those objectives. It evaluates all project portfolios and capacity planning functions collectively, gauging the strategic fit of initiatives to optimize resource management across each portfolio.”[6]   This needs to be clear in the legislation, which should drive efficiency changes in both DoD and Congressional oversight and reporting requirements.

C. Call out ANSI Standard Framework in Legislation.   The FY26 NDAA should note the standards created by the Project Management Institute (PMI), the ANSI standards developing organizations (SDO) for projects, programs, portfolios, and earned value management.  The Government Accountability Office (GAO) references the ANSI Standard for Project, Program, and Portfolio Management in their efforts and has for years.  DoD Policy should, at a minimum, consider the ANSI Standard as a framework, especially the creation of a portfolio strategy that addresses the portfolio value, which are two key performance domains for PfM (see figure 1).  The Standard for PfM has six performance domains aligned across the portfolio lifecycle.  The F-16, for example, has over a dozen active “programs” under management. Those individual programs of record should be under an F-16 System strategic PfM that is doing more than just managing the collection of programs. Within the PEO Fighter and Advanced Attack Aircraft, there would be Systems PfM for each fighter series, which could be within a capability portfolio of  “Fight Tonight” fighters, that is, all the current fighters, the F-15E, F-15EX, F-16, F-22, and fielded F-35As.  All these fighters have numerous programs in place. Still, there is no requirement for a “Fight Tonight” strategy that outlines how such a portfolio of fighter capability, with several system portfolios with numerous programs of record, is creating synergy and overall value across the major capability activity area (MCAA) budget lines[7] in terms of accomplishing missions for combatant commanders.  Reporting today is driven by program baselines, not by capability that is aligned with missions.  This multilayered portfolio structure (see Figure 2) might seem bureaucratic, but it would be under the PAE/PEO, which in many cases already has system-level organizational structures.  It would move out of the Pentagon the numerous program-focused reviews, thus “fostering reform,” “efficiency,” “streamlining” decision making, and overall improve “effective execution and delivery” of weapon systems.   

The use of ANSI Standards would modernize the DoD’s approach to programmatic management, with the Services and the Office of the Secretary of Defense (OSD) within the Pentagon focusing on optimization across approximately 300 capability portfolios, rather than over thousands of individual programs of record and other efforts.  This approach would leave management of individual portfolios to the PEO/PAEs and their Capability Portfolio Managers with a focus on mission value as well as individual program cost/schedule/performance. As noted in both the Senate and House versions of the NDAA, Congress should empower PEO/PAEs to manage and streamline reporting to the capability and system portfolio levels and allow program and project management reporting to be at the PEO/PAE level.  A significant streamlining approach will only work if aligned with requirements, resource structures, and reporting.

D. Capability Portfolio is just one dimension of the needed DoD Portfolio Structure: DoD needs to work on a multidimensional ontology structure for strategic portfolios.  The Requirement systems, the Joint Capability Integration and Development Systems (JCIDS) utilize the Joint Capability Areas (JCA). Still, this structure is not aligned nor robust enough to provide a comprehensive framework across the nearly 100 current PEOs within the DoD, which collectively likely have over 300 major capability activity areas that should be treated as portfolios.  Recent OSD-funded research outlined a Multidimensional PfM[8] approach, identifying the challenge of picking one level and/or one dimension of portfolios for the DoD.  The DoD, as it reworks the requirements process, needs to consider not just the capabilities, but also the portfolios of missions that drive those capability needs.  More importantly, to track the value of those missions based on the needs of the combatant commanders.[9]   DoD needs to explore a multidimensional ontology structure that can be useful in building optimization models that meet FoRGED and SPEED Act requirements for data-driven decision making. 

2. Portfolio value focus for data-driven decision-making 

The SPEED Act calls for the “use [of] data-driven decision making …. to manage trade-offs among life-cycle costs, delivery schedules, performance objectives, technical feasibility, and procurement quantity objectives to ensure acquisition and sustainment programs deliver the best value for the investment made in the program.”  Also “to prioritize resource allocation to meet operational readiness requirements…, ” and “predictive analysis, and appropriate modeling tools.”  The Act also emphasized “modular open system approach” and “align with the preference for the acquisition of commercial products.”  These are also important areas, but need some clarification when it comes to project, program, and portfolio management. 

Project Management Institute (PMI) launched its largest research study in its 55-year history in January 2024. The objective of this study was to revisit and challenge the traditional view of project success that most of us have likely encountered.  The result was an understanding of what over 10,000 project professionals collectively understand about what it takes to “Maximizing Project Success.”   To manage perceptions, own project success beyond project management success, relentlessly reassess project parameters, and expand perspective.  Put simply, as represented in the Project Success figure, “delivery value that was worth the effort and expense.” 

This might seem obvious, but for many industries and within government oversight, the focus of “data-driven” processes is measured against the cost/schedule/performance baselines that get set upon project and program approval.  What PMI’s study documented as a consensus across over 10,000 practitioners was a measure that balances “delivered value that was worth the effort and expense.” A very different view from the traditional cost/schedule/performance. 

The ANSI standard in these areas of measuring value is the ANSI PMI Standard for Earned Value Management (ANSI PMI 19-06-2019). It’s traditional use is to measure to a baseline, not measuring overall value to customers or the organization. For defense, that value measure can be complicated.  The Univ of Maryland study on Multidimensional PfM^[10] outlines a method of applying Michael Porter’s Value Chain across DoD primary activities, including combatant commander operations, doctrine/missions, operational units, as well as traditional measures of materiel systems and emerging technology efforts.  The study outlines a proposed expanded data schema that is not the perfect solution, but rather a necessary starting point for expanding beyond the traditional approach established in the 1960s, which measures value by focusing on the program/project and/or contract baseline. 

We are not suggesting portfolio managers should stop measuring program and project cost/schedule/performance/risk, whether done with current Earned Value Management approaches or other performance management techniques. Project, program, and even portfolio-level baseline tracking have proven to be very valuable for managers, but given the PMI study, we also must consider a broader set of measures for value.  The current ANSI Standard for Earned Value Management (ANSI PMI-06-19-2019) is aligned to PMIs other standards and more flexible than the current SAE EIA 748 standard.[11]  The PMI standards have an appendix on using the concepts within EVM at the Program and Portfolio levels, addressing value as well as other measures.     

The point is, EVM for almost 60 years within the US Government has been based on value defined by a baseline determined by contracts or organizational programmatic goals.  Congress should broaden the approach to also  consider overall value within the optimization models to be used in any future data-driven decision-making tradeoffs. The UMD research outlined a concept of an Integrated Multidimensional Portfolio Analysis Challenge Tool (IMPACT) using a combination of current government and commercial tools.   The concept was demonstrated in a DoD Service pilot completed in the spring of 2025, which was presented at the UMD PM Symposium.[12]  The effort used commercial tools already hosted on DoD networks at all levels of security, requiring no code changes.  Key to this effort is the ability to utilize robust industry modular open systems approach (MOSA) tools, including risk enabled scheduling modeling software that captures costs and funding, as well as quantitative risk analysis, using open standards, such as the DoD Integrated Program Management Data Analysis Report (IPMDAR).  These data standards need to be expanded to include quantitative risk and integration with Mission Engineering, which requires expansion of the current open data standards. The key to successful data-driven decision-making is not selecting a single tool or a set of tools, but creating open standards that allow the commercial industry to build a robust set of tools that can be used by the defense and commercial industry as well as the government. 

3.0  FY26 NDAA can set the US Defense Industry on an aligned  portfolio management path

As outlined in the appendix, the DoD has been evolving the Program Executive Officer (PEO) concept for 40 years.  The impact of the PEO has been inhibited by the program-centric approach and the lack of alignment across the DoD decision support systems.  The current FY26 NDAA Chairman’s marks are an excellent start to resetting the purpose of the PEO as an executive portfolio management over a set of strategic portfolios for capabilities and systems.  The Service and Joint Staff also need to consider mission portfolios that capture the operational needs of the combatant commanders. This multidimensional approach at the portfolio level, with capability portfolios as the aligning ontology, has great potential.    The transition from program to portfolio-centric will be significant. There will be many players across various functions who will not want to change; thus, Congress must be specific that the move to portfolios needs to occur in conjunction with the alignment around capability portfolios.  At the same time, the legislation needs to allow for flexibility as the DoD and the Services, along with the 4th Estate, will need years to implement the change.  

John Driessnack  current industry certifications include Project Management (PMP) and Portfolio Management (PfMP), as well as a Scrum Master (CSM).  His experience includes half dozen major defense programs as an Air Force officer, including Modular Automatic Test Equipment (MATE,  DATSA, B-1), Joint Airborne Self Protection Jammer (ASPJ – for F-16/F-18/AV-8B), Joint V-22 Osprey (MV-22/CV-22), Integrated Maintenance Data System (IMDS) and Global Combat Support System (GCSS-AF), and as the Major Program Manager for the Global Broadcast System (GBS).  A prior Defense Acquisition University professor, John, also holds a Professorial Lecturer position at American University School for Public Administration and Policy, and periodically as a Research Faculty at the University of Maryland’s Institute for Systems Research and the Project Management Center of Excellence, both within the A James Clark School of Engineering.   John was selected to be on the ANSI standards core teams for Earned Value and Program Management standards.  He was the principal subject matter expert to the Section 809 Panel for Portfolio Management and advised the Commission on PPBE as a private citizen.   He is also the past president of the College of Performance Management (CPM) and serves on ISO Standards committees periodically.  His consulting work is done through his sole proprietorship, Olde Stone Consulting, LLC. 

Manthan Bhatt is the Head of US Government Affairs for the Project Management Institute (PMI). PMI, founded in the United States in 1969 and proudly headquartered in Newtown Square, Pennsylvania, is the world's leading organization for project, program and portfolio management, with over 742,000 members. For over 50 years, PMI has worked with the US Department of Defense to enable project, program, and portfolio success through community generated knowledge platforms and resources, career long learning and development, and internal capability building. Manthan has worked in government affairs for over 15 years with a focus on licensure, credentialing, occupations, and professional certifications. PMI is committed to enabling urgently needed ideas into action.

Brittany Bauman is the Operations Lead for Military and Government Initiatives at the Project Management Institute (PMI). Brittany leads high-impact, federally funded programs that deliver professional certifications to service members, veterans, spouses, and government personnel. Her work advances mission readiness and reinforces the capability of the nation’s defense and civilian workforce.

John, along with Charles Mahon, wrote the first “Winning in the 21st Century, Command by Negation within a Portfolio, Program, Project Structure, a Point Paper to the Section 809 Panel.” ^[13]  The paper, written for and published by PMI in September 2017, influenced the Section 809 Panel to fully address the use of Portfolio Management within Defense capital asset investment accounts.  The Section 809 Panel eventually contracted John as an SME on Portfolio Management and was the lead author of Volume 3, Section 2, Portfolio Management.^[14]   For context, PMI updated the ANSI Standard for Portfolio Management in 2017, the 4th edition. PMI makes its ANSI Standards and other documents available to Federal employees through an agreement with the Federal Acquisition Institute on OMB’s website, MAX.gov, within the FEDPMCoP Resource page at no cost to the government.   PMI’s ANSI Standards for Project, Program, and Portfolio Management are also used extensively by the Government Accountability Office (GAO) as part of benchmarking government to industry best practices.

Appendix

 Understanding the 40 year history of misalignment and underutilization of the Program Executive Officer

Although the DSS has existed in some form since the 1960s, its three major parts have never been structurally aligned.  President Reagan’s Executive Order 12526 in 1986, almost 40 years ago, asked the Packard Commission to “Review the adequacy of the current authority and control of the Secretary of Defense in the oversight of the Military Departments, and the efficiency of the decision making apparatus of the Office of the Secretary of Defense.”[15]  Many changes resulted from the effort, including the creation of Program Executive Officers (PEOs) and the focus on the mission of the combatant commanders. What came up short was realizing all the efficiency from aligning the DSS with what eventually became known as capability portfolios.  

The Packard Commission efforts were initially implemented under the National Security Decision Directive Number 219, April 1, 1986, which was based on the Packard Commission interim report.  That directive called for the alignment of the military systems Program Managers with the PEOs.  The recommendation also included that the “Program Managers for these programs would be responsible directly to their respective PEO and report only to him on program matters.”  Also recommended was that a “Joint Requirements and Management Board (JRMB) should be co-chaired by the Under Secretary of Defense (Acquisitions) and the Vice Chairman of the Joint Chiefs of Staff. The JRMB should play an active and important role in all joint programs and in appropriate Service programs by defining weapons requirements, selecting programs for development, and thereby providing an early trade-off between cost and performance.”[16]  This last part would have helped align the DSS across requirements and acquisition, unfortunately it was not implemented. The Goldwater-Nickols Defense Reorganization Act of 1986, signed on Oct 1, 1986, codified only the creation of the OSD and Services Acquisition Executives, not the PEO nor the JRMB.  It called for a study on Planning, Programming, and Budgeting System (PPBS), which included “whether the major force program categories of the Five-Year Defense Plan could be restructured to better assist decisionmaking and management control.”[17]    The PEO structure was established without legislation, but efforts to align the DSS to achieve “efficiency of the decision-making apparatus” were hindered.  Over the next 40 years, numerous changes have improved the processes; however, alignment across the DSS has not been achieved and is unlikely to be achieved without it being explicitly addressed in specific legislation.  As Congress drives the migration from a program-centric process to portfolios, now is the time to address the need for a strategic alignment across the DSS.

The capability structure evolved from another set of studies in the early 2000s that are key to this discussion.  The 2001 Quadrennial Defense Review (QDR) recommended pursuing a capabilities-based approach to defining Defense needs. The 2003 Aldridge Study “recommended a capabilities-based process for identifying needs.”    The perception was that the prior Requirements Generation System (RGS), which required a Mission Need Statement (MNS) was service “stove-piped” and had “minimal considerations for cross-Service trades or multi-Service efficiencies.”  [18] Even though combatant commanders had been created under Goldwater-Nichols, the MNS were generally created by individual services, though they could be joint.  The reviews and studies conducted in the early 2000s ultimately replaced RGS with the current Joint Capability Integrated and Development Systems (JCIDS).  Unfortunately, which we will address later, the MNS was dropped with the focus on capabilities, and the new framework of joint capabilities was not aligned with the PEO portfolios or with how resources (PPBE) were managed. 

By 2006, the Deputy Secretary of Defense issued the Capability Portfolio Management Test Case on Roles, Responsibilities, Authorities, and Approaches, a detailed 24-page memo.  The process evolved and, eventually, in 2008, the DoD Directive 7045.20, Capability Portfolio Management, was published, but it did not move the capability portfolio from “passive resource authority” to “active resource authority”.  Again, the alignment of a standard structure with real authorities failed.  For almost two decades, the DoDD 7045/20 has not been influential in changing the efficiency of the decision-making apparatus. 

One challenge, as identified in recent OSD-funded research[19], was the lack of a standard capability portfolio structure.   OSD A&S updated the directive in Sept 2023 as they continued to explore a new Integrated Acquisitions Portfolio Review (IAPR) process.  The IAPRs have had some success but are not making an institutional change across the OSD, Joint Staff, nor with the Services, where most military systems are managed.  A recent article outlines the flow chart (see graphic), which shows the IAPR along with the various other reviews,  the Joint Staff Capability Portfolio Management Reviews (CPMR) and OSD Office of Cost Assessment and Program Evaluation (CAPE) and Comptroller reviews, the Strategic Portfolio Reviews (SPRs).[20]  These different reviews have different portfolio structures and do not align with the Technology Portfolios or the IT Portfolios.   None of them align with the Service or 4th Estate PEO portfolio structures, nor do they share a common strategy or value in which optimization is measured.   The multiple sets of reviews are unaligned, duplicative, and inefficient.   Additionally, all reviews focus on individual major and non-major programs, rather than the various capability portfolios the PEOs are tasked with managing.  
 

[1] FoRGED is the Senate Fostering Reform and Government Efficiency in Defense Act.  SPEED is the House Streamlining Procurement for Effective Execution and Delivery Act of 2025.  Each has been incorporated into the Senate and House versions of the FY26 National Defense Authorization Act (NDAA). 

[2] Section 809 Panel Final Report, Volume III, Section 2, Portfolio Management

[3] Commission on PPBE Reform Final Report

[4] Program Manager is defined in 10 USC 1737 along with the PEO and other members of the acquisition workforce

[5] Sometime also reference to as Enterprise PfM (EPfM)

[6] Example can be found in this article at https://www.ibm.com/think/topics/strategic-portfolio-management  17 May 2025

[7] The F-15, F-16, F-22, and F-35 each have a separate RDT&E Budget Activity 7 Program Elements, which could be consolidated under a single Budget Line Item, thus providing flexibility to the PEO/PAE along with the capability and systems portfolio manager to maximize the value of the overall fleet of current generation fighters with in the Air Force. 

[8] Univ of Maryland research on Multidimensional Portfolio Management was funded by OSD through the Acquisition Innovative Research Center (AIRC) in 2022. Papers can be found at https://pm.umd.edu/2024/01/29/umd-research-leads-to-multidimensional-view-of-portfolio-management/

[9] Combatant Commanders include Regions, Functional and Support commanders, for which there are a total of 18

[10] Univ of Maryland research on Multidimensional Portfolio Management was funded by OSD through the Acquisition Innovative Research Center (AIRC) in 2022. Papers can be found at https://pm.umd.edu/2024/01/29/umd-research-leads-to-multidimensional-view-of-portfolio-management/

[11] ANSI stopped using SAE EIA 748 standard over a decade ago.  PMI created a new Standard for EVM in 2019. 

[12] Modeling Optimization across Multidimensional Portfolio, UMD PM Symposium, May 2025

[13] https://www.pmi.org/learning/library/winning-21st-century-point-paper-section-809-panel-11314

[14] https://discover.dtic.mil/wp-content/uploads/809-Panel-2019/Volume3/Sec809Panel_Vol3-Report_Jan2019_part-1_0509.pdf

[15] President Regan Executive Order 12526, July 15, 1985.   The order created the President’s Blue Ribbon Commission on Defense Management, which also became known as the Packard Commission.

[16] Packard Commission Report, Jun 30,1986 

[17] Public Law 99-422, Sec 109(D)(3)

[18] Aldridge Study is formally the Joint Defense Capabilities Study, Dec 2003, chartered by the Secretary of Defense  

[19] Univ of Maryland research on Multidimensional Portfolio Management was funded by OSD through the Acquisition Innovative Research Center (AIRC) in 2022. Papers can be found at https://pm.umd.edu/2024/01/29/umd-research-leads-to-multidimensional-view-of-portfolio-management/ 

[20] Tremper, Dave; Portfolio-Focused Acquisition for the 21st Century Battlespace,  Defense Acquisition Magazine July-Aug 2023.   https://www.dau.edu/library/damag/july-august2023/portfolio-focused-acquisition