1. DFAS Transformation American Society of Military Comptrollers
Regional Mini-PDI, NCR
March 2006
Good (morning or afternoon).
As part of our ongoing dialogue with you as members of the DFAS team, we’re going to spend some time together today bringing you up to date on DFAS Transformation. Having recently returned from the DFAS Executive Offsite, several DFAS leaders had the opportunity to hear first hand from our Director and key staff what’s happening internal to DFAS and what lies ahead us and the Department. With so many exciting events on the horizon, including the recent conclusion of the BRAC legislative period, it’s a great time to meet and discuss ongoing events. Specifically, we’ll discuss.. next slide please...
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Agenda
DFAS – What We Do
DFAS Transformation Vision
Transformation Blueprint
People
Structure
Process
Technology
Information
Summary
First of all, we’ll review our DFAS Transformation goals and strategy, see how the 2006 Balanced Scorecard has evolved, and what our Transformation blueprint looks like. Then we’ll spend a few minutes reviewing highlights for the National Security Personnel System, how we will experience upgrades to our our future DFAS organization structure from a top down view, followed by an update on DFAS Base Realignment and Closure (BRAC) plans. Finally, we’ll do a brief recap and open the floor up for questions
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DFAS – What We Do
Mission: Provide accounting and finance services for the Military Departments and Defense Agencies.
Sales & Service - $1.62B
Scope of Business
Military Pay $190.8M
Civilian Pay $63.8M
Retiree Pay $52.8M
Travel Pay $66.3M
Commercial Pay $178.7M
Accounting Services $786.6M
Others $280.9M
Processed 104 million pay transactions (5.9 million people)
Made 6.9 million travel payments
Paid 12.6 million commercial invoices
Posted million general ledger transactions
Managed military retirement and health benefits funds ($234 billion)
Made an average of $455 billion in disbursements to pay recipients
Managed $13.5 billion in foreign military sales (reimbursed by foreign governments)
Account for 282 active DoD appropriations
People
13,830 employees * (Civilian and Military)
Located in:
30 sites
17 states
3 countries
*Source: HR Flash Report December 2005
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4. Transformation Vision
Transforming Today
To Be The Trusted Financial Partner
For Tomorrow’s Warfighter
It’s an exciting time to be in DoD. Within DFAS, in addition to BRAC we’re going to be experiencing refreshing upgrades to our work processes. Our next phase of DFAS transformation has begun.
For our workforce, that means we’re going to be experiencing a shift from a lot of our manual data entry and reconciliation processes to more analysis. So our predominantly technical workforce of today will evolve over time to a workforce with greater analytical capability. This is in part because of the benefits of streamlining processes, implementing systems improvements and achieving benefits from electronic commerce. As the number of systems we’ll be operating on behalf of customers will decrease, so will some of the costs associated with operating today’s applications.
We’ll work together with our customers to standardize finance and accounting business processes, which will also make us more efficient as a service provider. And under NSPS, we can recognize and reward members of our workforce in a manner that truly distinguishes high performers from good solid performers.
Under the BRAC law our footprint becomes smaller as we migrate to 10 locations (5 primary, and 5 other sites). BRAC 2005 provides an opportunity to implement site consolidations, streamline DFAS operations,and support our goal to provide best value to the warfighter. BRAC 2005 allows this to occur in a manner that is equally beneficial to the employee, the customer, and the American taxpayer. So let’s talk now for a minute about how we measure that performance.
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Transformation Vision
Human Capital Strategy
Information
People
Leadership & Vision
Structure
Technology
Process
Business Intelligence
Benchmarking
Information Security
BRAC
Centers of Excellence
NOTE: Presenters should briefly discuss the information, technology, process, structure and people components as highlighted in the schematic as discussed at the DFAS offsite, citing one or more examples under each block to set the stage for the remainder of the briefing.
Enterprise
Transition
Plans
eCommerce
High-Performing Organizations
Lean 6
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6. People - Human Capital Strategy
Succession Planning
Skills Inventory
National Security Personnel System (NSPS)
Implementation is event driven
Labor relations portions of NSPS delayed due to court ruling
DOD proceeding with Implementation for 11,000 non-bargaining unit employees in spiral 1.1 in April ‘06.
DOD intends to appeal decision and is currently reviewing options for further deployment in spiral 1.2 and 1.3.
Pay Raise: Employees will receive the 2006 pay raise once approved
Employee Transition Plan (Spiral Strategy):
Implement Spiral 1:Assess and certify performance management system
Implement Spiral 2 (FWS, OCONUS employees, and other eligible employees)
SecDef makes determination on Spiral 3 (DoD Labs currently excluded by NSPS statute)
Continuing Collaboration and Development of Implementing Issuances
DoD continues to collaborate with employee representatives in developing implementing issuances (details to carry out provisions of NSPS regulations)
A coalition of unions filed a lawsuit in the U.S. District Court for the District of Columbia to block portions of NSPS regulations dealing with labor relations, mandatory removal offenses, and appeals. After a series of discussions among DoD, OPM, Justice, and those labor unions, the DoD voluntarily agreed to delay the implementation of portions of NSPS until February 1, 2006, at the earliest. This agreement requests that the Court set a hearing on the case in early January. The Department may go forward with the continuing collaboration process beginning as early as December 1. This is the process in which DoD seeks union input on the NSPS regulations' implementing issuances, which provide the detailed guidance on the human resources system (e.g., pay banding, performance management, and job classification). These implementing issuances will not go into effect before February 1, 2006.
Communications Efforts
Keep employees informed of program plans and changes Town Hall meetings, FAQs, Employee Fact Sheets, articles on DFAS, WHS and CPMS e-portal sites
Training
Learning strategy to prepare DoD workforce for the transition to NSPS. Specialized courses in all functional areas covered by NSPS (pay banding, staffing flexibilities, performance management, labor relations, appeals process, etc.)
Skills Inventory
Data will assist managers in creating a skills profile of their organizations. This is a necessary and prudent step in developing a forward-looking and strategically-oriented management tool. This data will also assist in developing sound recruitment, training, and retention strategies and plans that are dynamic and constantly changing.
The Skills Inventory tool is mandatory for employees in the 501, 510, 525, 545, 544, 2210, 201, 203 and 260 career series beginning Dec 5, 2005.
Identification of skills for the remaining career series are scheduled to be completed by March To complete the skills inventory, select the skills inventory link in the My Personnel Data gadget on the HR home page.
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Structure BRAC Law
Grow the DFAS site at Cleveland, OH, to not less than 1,500 Full Time Equivalents (FTEs)
Grow the DFAS site at Limestone, ME, to not less than 600 FTEs
Grow the DFAS site at Rome, NY, to not less than 1,000 FTEs
Maintain not less than the current FTEs1 at the DFAS sites at Columbus, OH (2,064 FTEs), and Indianapolis, IN (2,632 FTEs)
Japan
Europe
Honolulu
Denver
Indianapolis
Cleveland
Columbus
Arlington (HQ Liaison)
Kansas City
Oakland
Seaside
San Bernardino
San Diego
San Antonio
Lawton
Omaha
St Louis
Rock Island
Orlando
Pensacola &
Saufley Field
Lexington
Norfolk
Rome
Limestone
Dayton
Charleston
Red River
Patuxent River
Bratenahl
Site Closed by BRAC
Remaining Site
Site Not Affected by BRAC
Texarkana
As a result of the BRAC Commission recommendations recently passed into law, DFAS will reduce our current 30 sites by 20 locations. In this scenario, our continuing sites will be:
Arlington Liaison
Cleveland
Cleveland Bratenahl
Columbus
Europe
Indianapolis
Japan
Limestone
Rome
Texarkana
In conjunction with our BRAC planning process, business line and corporate organization experts have participated in significant planning efforts to implement these recommendations in a timely and efficient manner. Furthermore the plan considered key business events including the business calendar and the requirement to stabilize work at a site before adding to much additional work to quickly.
The implementation schedule you will see in a moment defines the proposed by location BRAC implementation for site closure. Workload will be realigned incrementally over the next few years in the following timeframe.
Next slide please….
1 FTEs effective EOM August 2005 (Geographic Location Report, Military Personnel Report)
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8. Structure - Current DFAS Organization
Functional Model
For those of you who were here in August 2000, you recall that summer of our last visible organization transformation. While we did not change the products and services we delivered, we changed that year to the Business Line and Corporate Organization alignment we’ve known for the past several years. So from 1991 when DFAS was created until late Summer 2000, we were organized geographically. At that time you may remember our field sites depending on their military service customer reported to either DFAS Cleveland, Denver, or Indianapolis.
Then in 2000 during the significant event known as the DFAS Business Evolution or DBE implementation, we shifted our operations to a functional alignment.
We’ve experienced many business process efficiencies and benefits for stakeholders under this alignment model.
As of Feb. 28, 2005
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9. Organizational Structure - January 2006
Client Executives
Information Technology
Corporate Resources
Internal Review
Acquisition Management Organization
Office of General Counsel
Chief of Staff
Director
Deputy Director
Office of Strategic
Management
Deputy for
Strategic Business
Management
Deputy
for
Operations
Sites included:
Charleston Pensacola
Norfolk Japan
Oakland San Diego
Pacific
Director Standards & Compliance
Director
Cleveland Site
Director
Policy &
Performance
Director
Transformation
Implement the High Performing Organization
Operationally, we’ll be implementing our High Performing Organization as a part of this realignment. Although we’ll be eliminating the business lines as we know them today, the DFAS product lines (like travel, civilian pay, contract pay, etc.) will continue.
Align mission work by functional areas
Our new “Standards and Compliance” organization will provide the necessary oversight to monitor the performance and service delivery of each of our business areas, so we’ll retain the benefits we achieved under DBE by making services more standard.
Empower site director with responsibility for all site personnel and functions
We’ll also empower site directors at enduring locations with responsibility for all personnel (excluding corporate organizations like OGC or contracting). For CR personnel at sites that will close during BRAC, there is a proposal to keep you as part of Corporate Resources during the site transition.
Increase electronic processing
Standardize DOD work processes and policies
Shift from focusing on processing of data to providing financial analysis and information
With this realignment DFAS will align work by functional areas and customer groups that we’ll explain more in a few minutes. We’ll do this while implementing electronic processing and teeing up our financial analysis capability.
Implement Phase I (Command and Control), January 2006
We’ll stand up Phase I (Command and Control) in January 2006, followed by full implementation shortly thereafter. There will be more information in the coming weeks on the DFAS realignment through your management team and our ePortal capability.
Corporate Accounting
Mission Area Director
Director
Columbus Site
Sites included:
Dayton
San Bernardino
Omaha
Limestone
Accounting Operations
Mission Area Director
Director
Denver Site
Director
Business Requirements
& Integration
Finance
Mission Area Director
Director
Indianapolis Site
Sites included:
Lawton Lexington
Orlando Rome
Rock Island Europe
San Antonio Seaside
Texarkana St Louis
Disbursing
Mission Area Director
Director
Kansas City
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10. Organizational Structure - FY 2009
Client Executives
Information Technology
Corporate Resources
Internal Review
Acquisition Management Organization
Office of General Counsel
Chief of Staff
Director
Deputy Director
Office of Strategic
Management
Deputy for
Strategic Business
Management
Deputy
for
Operations
Director Standards & Compliance
Director
Cleveland Site
Director
Policy &
Performance
Director
Transformation
Corporate Accounting
Mission Area Director
Oversight
Japan
By 2009 we will be finished with most BRAC actions and will realign responsibility for sites as you see here.
Director
Columbus Site
Accounting Operations
Mission Area Director
Limestone
Director
Business Requirements
& Integration
Finance
Mission Area Director
Director
Indianapolis Site
Disbursing
Mission Area Director
Rome
Europe
Texarkana
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11. Process - FY2009 End State - Operations Highlights
Center of Excellence
Limestone
Center of Excellence
Columbus
Transportation Working
Capital Fund Accounting
Acquisition Accounting
including Contract Pay
Centers of Excellence
Cleveland
Retired and Annuitant Pay
Garnishments
And so when the workload migrates during BRAC between locations, what will DFAS Operations ultimately include within each of our primary locations? Our Centers of Excellence will include Retired and Annuitant Pay at Cleveland, Acquisition Accounting at Columbus, Security Assistance Accounting at Indianapolis, Transportation Working Capital Fund Accounting at Limestone and Medical and Special Ops Accounting at Rome. In addition to acting in the capacity of Centers of Excellence for one of a kind workloads, each of these locations will also support multiple business functions for our DFAS customers.
Also during this time our DFAS Arlington Liaison, Cleveland Bratenahl, Europe, Japan and Texarkana locations will continue mission operations.
NOTE: Briefers should at this point point out the workload and customers for each location.
Center of Excellence
Indianapolis
Security Assistance Accounting
Centers of Excellence
Rome
Medical Accounting
Special Ops Accounting
NOTES:
1. Redundant capability for Travel Pay will reside in Columbus until DTS is fully implemented
2. Arlington Liaison, Bratenahl, Texarkana and OCONUS locations also continue mission operations
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Technology
Enterprise Transition Plan
Enterprise Priorities
Defense Travel System
Defense Integrated Military Human Resources System
Service Enterprise Resource Planning Systems
General Fund Enterprise Business System
Defense Enterprise Accounting & Management System
eCommerce
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Information
Business Intelligence (BI)
Benchmarking
Information Security
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14. Information - Business Intelligence
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15. Information - Benchmarking
Accounting -
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DFAS Summary
FY 2011
FY 2005
30 locations1
13,8792 employees
92 systems
$1,615M operating costs3
70% technicians / 30% professional
Aging workforce
General Schedule Pay System
Fewer locations: 101
9,9152 employees
18 systems
$1,368M operating costs3
70% professional / 30% technicians
Right employees with right skills
Optimum number and mix of civilians/contractors
Pay for performance under NSPS
In conclusion, the DFAS transformation will result in a dramatic reduction in the number of sites over the next few years. We will also reduce our costs to the warfighters, which is a very important outcome for DoD. We will be changing the way work is performed, how people are recognized and rewarded, and provide higher levels of service to our customers.
Change is a difficult and confusing time for many people. Senior leaders in DFAS are committed to training our workforce for the new work processes, moving people to the enduring sites, and helping people make other decisions.
We hope that you are excited about the opportunities that lay ahead and will remain part of the DFAS family. Even if you choose not to relocate, DoD still needs your dedicated and professional support during the next several years.
1 Includes Europe & Japan
2 Source: HR Flash Report September 2005 (civilian & military)
3 Current$
1 Includes Europe & Japan
2 Projected Civilian & Military
3 Current$
Information
People
Leadership & Vision
Structure
Technology
Process
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