Define Characteristics of Organization Based Control © Dale R. Geiger 20111

Everyone is Part of a Hierarchy © Dale R. Geiger 20112

Terminal Learning Objective Task: Define Characteristics of Organization Based Control Condition: You are training to become an ACE with access to ICAM course handouts, readings, and spreadsheet tools and awareness of Operational Environment (OE)/Contemporary Operational Environment (COE) variables and actors Standard: with at least 80% accuracy Describe the difference between Cost Benefit Analysis and Cost Managed Organizations Describe characteristics of Organization Based Control © Dale R. Geiger 20113

Single Use Estimated Future Cost Cost Informed Decision Making Cost Benefit Analysis Single Use Estimated Future Cost Cost Informed Decision Making Cost Benefit Analysis Cost Benefit Analysis Contrasting CBAs and CMOs

Single Use Estimated Future Cost Cost Informed Decision Making Cost Benefit Analysis Single Use Estimated Future Cost Cost Informed Decision Making Cost Benefit Analysis Persistent Use Expected & Actual Cost Continuous Improvement Cost Managed Organization Persistent Use Expected & Actual Cost Continuous Improvement Cost Managed Organization Cost Benefit Analysis Cost Managed Organization Contrasting CBAs and CMOs

Cost Benefit Analysis Uses a formal, structured process to inject cost considerations into the decision making process Improves the cost effectiveness of acquisitions, policy alternatives, and other major decisions Is too time consuming and costly itself to be used for all day-to-day operating decisions Cost Managed Organizations Use cost management and control processes to improve the cost management and control of day-to- day operations

Contrasting CBAs and CMOs Leadership Cost Benefit Analysis Cost Managed Organization

Contrasting CBAs and CMOs ACE Expertise Cost Benefit Analysis Cost Managed Organization

Contrasting CBAs and CMOs Process Cost Benefit Analysis Cost Managed Organization

Contrasting CBAs and CMOs Measurement Cost Benefit Analysis Cost Managed Organization

CMOs Look for a Return on Investment From Cost Management and Control credibility cost beneficial use beneficial use Desired 10 to 1 Ratio Process and Measurement

Learning Check How does the leader’s role in CBA differ from that in a CMO? Why is CBA justified in major acquisition decisions? © Dale R. Geiger

Different Types of CMOs Organization Based Exploits existing accountability relationships embedded in every organization Role Based Adds new accountability relationships to control costs for specific purpose Output Based Focuses control on product or service costs

Organization Based Control Tier 3 Leader Tier 2 Leader Tier 3 Leader Tier 2 Leader Tier 1 Leader Tier 3 Leader Utilizes Each Node in the Chain of Command in AAR Process AAR

Organization Based Control Strengths Takes advantage of existing accountability relationships Subordinates are accustomed to taking direction and critique from their superiors Greatest challenge Defining and motivating the Cost Chain of Command

The Power of Decentralization The power of the AAR can extend throughout any sized organization

Learning Check What are the three general categories of Cost Managed Organizations? What are the strengths of Organization Based CMOs? © Dale R. Geiger

Practical Demonstration 3d Armored Cavalry Regiment The 3d Armored Cavalry Regiment is a unique armored Brigade level unit with a storied history LTG George Patton was once its regimental commander As was GEN Dempsey Soldiers are the most expensive cost element in a tactical unit AMCOS is an Army tool to evaluate cost of military and civilian personnel Go to and log in with AKO or CAC

Accessing AMCOS © Dale R. Geiger

AMCOS Total Cost Data by Rank © Dale R. Geiger $K per Year per SoldierE1E2E3 Military CompensationAvg Cost of Base Pay (Military) Military CompensationAvg Cost of Basic Allowance for Housing (in cash) Military CompensationAvg Cost of Basic Allowance for Subsistence4.7 Other BenefitsAvg Cost of Other Benefits Permanent Change of Station CostsAvg Permanent Change of Station-annualized () Recruiting CostsAvg Recruiting Cost for MOS () Retired Pay AccrualAvg Cost of Retired Pay Accrual Selective Reenlistment Bonus Avg Cost of Reenlistment Bonus (A and B Amortized)0.0 Separation CostsAvg Cost of All Separation Incentives Special PaysAvg Cost of Special Pays TrainingAvg Cost of Training (Total Amortized) Total MPA (AMCOS) $K per Year per SoldierE1E2E3 Medical Support CostsAvg Cost of Medical Support Cost Morale, Welfare and Recreation CostsAvg Cost of Morale, Welfare and Recreation0.3 Recruiting CostsAvg Recruiting Cost for MOS (Amortized) TrainingAvg Cost of Training (Total Amortized) Total OMA (AMCOS) $K per Year per SoldierE1E2E3 New GI Bill CostsAvg Cost of GI Bill30.9 TrainingAvg Cost of Training (Total Amortized) Total Other (AMCOS) MPA other OMA

Total Cost © Dale R. Geiger

The Composite Standard Rate is Preferred © Dale R. Geiger $K per Year per SoldierE1E2E3 Military CompensationAvg Cost of Base Pay (Military) Military CompensationAvg Cost of Basic Allowance for Housing (in cash) Military CompensationAvg Cost of Basic Allowance for Subsistence4.7 Other BenefitsAvg Cost of Other Benefits Permanent Change of Station CostsAvg Permanent Change of Station-annualized () Recruiting CostsAvg Recruiting Cost for MOS () Retired Pay AccrualAvg Cost of Retired Pay Accrual Selective Reenlistment Bonus Avg Cost of Reenlistment Bonus (A and B Amortized)0.0 Separation CostsAvg Cost of All Separation Incentives Special PaysAvg Cost of Special Pays TrainingAvg Cost of Training (Total Amortized) Total MPA (AMCOS) $K per Year per SoldierE1E2E3 Medical Support CostsAvg Cost of Medical Support Cost Morale, Welfare and Recreation CostsAvg Cost of Morale, Welfare and Recreation0.3 Recruiting CostsAvg Recruiting Cost for MOS (Amortized) TrainingAvg Cost of Training (Total Amortized) Total OMA (AMCOS) $K per Year per SoldierE1E2E3 New GI Bill CostsAvg Cost of GI Bill30.9 TrainingAvg Cost of Training (Total Amortized) Total Other (AMCOS) Composite Standard Rates Composite Standard Rates other OMA 42.1, 44.9, 48.5

Composite Standard Rate © Dale R. Geiger

Individual Exercise in Costing Soldiers of the 3d Armored Cavalry Regiment The 3d ACR air assets were re-flagged as part of a new Combat Aviation Brigade when the unit deployed A significant sized rear detachment remained at Fort Hood, Texas Use AMCOS to determine the annual cost of the deployed unit and the rear detachment at the composite standard rate O6O5O4O3O2O1 CW 5 CW 4 CW 3 CW 2 WO 1 E9E8E7E6E5E4E3E2E1total Rear Detachment Deployed to Iraq Total 3d ACR

Teacher’s Note 3d Armored Cavalry Regiment The 3d Armored Cavalry Regiment is a Heavy Brigade Combat Team deployed to Iraq (as of spring 2011) The Rear Detachment remained at Fort Hood, Texas *At composite standard rate

Tactical Unit Cost Management & Control: Non Deployable Soldiers Throughout the Army many Soldiers are unable to deploy Operational effects can be Under strength units deploying Units deploying with filler personnel Increased deployments for some personnel Reduced dwell to BOG (boots on the ground) time Cost effects involve military pay for limited military work $68 Billion milpay budget in FY11 controlled at Army level Commands, Armies, Corps, Divisions, Brigades, etc see no cost or even budget This means that Soldiers are free goods to their units FY11 milpay cost for non deployable soldiers is in $10 billion range

3d ACR Non Deployable Cost Soldiers are not deployable for a number of reasons They still draw full salaries The following are the 3d ACR non deployable soldiers by category as of January 2011 How much do these soldiers cost the Army per year by category at the average composite standard rate for the rear detachment? 3d ACR Major Med Retire- ment Cadre Minor Med PCSLegalTDY Child Care OtherTotal Soldiers

Teacher’s Note 3d ACR Non Deployable Cost 3d ACR Major Med Retire- ment Cadre Minor Med PCSLegalTDY Child Care OtherTotal Soldiers $M

3d ACR Non Deployables Non deployable soldier levels are considered a major issue throughout Forces Command Consider the III Corps level of non deployable troops: The 3d ACR Rear Detachment CO, LTC Perry reviewed non deployables weekly Rear Detachment Squadron COs and numerous Rear Detachment staff attend Major Med Retire ment Cadre Minor Med PCSLegalTDY Child Care OtherTotal III Corps III Corps 24%22%17%11% 8%3%2%4% 100%

7 Feb Review of 3d ACR Non Deployable Meeting went 90 minutes Much time was spent reviewing a handful of cases LTC Perry learned that Medical appointment issues caused delay Getting signatures added unnecessary delay Time allowed only two of the Squadron COs to speak The review (report?) follows

3d ACR Feb 7, 2011 Non-deployables Review © Dale R. Geiger pages over 400 names over 400 names

Commander’s 7 Feb Review Critique LTC Perry was unsatisfied with the results of the non deployable review process He recognized that the subordinates were not attacking the problem Instead they were complying with a reporting requirement The pages and pages of detail were data, not information He likened the situation as one of trying to fight the Battle of the Bulge with the following very detailed map

Battle Map of Ardennes Forest

Leadership Driven Management LTC Perry changed the format of the review process to that of an AAR Established his Commander’s Intent Established his Commander’s Intent as: “look for and resolve systemic issues” Targeted medical profiles over one year and legal chapters over 60 days to be attacked Directed that preliminary meetings occur in the Squadrons Interacted with medical and legal staff on post to enlist their support © Dale R. Geiger

3d ACR Rear Detachment 1-3 Tiger Squadron 1-3 Tiger Squadron 3-3 Thunder Squadron 3-3 Thunder Squadron LTC Perry 2-3 Sabre Squadron 2-3 Sabre Squadron 43rd Engineer 43rd Engineer HQ Troop Remington HQ Troop Remington AAR

Results of LTC Perry Initiative: March to May Target Areas Mar 7May 6Δ Medical > 365 Legal > 60 Total Medical > 365 Legal > 60 TotalDelta Tiger Sabre Thunder Remington Muleskinner213134(1) Bullwhip d ACR Two months

Results of LTC Perry Initiative: March to May Target Areas Mar 7May 6Δ Medical > 365 Legal > 60 Total Medical > 365 Legal > 60 TotalDelta Tiger Sabre Thunder Remington Muleskinner213134(1) Bullwhip d ACR $4M Annualized at Composite Standard Rate Two months

Opportunities for Improvement Systemic Improvements Unforeseen Benefits of Creativity Unforeseen Benefits of Accountability

3d ACR Rear Detachment 1-3 Tiger Squadron 1-3 Tiger Squadron 3-3 Thunder Squadron 3-3 Thunder Squadron LTC Perry 2-3 Sabre Squadron 2-3 Sabre Squadron 43rd Engineer 43rd Engineer HQ Troop Remington HQ Troop Remington Missions? Support the Field Support the Families Prepare ARFORGEN Missions? Support the Field Support the Families Prepare ARFORGEN