Review of Fiscal Law December 18, 2002 DRAFT

Change Management Center 2 DRAFT Overview Purpose & Objective Challenges Assertions Partnership Basic Approach Fiscal Law Review Process Project Organization Envisioned Changes Project Activities & Timeframe Cost Next Steps

Change Management Center 3 DRAFT Purpose To conduct a comprehensive review of current Fiscal Laws and associated regulations and directives, and recommend legislative changes as appropriate for inclusion in the Fiscal Year 2005 Presidents Budget. Objective Implement an Overarching Network of Fiscal Laws that will provide an Integrated and Flexible Support Foundation for DoD Financial Management Operations into the 21st Century

Change Management Center 4 DRAFT Congress receptive to DoD financial streamlining recommendations DoD Fiscal Policy can accommodate commercial best practices DoD resources available to manage the exercise No Wall to Wall review of Fiscal Law that serves as foundation for FMEA Review Presidents Management Agenda supports change: –The Financial Management Initiative improves how the Government manages its money – reducing, for instance, the billions in erroneous payments the Government makes every year. –The E-Gov Initiative harnesses the power of the Internet to make the Government more productive. Challenges Overlapping Congressional/Administrative financial rules Limited DoD Freedom to Manage Disconnect between fiscal policy and business processes GAO: DoD financial modernization requires complimentary policy/process modernization Pete Aldridge, USD (AT&L) Wednesday, August 15, 2001 –…the challenge within the departments is to go after those overhead activities that they would find to be marginal and to reallocate those resources back to procurement and the things they need for readiness. Assertions

Change Management Center 5 DRAFT Approach Management – CMC & OSD Controller –Senior Advisory Services Section 800 Model - Creation of an Advisory Panel to identify, justify, and recommend legal and structural changes to complex DoD issues Financial Management Advisory Group – Subject Matter Experts - private sector – former civilian agencies SES financial managers –Contractor Administrative Support SAIC Keane FMSI Divide Project into distinct Modules –Appropriation Law –Anti-Deficiency Act –Disbursement and Collection –Financial Management Accountability Initially specialize in each module –Focus on expertise within each module End product will ensure consistency in overall recommendations

Change Management Center 6 DRAFT Expected Results Proposed Legislation Anti-Deficiency Act –Problem - Fund managers can not pay vendors for purchases required to perform work for working capital fund customers due to non collection of receivables from customers. –Solution - Modify over-expenditure requirement of Anti-Deficiency Act to allow Working Capital Funds to either 1) over-expend fund balance with treasury or authorize borrowing authority from treasury equal to agency accounts receivable balance. –Result – Vendors are: 1) paid timely, 2) provided increased working capital liquidity, 3) reduced borrowing cost, and 4) either reduced product or service cost or profits to be reinvested or returned to stockholders to be reinvested or used. Disbursing Officer Act, Executive Order 6166, Prompt Payment Act –Problem – Vendors invoices can not be paid except by authorized government disbursing officers & interest penalties are assessed for late payment (Prompt Payment Act) –Solution – Change Disbursing Officers Act, Executive Order 6166 & Prompt Payment Act to allow vendors to Electronically PULL payments from treasury general account equal to one months invoice for products or services and post audit paid invoice and adjust next month invoice for discrepancies. –Result - Vendors are: 1) paid timely, 2) provided increased working capital liquidity, and 3) either reduced product or service cost or profits to be reinvested or returned to stockholders to be reinvested or used and 4) Government payment processing cost, invoice examination and disbursing costs are reduced.

Change Management Center 7 DRAFT Project Activities & Timeframe Phase I – Scope Identification (01/1/03 – 06/30/03) Identify issues for review – Subject Matter Expert Panel: –Contract Law –Financial Management Law Appropriation Law Anti-Deficiency Disbursing & Collection Financial Management Accountability Conduct interviews to understand the current fiscal environment –DoD managers –Congressional staff, CBO, GAO, OMB, FASAB, & JFMIP –Private sector experts Conduct research and analysis of applicable and most critical areas of statute, regulation and process Define scope of analysis & Key Performance Indicators NOTE: The end date of Phase I will need to be moved to04/30/03 if submission of proposed legislation is required to be submitted with the Presidents FY05 Budget and related interviews and financial management analysis may be required to be reduced.

Change Management Center 8 DRAFT Project Activities & Timeframe Phase II – Recommendation Development (7/1/03 – 12/31/03) Establish Advisory Panel Identify & Establish Congressional Champion Establish Staff, SME, Technical Expert Working Groups –Review and validate project scope –Identify issues –Propose recommendations for change & performance results expected Process or policy Regulatory Legislative Effectiveness & Efficiency Improvements Provide IPRs to Advisory Panel on Working Group progress Finalize Working Group recommendations NOTE: The end date of Phase II will need to be moved to 09/30/03 if submission of proposed legislation is required to be submitted with the Presidents FY05 Budget and related interviews and financial management analysis may be required to be reduced. The begin date for Phase II would also be moved to 05/01/03.

Change Management Center 9 DRAFT Project Activities & Timeframe Phase III – Final Report & Action Model Implementation Plan (01/01/04 – 9/30/04 ) Conduct Advisory Panel review Prepare final report –Background –Analysis and justification –Recommendations –Outreach and Communications Plan –Draft Legislative/Regulatory Language –Implementation Plan Submit recommendations for Presidents Budget NOTE: The end date of Phase III will need to be moved to 02/28/03 if submission of proposed legislation is required to be submitted with the Presidents FY05 Budget and related interviews and financial management analysis may be required to be reduced. The begin date for Phase III would also be moved to 10/01/03. The project team would remain in operation to respond to legislative questions and plan implementation strategies and related costs.

Change Management Center 10 DRAFT Cost Support Services Contractor Support Subject Matter Experts Technology Support Internet Web Services –Project & Knowledge Management Software & Services DOD Internal Support Services Travel & Sundry Total Cost Next Steps Executive Sponsor Drives Change Establish Executive Sponsor/CMC Partnership Identify & Allocate Funding Identify Scope Identify DoD Technical Resources Identify/Establish Advisory Panel