Managing DFAS Operations Like a Business Rick Davis Deputy Director for Compliance, Standards &...

Managing DFAS Operations Like a Business

Rick DavisDeputy Director for Compliance,

Standards & Compliance

May 20, 2009

Integrity - Innovation - Service 2

DFAS – What We Do (2008)

Sales & Service - $1.5B Scope of Business

• 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

• 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

People• 12,572 employees * (Civilian and Military)• Located in:

• 13 sites• 9 states• 3 countries


DFAS Operations Org Chart

Deputy Director

Operations (Steve Turner)

Standards &Compliance

(Dave McDermott)

ClevelandCenter(Martha Smith)

ColumbusCenter

(Jonathan Witter)

Rome(Aaron

Gillison)

IndianapolisCenter(Edna

Knight)

DenverCenter

(Roxanne Nowling)

Japan(LTC Barry

Eddins)

Europe(Larry

Lovelette)

Limestone(Wayne Ingle)

Texarkana (Mitch

Covington)


DFAS Standards and Compliance Org Chart

Standards and Compliance(Dave McDermott)

Standards and Compliance(Dave McDermott)

Business ManagementBusiness Management

Deputy Directorfor Compliance

(Rick Davis)

Deputy Directorfor Compliance

(Rick Davis)

Deputy Director for Standards

(Greg Schmalfeldt)

Deputy Director for Standards

(Greg Schmalfeldt)

Post Pay Review & Analysis

Post Pay Review & Analysis

Network ComplianceNetwork Compliance

Corporate ReportingCorporate Reporting

Finance Mission AreaFinance Mission Area

Accounting Mission Area

Accounting Mission Area

Financial Improvement & Audit Readiness

Financial Improvement & Audit Readiness

Metrics & InitiativesMetrics & Initiatives

Program Manager, Accounting HPO

Program Manager, Accounting HPO


Strategy Execution


DFAS STRATEGIC PLAN (2008-2013)

Lead transformation of finance and accounting functions throughout DoD

Perform the DFAS mission at best value for DoD

Attract, develop, and retain a highly capable workforce with

relevant skills and competencies

Attain operational excellence in finance and accounting services

• Use DFAS resources efficiently and effectively to achieve expected results

• Achieve expected financial results from transformation initiatives

• 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

• Raise the level of relevant skills and competencies to meet anticipated needs

• Attract and retain employees with needed skills and competencies

Learning & Growth Perspective

Internal Perspective

Financial Perspective

• 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

Perform the DFAS mission at best value for DoD

Attract, develop, and retain a highly capable workforce with

relevant skills and competencies

Attain operational excellence in finance and accounting services

• Raise the level of relevant skills and competencies to meet anticipated needs

• Attract and retain employees with needed skills and competencies

Learning & Growth Perspective

Internal Perspective

MISSIONDirect, approve and perform finance and accounting activities for DoD

VISIONTransforming with the Warfighter to remain the trusted financial partner for DoD

OBJECTIVESGOALS

Support DoD in prevailing in the Overseas Contingency

Operations

• Support Customers in the Overseas Contingency Operations

Customer Perspective


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 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

≤ FY08 Rate≤ FY09

Rate≤ FY10

Rate

Initiative Impact on Savings:

% Actual Execution of Budgeted Accounting Operations Work

Years<100% <FY09 Rate

<FY10 Rate

Accounting HPO Implementation

FIN

AN

CIA

L P

ER

SP

EC

TIV

E


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

Provide finance and accounting expeditionary support in theater

Manage Wounded Warrior pay accounts

Supply accounting data related to Overseas Contingency Operations Costs G

G

G

G






Lead transformation of finance andaccounting functions throughout DoD

Enterprise Resource Planning

Support implementation of : General Fund Enterprise Business System (GFEBS) –Army

High Performance Organization (HPO)

Global Combat Support System (GCSS) – Army

Business Activity Monitoring (BAM)

Logistics Modernization Program (LMP) – Army

Defense Agencies Initiative (DAI) – 26 Defense Agencies

Defense Integrated Military Human Resources System –Army, Air Force

Apply BAM to Vendor Pay Systems (MOCAS, CAPS, OnePay)

Implement HPO initiatives across Accounts Payable;Accounts Receivable; and Accounts Maintenance andControl

Y

G

G

G

G

G

Y






Perform the DFASmission at best value for DOD

BRAC Link work years/counts with budget, performance, and manpower

Meaningful productivity measurements

Monitor and achieve Lean6 savings

Lean6 Conduct business case analysis of Foreign Military Sales MostEfficient Organization

Implement Deputy Director of Operations’ Metric and Performance Indicator Tools

Complete transition of Air Force Military Pay workload

Manage budgetary and manpower resources to achievemissions on time and within approved resource restraints

Y

G

G

Y

Y

G


Performance Management


Key Accomplishments

Travel Pay Operations Turn Around Time

8.88 9.397.82

4.07 4.83

10.30

5.455.67 6.056.30

0.00

2.004.00

6.00

8.0010.00

12.00

Months

Tu

rn A

rou

nd

Tim

e (

Days)

Weighted Average TAT Army SLA

Civilian Pay Accounts

571,654 609,244 612,390 613,093

681,312674,092

200,000

300,000

400,000

500,000

600,000

700,000

800,000

Oct-08 Nov-08 Dec-08 Jan-09 Feb-09 Mar-09

Months

Nu

mb

er

of A

cco

un

ts

Military Pay CMS Cases

99.30%

99.90%

99.30% 99.30%99.70%

99.06%98.80%

98.02%

98.70%

98.10%97.60%

97.80%

95.00%

96.00%

97.00%

98.00%

99.00%

100.00%


Months

Cases P

rocessed

(%

)

Cases Processed within 20 Days Cases Processed within 30 Days

Debt & Claims Military Pay

Civilian PayTravel Pay

Debt Establishment Inventory

1412115959

18113 18811

15388

12719

0

5000

10000

15000

20000


Months

Nu

mb

er

of

Ca

se

s

InventoryReduction

Decrease in TAT

New Accounts On Board

PerformanceSustained


Key Challenges

Civilian Pay (Tier 2) Call Center Average Turn Around Time

7.00

7.20 7.167.06

7.13

7.30

6.506.606.706.806.907.007.107.207.307.40


Months

Cal

l T

urn

Aro

un

d T

ime

(in

Min

ute

s)

Summer Surge

Improvement Plan

Flexible Workforce Outside Assistance Improved Workflow

Civilian PayTravel PayUnacceptable

ASA

ApproachingSummer

Surge


RomeColumbus

Indianapolis

Incoming Vouchers

Daily Processed Travel

Vouchers

Inventory On Hand

Turn Around Time (TAT) of Travel

VouchersTAT Casualty Pay

Timeliness of Claims

Processed (%)

Oldest Inventory on Hand

Pre-Pay Accuracy

Improper Payments: $

Amount

Improper Payments: Quantity

Level 1

Inventory On Hand

Daily Processed Travel

Vouchers

Turn Around Time (TAT) of

Travel Vouchers

TAT Casualty Pay

Timeliness of Claims

Processed (% )

Oldest Inventory on Hand

Pre-Pay Accuracy

Improper Payments

Level2

Level 3Turn Around Time (TAT) of

Travel Vouchers

TAT Casualty Pay

Pre-Pay Accuracy

Improper Payments


ClevelandIndianapolis

Denver: BRAC

Level 2Timeliness of Pay Cases Resolved-

20 days

Timeliness of Deceased

Claims

Timeliness of Dependency

Claims

Timeliness SDP Cases Resolved

Timeliness of Death Gratuity

Cases

Improper Payments

Level 3Timeliness of Pay Cases Resolved-

20 days


Cases

Timeliness of Deceased Claims

Improper Payments

Timeliness of Pay Cases

Resolved- 20 days

Timeliness of Deceased Claims

Timeliness of Dependency

Claims

Timeliness of Central Site

Separations-

Timeliness of Adoption

Reimbursement cases

Timeliness SDP Cases Resolved

Timeliness of Marine Corps Garnishments


Cases Critical SCRs

Systems Downtime

Electronic Leave&

Earnings Statements


Amount


Level 1


Level 3Remedy Tickets Completed within

Stated Expectation

Timeliness of Retirement &

Annuitant packages sent to OPM

Improper Pay

ClevelandIndianapolis

President's Pay VIP PayField Site

Timeliness of T&A Inputs

Field Site Timeliness of

Personnel Transactions

Remedy Tickets Completed within

Stated Expectation

% Change in Remedy Tickets

Timeliness of Retirement &

Annuitant packages sent to OPM

% Change in Debt letters

from previous month

Timelines of Debt Hearings/

Waivers

Timeliness of Debt Letters Processed

% of electronic pay Accts

compared to Hard Copy

% Change in Special Pay Processing

Critical SCR'sSystems

Downtime


Amount


Level 1


TIAgency LevelAccounting

Columbus 57 & 97Cleveland 17

Indianapolis 21 & 97

Overaged Abnormal Balances

Fund Balance with Treasury- Deficiency

Rate

Clearing Accts Non-exempt overage

balance (Suspense Accts)

Clearing Accts Non-exempt within

timeframe (Suspense Accts)

Aged In-TransitsTimeliness of

Accounting Reports to Customers

Stop Pay/ Stop AcctsUnsupported

Accounting Entries

Level 2


Rate

Unsupported Accounting Entries



Stop Pay/ Stop Accts

Level 3

Deposit Accts with negative balances

Overaged Abnormal Balances


Rate

Clearing Accts Exempt - Reconciliation of

Balances- net (Suspense Accts)

Clearing Accts Non-exempt

overage balance (Suspense Accts)

Clearing Accts Non-exempt within

timeframe (Suspense Accts)



Stop Pay/ Stop AcctsUnsupported

Accounting Entries (AFS Trust Fund)

# Corrected Departmental

Reports

# Corrected Journal Vouchers

Level 1


RomeClevelandColumbusLimestone

IndianapolisField LevelAccounting

Reported Debts to Treasury Referral

Rates

Delinquent Intergovernmental

Outside DoD age >180 days delinquent

Delinquent Intergovernmental Within DoD aged

>180 days delinquent

Delinquent Public ARDelinquent Outside DoD Intergovernmental AR

Delinquent within DoD

Intergovernmental AR

Level 2

Level 3 Delinquent Public ARDelinquent Outside DoD Intergovernmental AR



Write-off of Eligible Public Receivables

aged > 2 years delinquent

Debt Referrals to Treasury by DCMO

Reported Debts to Treasury Referral

Rates

Delinquent Intergovernmental Outside DoD age


Delinquent Intergovernmental Within DoD aged


Delinquent Public ARDelinquent Outside

DoD Intergovernmental AR



% of total bills processed vs

total bills disputed

Level 1


Process Improvements

and Controls


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


Statement of

Assurance

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

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

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

FMFIA Office• consolidate ICQs• submit SOA

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

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

ERMP Fortifies Internal Controls Up/Down and Across the Agency

Risks are managedenterprise wide with an

enhanced Mission Focus

Org

an

izatio

na

l Cen

tric

Mission Centric


3 QTR 09 4 QTR 09 1 QTR 10

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

• Military Pay• Civilian Pay• Accounts Payable

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

Planned CA Schedule w/Prioritization Criteria

Most Critical Sub-Core Areas

• Additional Prioritized Core Areas (e.g. Civ Pay, Debt & Claims, AM&C)

2 QTR 10

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

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


Risk Mitigation Plan/Risk Rating:

Examples of Critical Customer Programs

Fund Balance With Treasury (FBWT) - Cash

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

Risk Condition: Process: Controls:

Reduce cash payments; transfer vendor operations

to CONUS via EFT; improve visibility of

agent cash in financial reports


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.


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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