"2009 Military Retiree Pay Chart"
Managing DFAS Operations Like a Business Rick Davis Deputy Director for Compliance, Standards & Compliance May 20, 2009 DFAS – What We Do (2008) Sales & Service - $1.5B Scope of Business • Military Pay $ 247.5M • Processed 169 million pay transactions • Civilian Pay $ 73.3M (6.5 million people) • Retiree Pay $ 57.6M • Made 7.5 million travel payments • Travel Pay $ 50.3M • Paid 14.4 million commercial invoices • Commercial Pay $ 162.2M • Maintained 55.7 million general ledger • Accounting Services $ 466.1M accounts • Support to Others $ 124.7M • Managed military retirement and health • Others $ 320.2M benefits funds ($394 billion) • Made $591 billion in disbursements to pay People recipients • Made $26.5 billion in foreign military sales • 12,572 employees * (Civilian and Military) (reimbursed by foreign governments) • Located in: • Account for 927 active DoD appropriations • 13 sites • 9 states • 3 countries Integrity - Innovation - Service 2 DFAS Operations Org Chart Deputy Director Operations (Steve Turner) Cleveland Standards & Columbus Denver Indianapolis Rome Center Compliance Center Center Center (Aaron (Martha (Dave (Jonathan (Roxanne (Edna Gillison) Smith) McDermott) Witter) Nowling) Knight) Japan Texarkana Europe Limestone (Mitch (LTC Barry (Larry (Wayne Ingle) Covington) Eddins) Lovelette) Integrity - Innovation - Service 3 DFAS Standards and Compliance Org Chart Standards and Compliance (Dave McDermott) Deputy Director Deputy Director Program Manager, for Standards for Compliance Accounting HPO (Greg Schmalfeldt) (Rick Davis) Accounting Mission Post Pay Review & Area Analysis Network Compliance Finance Mission Area Financial Improvement Corporate Reporting & Audit Readiness Metrics & Initiatives Business Management Integrity - Innovation - Service 4 Strategy Execution Integrity - Innovation - Service 5 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 GOALS OBJECTIVES Customer Perspective Support DoD in prevailing in • Support Customers in the Overseas Contingency Operations the Overseas Contingency Operations • Establish business requirements for DoD transformation initiatives related to Lead transformation of finance and finance and accounting activities accounting functions throughout DoD • Execute and/or support deployment of DoD transformation initiatives Financial Perspective Perform the DFAS mission • Use DFAS resources efficiently and effectively to achieve expected results at best value for DoD • Achieve expected financial results from transformation initiatives Internal Perspective • Optimize processes to meet or exceed industry and government standards Attain operational excellence in finance and accounting services • Increase productivity and deliver products and services on time • Identify and mitigate risks to improve processes and internal controls Learning & Growth Perspective Attract, develop, and retain a highly capable workforce with • Raise the level of relevant skills and competencies to meet anticipated needs relevant skills and competencies • Attract and retain employees with needed skills and competencies Integrity - Innovation - Service 6 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 FINANCIAL PERSPECTIVE Each Objective has at least Each Target has an one measure associated initiative Initiative Impact on Productivity: 2009 2010 2011 Work Counts / Productive Hr Defense Travel System Perform the DFAS Achieve Expected Charged to Travel ≤ FY09 ≤ FY10 Implementation Mission at Best Value Financial Results from ≤ FY08 Rate Rate Rate for DoD Transformation Initiatives Initiative Impact on Savings: % Actual Execution of Budgeted Accounting Operations Work <FY09 <FY10 Accounting HPO <100% Years Rate Rate Implementation Integrity - Innovation - Service 7 Operationalizing the DFAS Strategy Strategic Corporate FY 09 Tactical Activities Quarter 1 Objectives Initiatives Support DoD in Overseas Contingency Pay service members, civilians and vendors supporting Operations Costs Overseas Contingency Operations G prevailing in the Overseas Contingency Provide finance and accounting expeditionary support in theater G Operations Manage Wounded Warrior pay accounts G Supply accounting data related to Overseas Contingency Operations Costs G Integrity - Innovation - Service 8 Operationalizing the DFAS Strategy Strategic Corporate FY 09 Tactical Activities Quarter 1 Objectives Initiatives Lead transformation Support implementation of : of finance and General Fund Enterprise Business System (GFEBS) –Army Enterprise Resource accounting functions Planning Y throughout DoD High Performance Organization (HPO) Global Combat Support System (GCSS) – Army G Business Activity Logistics Modernization Program (LMP) – Army G Monitoring (BAM) Defense Agencies Initiative (DAI) – 26 Defense Agencies G Defense Integrated Military Human Resources System – Army, Air Force Y Apply BAM to Vendor Pay Systems (MOCAS, CAPS, OnePay) G Implement HPO initiatives across Accounts Payable; Accounts Receivable; and Accounts Maintenance and Control G Integrity - Innovation - Service 9 Operationalizing the DFAS Strategy Strategic Corporate FY 09 Tactical Activities Quarter 1 Objectives Initiatives Perform the DFAS Link work years/counts with budget, performance, and mission at best BRAC manpower value for DOD Y Meaningful productivity Monitor and achieve Lean6 savings measurements G Conduct business case analysis of Foreign Military Sales Most Lean6 Efficient Organization G Implement Deputy Director of Operations’ Metric and Performance Indicator Tools Y Complete transition of Air Force Military Pay workload Y Manage budgetary and manpower resources to achieve missions on time and within approved resource restraints G Integrity - Innovation - Service 10 Performance Management Integrity - Innovation - Service 11 Key Accomplishments New Travel Pay Decrease in Civilian Pay Accounts TAT On Board Travel Pay Operations Civilian Pay Accounts Turn Around Time 800,000 700,000 674,092 681,312 Number of Accounts Turn Around Time (Days) 612,390 613,093 12.00 10.30 571,654 609,244 10.00 8.88 9.39 600,000 7.82 8.00 6.30 5.67 6.05 4.83 5.45 500,000 6.00 4.07 4.00 400,000 2.00 0.00 300,000 8 D 8 N 8 A 8 S 8 Fe 9 8 M 9 9 8 -0 -0 -0 -0 -0 0 -0 0 -0 -0 n- b- n l ov ec ct ug ar ep Ju 200,000 Ju Ja O Months Oct-08 Nov-08 Dec-08 Jan-09 Feb-09 Mar-09 Months Weighted Average TAT Arm y SLA Debt & Claims Inventory Military Pay Performance Reduction Sustained Debt Establishment Inventory Military Pay CMS Cases 18811 99.90% 20000 18113 100.00% 99.70% Number of Cases Cases Processed (%) 99.30% 99.30% 99.30% 15959 15388 99.06% 14121 99.00% 98.80% 98.70% 15000 12719 97.80% 98.10% 98.02% 98.00% 97.60% 10000 97.00% 5000 96.00% 0 95.00% Oct-08 Nov-08 Dec-08 Jan-09 Feb-09 Mar-09 Oct-08 Nov-08 Dec-08 Jan-09 Feb-09 Mar-09 Months Months Cases Processed within 20 Days Cases Processed within 30 Days Integrity - Innovation - Service 12 Key Challenges Travel Pay Approaching Civilian Pay Summer Unacceptable Surge ASA Summer Surge Improvement Plan Civilian Pay (Tier 2) Call Center Average Turn Around Time Call Turn Around Time Flexible Workforce 7.40 7.30 7.20 7.30 7.16 7.13 7.20 (in Minutes) Outside Assistance 7.10 7.00 7.06 7.00 Improved Workflow 6.90 6.80 6.70 6.60 6.50 Oct-08 Nov-08 Dec-08 Jan-09 Feb-09 Mar-09 Months Integrity - Innovation - Service 13 Rome Columbus Indianapolis Turn Around TAT Casualty Pre-Pay Improper Level 3 Time (TAT) of Pay Accuracy Payments Travel Vouchers Turn Around Daily Processed Inventory On Time (TAT) of TAT Casualty Travel Hand Travel Pay Vouchers Vouchers Level2 Timeliness of Oldest Inventory Pre-Pay Improper Claims on Hand Accuracy Payments Processed (%) Daily Processed Turn Around Time Incoming Inventory On Travel (TAT) of Travel TAT Casualty Pay Vouchers Hand Vouchers Vouchers Level 1 Timeliness of Improper Improper Oldest Inventory Pre-Pay Claims Payments: $ Payments: on Hand Accuracy Processed (% ) Amount Quantity Integrity - Innovation - Service 14 Cleveland Indianapolis Denver: BRAC Timeliness of Pay Timeliness of Timeliness of Improper Level 3 Cases Resolved- Death Gratuity Deceased Claims Payments 20 days Cases Timeliness of Pay Timeliness of Timeliness of Timeliness Timeliness of Improper Level 2 Cases Resolved- Deceased Dependency SDP Cases Death Gratuity Payments 20 days Claims Claims Resolved Cases Timeliness of Timeliness of Timeliness of Timeliness of Pay Cases Timeliness of Adoption Timeliness SDP Dependency Central Site Resolved- 20 Deceased Claims Reimburseme Cases Resolved Claims Separations- days nt cases Level 1 Electronic Timeliness of Timeliness of Improper Improper Systems Leave& Marine Corps Death Gratuity Critical SCRs Payments: $ Payments: Downtime Earnings Garnishments Cases Amount Quantity Statements Integrity - Innovation - Service 15 Cleveland Indianapolis Timeliness of Remedy Tickets Retirement & Level 3 Completed within Annuitant packages Improper Pay Stated Expectation sent to OPM Field Site Timeliness Remedy Tickets Field Site Timeliness % Change in of Personnel Completed within of T&A Inputs Remedy Tickets Transactions Stated Expectation Level 2 Timeliness of % Change in Debt % Change in Retirement & Items from previous Special Pay Improper Pay Annuitant packages month Processing sent to OPM Field Site Timeliness of % Change in Field Site Remedy Tickets Timeliness of % Change in Retirement & Debt letters President's Pay VIP Pay Timeliness of Completed within Personnel Remedy Tickets Annuitant packages from previous T&A Inputs Stated Expectation Transactions sent to OPM month Level 1 % of electronic Timelines of % Change in Improper Improper Timeliness of Debt pay Accts Systems Debt Hearings/ Special Pay Critical SCR's Payments: $ Payments: Letters Processed compared to Downtime Waivers Processing Amount Quantity Hard Copy Integrity - Innovation - Service 16 Columbus 57 & 97 Cleveland 17 Indianapolis 21 & 97 TI Fund Balance with Agency Level Treasury- Deficiency Unsupported Accounting Entries Accounting Rate Level 3 Timeliness of Aged In-Transits Accounting Reports Stop Pay/ Stop Accts to Customers Clearing Accts Non- Clearing Accts Non- Overaged Fund Balance with exempt overage exempt within Abnormal Treasury- Deficiency balance (Suspense timeframe (Suspense Balances Rate Accts) Accts) Level 2 Timeliness of Unsupported Aged In-Transits Accounting Reports Stop Pay/ Stop Accts Accounting Entries to Customers Clearing Accts Exempt Clearing Accts Clearing Accts Non- Fund Balance with Deposit Accts with Overaged Abnormal - Reconciliation of Non-exempt exempt within Treasury- Deficiency negative balances Balances Balances- net overage balance timeframe (Suspense Rate (Suspense Accts) (Suspense Accts) Accts) Level 1 Timeliness of Unsupported # Corrected # Corrected Aged In-Transits Accounting Reports Stop Pay/ Stop Accts Accounting Entries Departmental Journal Vouchers (AFS Trust to Customers Integrity - Innovation - Service Fund) Reports 17 Rome Cleveland Columbus Limestone Indianapolis Field Level Accounting Delinquent within Delinquent Outside DoD Level 3 Delinquent Public AR Intergovernmental AR DoD Intergovernmental AR Delinquent Delinquent Reported Debts to Intergovernmental Intergovernmental Treasury Referral Outside DoD age >180 Within DoD aged Rates days delinquent >180 days delinquent Level 2 Delinquent within Delinquent Outside DoD Delinquent Public AR DoD Intergovernmental AR Intergovernmental AR Delinquent Write-off of Eligible Reported Debts to Intergovernmental Public Receivables Debt Referrals to Treasury Referral Outside DoD age aged > 2 years Treasury by DCMO Rates >180 days delinquent Level 1 delinquent Delinquent Delinquent within % of total bills Delinquent Outside Intergovernmental DoD processed vs Delinquent Public AR DoD Within DoD aged Intergovernmental total bills Intergovernmental AR >180 days delinquent AR disputed Integrity - Innovation - Service 18 Process Improvements and Controls Integrity - Innovation - Service 19 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 Integrity - Innovation - Service 20 ERMP Fortifies Internal Controls Up/Down and Across the Agency Senior Level Manager • review IC matrix evaluation results • appoint AU managers Organizational Centric at an agency specified level • identify & review risks Risks are managed enterprise wide with an enhanced Mission Focus FMFIA Coordinator • request self evaluation using FMFIA Office the IC questionnaire • consolidate ICQs • report to senior manager • submit SOA • report to FMFIA • recognize trends and report Mission Centric Core Area Statement Manager of • create Sub-CA IC Sub-Core Area AU/Process Manager Assurance questionnaires (ICQ) Lead • provide input to the ICQ • ensure standard IC • create Sub-CA IC • utilize the standard ICQ aligned to business questionnaires • perform self evaluation objectives for CA • review self • identify & review risks • assign Sub-CA Leads evaluations • Corrective Action Plan • review self • identify & review risks evaluations • identify & review risks Technician/Analyst • identify risks • provide input to the ICQ Integrity - Innovation - Service 21 Planned CA Schedule w/Prioritization Criteria Most Critical Sub-Core Areas • Military Pay • Civilian Pay • Accounts Payable • Departmental Operations • Accounts Receivable CRITERIA: • Travel Pay • Top 10 Risks • DIMHRS & ERMP • Retired and Annuitant Pay Focus Area • FMFIA Deficiency Mitigations • Trust Funds • FIAR Support (A/P) • Disbursing • HPO Initiative • Transportation Pay CRITERIA: • Security Assistance Accounting • FIAR support • End to End Segment Strategy • FMFIA Deficiency Mitigation CRITERIA: • Additional Prioritized • High IPIA Percentages • DoD AFS Strategy • HPO initiative • Top 10 risks Core Areas (e.g. Civ Pay, • Standard Disbursing Debt & Claims, AM&C) Initiative • FMFIA support 3 QTR 09 4 QTR 09 1 QTR 10 2 QTR 10 Integrity - Innovation - Service 22 Examples of Critical Customer Programs Fund Balance With Treasury (FBWT) - Cash Risk Mitigation Risk Condition: Process: Controls: Plan/Risk Rating: FBWT understated Agents make Require agents Reduce cash by the amount of cash payments clear within 30 day payments; transfer cash disbursed but and provide window; specific vendor operations not recorded/Cash documentation overstated documents for cash to CONUS via EFT; supporting payments; improve visibility of transactions in- reconciliation agent cash in theater payments and financial reports documents Integrity - Innovation - Service 23 Lean6 Process Improvements: Accounts Receivable Project Title Status Potential Estimated Comments Savings Completion Out of Service Debt Initial phase complete, will next expand and Claims Completed $379K February 2009 current credit card initiative with DCMO from Management Credit phone payments to online payments. Card Process Out of Service Debt Changed email to paper process for inquiries Customer Service Completed $57K April 2009 to fully automated process. Reduced Email Inquiry Process turnaround time on inquiries from 20 days to 3 days or less. Customers receive immediate confirmation of received inquiry. Reduction of time to Reduce the number of management reports prepare management On-Track $1M July 2009 required to two all inclusive reports, in addition reports in Debt and to changing the employee production reports Claims Case from a manual to electronic process. Management Integrity - Innovation - Service 24 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 Integrity - Innovation - Service 25 Integrity - Innovation - Service 26