Your Financial Work Defense Finance and Accounting Service DFAS Transformation Update March 2003

Your Financial Work 2 Outcomes n Provide overview of DFAS Transformation n Explain the process n Outline the next steps

Your Financial Work 3 Why Transformation? n Transformation supports DFAS Mission and Vision n Continue to drive best value for the customer through – Greater effectiveness – Increased efficiency – Continued productivity gains n President’s Management Agenda calls for improved financial management, improved budget and performance integration, and better competition in commercial activities n Quadrennial Defense Review (QDR) concludes DoD must transform to meet future challenges n Defense Planning Guidance (DPG) required Transformation Roadmaps

Your Financial Work 4 Transformation Principles n n Leadership - Key vision and Transformation Goals provided by senior DFAS leadership n n Inclusion - Transformation is a team effort n n Openness - The process is clear and published n n Integration - Incorporate current and future initiatives from Business Lines, Support Services, and HQ Elements into one plan

Your Financial Work 5 Current State Future State Customer Focused Value Driven Efficient Transact Process Build Own Analyze Advise Build & Operate System Process Transactions Respond to Customers Current State Future State Transact Process Build Own Analyze Build & Operate System Process Transactions Respond to Customers Establish transformation outcomes and business strategy Implement collaborative process that leverages BCA activities to integrate transformation efforts across DFAS Generate results based on best value to the customer Partner Leverage operational excellence Develop client partnerships Deliver business solutions Transformation Moving Forward Integrate Leverage

Your Financial Work 6 n n DFAS transformation decisions will be based on Business Case Analysis (BCA) studies of Business/Product Lines n n Theme - Business Process Improvement n n Key evaluation criteria is “best value” Transformation - Our Strategy

Your Financial Work 7 BCA Process

Your Financial Work 8 n n BCA is an analysis tool used to present alternatives and supporting information to DFAS leadership for a decision n n BCAs include: – –Clearly defined organization with manpower, cost, and resources – –Options for consideration with an analysis of the benefits and drawbacks, costs, personnel impact and risk assessment – –Recommended course of action Business Case Analysis Results

Your Financial Work 9 n n Conduct 20 BCAs from FY n n Start with Marine Corps Accounting & Vendor Pay Transformation Schedule - Long Term Conduct BCAs PL A-76 MEO Plus Competitive Procurement (FAR Part 15) Public-Private Venture Implement Transformation Actions Feb 04 Final Site Selection Criteria May 05 SECDEF Site Selection Jan 06 Implement BRAC Dec 03 Draft Site Selection Criteria

Your Financial Work 10 Transformation - Accomplishments n n Submitted Transformation Roadmap to SECDEF on June 30, 2002 n n Publicized DFAS Transformation Strategy on Nov. 27, 2002 n n Commenced analysis of Product Lines to identify transformation options n n Established Executive Steering Group (ESG) and Corporate Transformation Team to integrate DFAS long-term transformation actions

Your Financial Work 11 Corporate Transformation Team Corporate Planning, Chair Accounting Services Military & Civilian Pay Services Commercial Pay Services Site Directors (2) Technology Services General Counsel Corporate Resources Resource Management Human Resources Acquisition Services Administrative Services Corporate Communications Union Representative Corporate Transformation Team

Your Financial Work 12 Next Steps n Continued communication and updates: –ePortal < Currently on Competitive Sourcing page < Developing new “Transformation Central” –Periodic briefings –“Ask the Expert” n Appoint Transformation ESG and Corporate Transformation Team representatives n Kick-off Transformation Team