Managing DFAS Operations Like a Business

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Managing DFAS Operations Like a Business

• Rick Davis
• Deputy Director for Compliance,
• Standards Compliance
• May 20, 2009

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DFAS What We Do (2008)
Sales Service - 1.5B
Scope of Business

• Processed 169 million pay transactions
  (6.5 million people)
• Made 7.5 million travel payments
• Paid 14.4 million commercial invoices
• Maintained 55.7 million general ledger accounts
• Managed military retirement and health benefits
  funds (394 billion)
• Made 591 billion in disbursements to pay
  recipients
• Made 26.5 billion in foreign military sales
  (reimbursed by foreign governments)
• Account for 927 active DoD appropriations

• Military Pay 247.5M
• Civilian Pay 73.3M
• Retiree Pay 57.6M
• Travel Pay 50.3M
• Commercial Pay 162.2M
• Accounting Services 466.1M
• Support to Others 124.7M
• Others 320.2M

People

• 12,572 employees (Civilian and Military)
• Located in
• 13 sites
• 9 states
• 3 countries

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DFAS Operations Org Chart
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DFAS Standards and Compliance Org Chart
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• Strategy Execution

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DFAS STRATEGIC PLAN (2008-2013)
MISSION Direct, approve and perform finance and
accounting activities for DoD
VISION Transforming with the Warfighter to remain
the trusted financial partner for DoD
OBJECTIVES
GOALS
Customer Perspective
Support DoD in prevailing in
the Overseas Contingency
Operations

• Support Customers in the Overseas Contingency
  Operations

• Establish business requirements for DoD
  transformation initiatives related to finance and
  accounting activities
• Execute and/or support deployment of DoD
  transformation initiatives

Lead transformation of finance and accounting
functions throughout DoD
Lead transformation of finance and accounting
functions throughout DoD
Financial Perspective
Perform the DFAS mission
at best value for DoD

• Use DFAS resources efficiently and effectively
  to achieve expected results
• Achieve expected financial results from
  transformation initiatives

Perform the DFAS mission
at best value for DoD
Internal Perspective
Internal Perspective

• Optimize processes to meet or exceed industry
  and government standards
• Increase productivity and deliver products and
  services on time
• Identify and mitigate risks to improve processes
  and internal controls

Attain operational excellence
in finance and accounting services
Attain operational excellence
in finance and accounting services
Learning Growth Perspective
Learning Growth Perspective
Attract, develop, and retain
a highly capable workforce with
relevant skills and competencies
Attract, develop, and retain
a highly capable workforce with
relevant skills and competencies

• Raise the level of relevant skills and
  competencies to meet anticipated needs
• Attract and retain employees with needed skills
  and competencies

• Raise the level of relevant skills and
  competencies to meet anticipated needs
• Attract and retain employees with needed skills
  and competencies

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HOW DO WE EXECUTE STRATEGY?

• Strategy and BSC Process ensures clear linkage
  between
• Each Goal and its Objectives
• Each Objective and its Measures
• Each Measure and the Initiatives that will close
  the gap to the Targets

STRATEGY
ACTION
Goal Objectives Measures Targets Targets Targets Initiatives
Each Objective has at least one measure Each Target has an associated initiative
Perform the DFAS Mission at Best Value for DoD Achieve Expected Financial Results from Transformation Initiatives Initiative Impact on Productivity Work Counts / Productive Hr Charged to Travel 2009 2010 2011 Defense Travel System Implementation
Perform the DFAS Mission at Best Value for DoD Achieve Expected Financial Results from Transformation Initiatives Initiative Impact on Productivity Work Counts / Productive Hr Charged to Travel FY08 Rate FY09 Rate FY10 Rate Defense Travel System Implementation
Perform the DFAS Mission at Best Value for DoD Achieve Expected Financial Results from Transformation Initiatives Initiative Impact on Savings Actual Execution of Budgeted Accounting Operations Work Years lt100 ltFY09 Rate ltFY10 Rate Accounting HPO Implementation
FINANCIAL PERSPECTIVE
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Operationalizing the DFAS Strategy
Strategic Objectives Corporate Initiatives FY 09 Tactical Activities Quarter 1
Support DoD in prevailing in the Overseas Contingency Operations Overseas Contingency Operations Costs Pay service members, civilians and vendors supporting Overseas Contingency Operations  
Support DoD in prevailing in the Overseas Contingency Operations   Provide finance and accounting expeditionary support in theater  
Support DoD in prevailing in the Overseas Contingency Operations   Manage Wounded Warrior pay accounts  
Support DoD in prevailing in the Overseas Contingency Operations   Supply accounting data related to Overseas Contingency Operations Costs  
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Operationalizing the DFAS Strategy
Strategic Objectives Corporate Initiatives FY 09 Tactical Activities Quarter 1
Lead transformation of finance and accounting functions throughout DoD Enterprise Resource Planning Support implementation of General Fund Enterprise Business System (GFEBS) Army  
Lead transformation of finance and accounting functions throughout DoD High Performance Organization (HPO) Global Combat Support System (GCSS) Army  
Lead transformation of finance and accounting functions throughout DoD Business Activity Monitoring (BAM) Logistics Modernization Program (LMP) Army  
Lead transformation of finance and accounting functions throughout DoD   Defense Agencies Initiative (DAI) 26 Defense Agencies  
Lead transformation of finance and accounting functions throughout DoD Defense Integrated Military Human Resources System Army, Air Force
Lead transformation of finance and accounting functions throughout DoD   Apply BAM to Vendor Pay Systems (MOCAS, CAPS, OnePay)  
Lead transformation of finance and accounting functions throughout DoD   Implement HPO initiatives across Accounts Payable Accounts Receivable and Accounts Maintenance and Control  
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Operationalizing the DFAS Strategy
Strategic Objectives Corporate Initiatives FY 09 Tactical Activities Quarter 1
Perform the DFAS mission at best value for DOD BRAC Link work years/counts with budget, performance, and manpower  
Perform the DFAS mission at best value for DOD Meaningful productivity measurements Monitor and achieve Lean6 savings  
Perform the DFAS mission at best value for DOD Lean6 Conduct business case analysis of Foreign Military Sales Most Efficient Organization  
Perform the DFAS mission at best value for DOD   Implement Deputy Director of Operations Metric and Performance Indicator Tools  
Perform the DFAS mission at best value for DOD   Complete transition of Air Force Military Pay workload  
Perform the DFAS mission at best value for DOD   Manage budgetary and manpower resources to achieve missions on time and within approved resource restraints  
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• Performance Management

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Key Accomplishments
New Accounts On Board
Decrease in TAT
Civilian Pay
Travel Pay
Inventory Reduction
Performance Sustained
Debt Claims
Military Pay
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Key Challenges
Approaching Summer Surge
Civilian Pay
Travel Pay
Unacceptable ASA

• Summer Surge
• Improvement Plan
• Flexible Workforce
• Outside Assistance
• Improved Workflow

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Travel Pay Operations
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Military Pay Operations
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Civilian Pay Operations
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Departmental Reporting
TI Agency Level Accounting
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Accounts Receivable
Field Level Accounting
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• Process Improvements
• and Controls

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FY 2009 ERMP Objectives

• Execute Enterprise Risk Management Program (ERMP)
  for critical customer programs
• Validate and document key processes/controls/risks
  
• Test risks and controls by core area (travel pay,
  civ pay, etc.)
• Standardize key processes/controls/risks
• Develop Internal Control Questionnaires (ICQ) by
  core area
• Evaluate internal controls across mission using
  the ICQ
• Establish Foundation for Integrating FMFIA and
  Appendix A programs with ERMP

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ERMP Fortifies Internal Controls Up/Down and
Across the Agency

• Senior Level Manager
• review IC matrix evaluation
• results
• appoint AU managers
• at an agency specified level
• identify review risks

Risks are managed enterprise wide with an
enhanced Mission Focus
Organizational Centric

• FMFIA Coordinator
• request self evaluation using
• the IC questionnaire
• report to senior manager
• report to FMFIA
• recognize trends and report

• FMFIA Office
• consolidate ICQs
• submit SOA

Mission Centric
Statement of Assurance

• Core Area Manager
• create Sub-CA IC
• questionnaires (ICQ)
• ensure standard IC
• aligned to business
• objectives for CA
• assign Sub-CA Leads
• review self evaluations
• identify review risks

• Sub-Core Area Lead
• create Sub-CA IC
• questionnaires
• review self
• evaluations
• identify review risks

• AU/Process Manager
• provide input to the ICQ
• utilize the standard ICQ
• perform self evaluation
• identify review risks
• Corrective Action Plan

• Technician/Analyst
• identify risks
• provide input to the ICQ

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Planned CA Schedule w/Prioritization Criteria
Most Critical Sub-Core Areas

• Military Pay
• Civilian Pay
• Accounts Payable

• Departmental Operations
• Accounts Receivable
• Travel Pay
• Retired and Annuitant Pay

• CRITERIA
• Top 10 Risks
• DIMHRS ERMP Focus Area
• FMFIA Deficiency Mitigations
• FIAR Support (A/P)
• HPO Initiative

• Trust Funds
• Disbursing
• Transportation Pay
• Security Assistance Accounting

• Additional Prioritized
• Core Areas (e.g. Civ Pay,
• Debt Claims, AMC)

• CRITERIA
• FIAR support
• End to End Segment Strategy
• FMFIA Deficiency Mitigation
• High IPIA Percentages
• HPO initiative

• CRITERIA
• DoD AFS Strategy
• Top 10 risks
• Standard Disbursing Initiative
• FMFIA support

4 QTR 09
1 QTR 10
2 QTR 10
3 QTR 09
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Examples of Critical Customer Programs
Fund Balance With Treasury (FBWT) - Cash
Risk Mitigation Plan/Risk Rating
Risk Condition
Process
Controls

• FBWT understated by the amount of cash disbursed
  but not recorded/Cash overstated

Agents make cash payments and provide
documentation supporting transactions in-theater
Require agents clear within 30 day window
specific documents for cash payments
reconciliation payments and documents
Reduce cash payments transfer vendor operations
to CONUS via EFT improve visibility of agent
cash in financial reports
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Lean6 Process Improvements Accounts Receivable
Project Title Status Potential Savings Estimated Completion Comments
Out of Service Debt and Claims Management Credit Card Process Completed 379K February 2009 Initial phase complete, will next expand current credit card initiative with DCMO from phone payments to online payments.
Out of Service Debt Customer Service Email Inquiry Process Completed 57K April 2009 Changed email to paper process for inquiries to fully automated process. Reduced turnaround time on inquiries from 20 days to 3 days or less. Customers receive immediate confirmation of received inquiry.
Reduction of time to prepare management reports in Debt and Claims Case Management On-Track 1M July 2009 Reduce the number of management reports required to two all inclusive reports, in addition to changing the employee production reports from a manual to electronic process.
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ERMP Customer Outcomes

• Integrate and support other DFAS initiatives
• Verify internal controls are properly tested
• Improve Internal Controls and Compliance Across
  Operations
• Reduce Risk and Ensure Effective Risk Mitigation
• Standardize processes, Controls, and Structures
  (HPOs)
• Increase Program Reliability and Timely Delivery
  of Information
• Ensure Reporting Audibility and Supportability
• Internal control programs absorbed by ERMP and
  integrated to eliminate redundant efforts and
  costs
• DFAS asserts processes are compliant and
  auditable

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