1. Army Cost Culture A rmy Cost Culture Initiative May 2013 DASA(CE) Ad-hoc Army today Cost Managed Organization Brief to the Honorable Dr. Westphal  Changing Processes Resource Informed Decisions (CBA)  Changing Technology Enterprise Resource Planning ( GFEBS, LMP, GCSS-A, IPPS-A )  Changing People Training Cost Management Changes the Army Culture 1 1

2. Army Cost Culture Cost Management End-to-End Process People 1.Leadership Commitment 2.Training 3.RM Workforce People 1.Leadership Commitment 2.Training 3.RM Workforce Technology 4.Data Quality (ERP) 5.Tools & Models Technology 4.Data Quality (ERP) 5.Tools & Models Process 6.Cost Planning 7.Cost Analysis (CBA,) 8.Cost Integration to Requirement, Acquisition, & Resource 9.Cost Control (LSS) Process 6.Cost Planning 7.Cost Analysis (CBA,) 8.Cost Integration to Requirement, Acquisition, & Resource 9.Cost Control (LSS) Cost Management Changes the Cost Culture

3. Army Cost Culture People 1.Leadership Commitment 2.Training 3.FM Workforce (AFMO) People 1.Leadership Commitment 2.Training 3.FM Workforce (AFMO) Technology 4.Data Quality (GFEBS) 5.Tools & Models Technology 4.Data Quality (GFEBS) 5.Tools & Models Process 6.Cost Planning 7.Cost Analysis (CBA, AoA) 8.Cost Integration to Requirement, Acquisition, & Resource 9.Cost Control (LSS & AFBRT) Process 6.Cost Planning 7.Cost Analysis (CBA, AoA) 8.Cost Integration to Requirement, Acquisition, & Resource 9.Cost Control (LSS & AFBRT) as of May 2013 3 May 2013 Goal: Better Value for Lower Cost Stewardship of nation’s resources Cost informed decision making Continuous improvement Accountability for costs Tracking progress Cost Management Professionals Cost Management E2E Process its Current Maturity Cost Management E2E Process its Current Maturity

4. Army Cost Culture Army Resource Informed Decisions (as of 09 May 13) Army Resource Informed Decisions (as of 09 May 13) 4 May 2013

5. Army Cost Culture GFEBS will provide Multiple Cost Views for Decision Making at Every Level GFEBS will provide Multiple Cost Views for Decision Making at Every Level … provide essential data to transform the Army to a cost culture … provide essential data to transform the Army to a cost culture Army Cost Management Framework GFEBS Technology Enables Cost Management GFEBS Technology Enables Cost Management 5 May 2013 DASA(CE)

6. Army Cost Culture GFEBS Provides Total Cost Visibility 10 views (table) cost visibility for five dimension Polygon 2.Contracts 3.Services Total Cost Visibility Example: 1- Customers by Contracts 2- Customers by Services 3- Customers by Funding 4- Customers by Cost Centers 5- Contracts by Service 6- Contracts by Funding 7- Contracts by Cost Centers 8- Services by Funding 9- Service by Cost Centers 10 –Funding by Cost Centers Total Cost Visibility Example: 1- Customers by Contracts 2- Customers by Services 3- Customers by Funding 4- Customers by Cost Centers 5- Contracts by Service 6- Contracts by Funding 7- Contracts by Cost Centers 8- Services by Funding 9- Service by Cost Centers 10 –Funding by Cost Centers 1. Customers 4.Funding 5.Cost Centers 2. Contracts 3. Services 4. Funding PE 4. Funding PE N * (N-1) / 2 for each FY 6 May 2013 DASA(CE)

7. Army Cost Culture Army Cost Management Training ICAM Cost Flow Methods Analysis and Reporting Practical Exercises Complex Case Studies Cost-Benefit Analysis ICAM Cost Flow Methods Analysis and Reporting Practical Exercises Complex Case Studies Cost-Benefit Analysis PCAM Cost Terms Cost Concepts Fundamentals of Cost Accounting and Cost Management Practical Exercises Cost-Benefit Analysis PCAM Cost Terms Cost Concepts Fundamentals of Cost Accounting and Cost Management Practical Exercises Cost-Benefit Analysis Principles of Cost Analysis and Management Intermediate Cost Analysis and Management CMEX Cost Leadership-Driven Cost Management Cost-Benefit Analysis Value Proposition CMEX Cost Leadership-Driven Cost Management Cost-Benefit Analysis Value Proposition CMCC Managerial Cost Accounting Operations Management Cost Control and Cost-Benefit Analysis Organizational Development for Cost Managers CMCC Managerial Cost Accounting Operations Management Cost Control and Cost-Benefit Analysis Organizational Development for Cost Managers Army Cost Management Certificate Course Cost Management Executive Course 3 Weeks 4 Weeks 4-Hour CBA Training What is CBA? Why do we need CBA? Who are the key players? What Army processes call for CBA What are the processes and methodologies used 4-Hour CBA Training What is CBA? Why do we need CBA? Who are the key players? What Army processes call for CBA What are the processes and methodologies used 4-Day CBA Training Policies, Regulations, Methodology, and Roles Workflow Automation Tools Other Tools Case Studies and Exercises 4-Day CBA Training Policies, Regulations, Methodology, and Roles Workflow Automation Tools Other Tools Case Studies and Exercises GFEBS: Other Training Other Training Online Defense Acquisition University (DAU) Force Management (FA50) Other Training Online Defense Acquisition University (DAU) Force Management (FA50) GFEBS General GFEBS Overview Integrated Process Overview Navigation and Reports Business Intelligence Reporting Fundamentals GFEBS General GFEBS Overview Integrated Process Overview Navigation and Reports Business Intelligence Reporting Fundamentals GFEBS Other Training Cost Management Equipment and Assets Financials Funds Management Plant Maintenance Project Systems Real Property Reimbursable Spending Chain GFEBS Other Training Cost Management Equipment and Assets Financials Funds Management Plant Maintenance Project Systems Real Property Reimbursable Spending Chain GFEBS Online TrainingCost Benefit Analysis (CBA) Training Cost Management Education TBD Slide 7 May 2013 DASA(CE)

8. Army Cost Culture CM Community of Practice AKO Cost Management Community Cost Warrior Newsletter Cost Warrior milSuite web site Cost Warrior Roundtable Cost Warrior Listserv CBA Field Trainers 8 1 May 2013

9. Army Cost Culture Senior Leadership Commitment SECDEF Leon Panetta, 5 Jan 12: New DoD Strategic Guidance—Impact of fiscal constraints We are shaping a Joint Force for the future that will be smaller and leaner, but will be agile, flexible, ready, and technologically advanced. SECDEF Leon Panetta, 5 Jan 12: New DoD Strategic Guidance—Impact of fiscal constraints We are shaping a Joint Force for the future that will be smaller and leaner, but will be agile, flexible, ready, and technologically advanced. SECDEF Robert Gates 24 May 11: …not repeat the mistakes of the past …salami-slicing” approach results in a hollowing-out of the force SECDEF Robert Gates 24 May 11: …not repeat the mistakes of the past …salami-slicing” approach results in a hollowing-out of the force DEPSEC William Lynn, 11 May 11: America’s cut forces after every war: WW II, Korea, Vietnam, Iraq …the Army had to reverse course, rebuild …we’re 0-for-4 in managing drawdowns SECARMY McHugh at AUSA Oct. 10, 2011: Army Bracing for More Budget Cuts No matter what happens, we are not going to have a hollow force We have been analyzing the best ways to meet these challenges, …and do it in a way that truly makes sense. USD (AT&L) Dr. Ashton Carter, June 28, 2010: Better Buying Power: Mandate … …we can't support our troops with the capability they need unless we achieve greater efficiency (doing “more without more”) USD (AT&L) Dr. Ashton Carter, June 28, 2010: Better Buying Power: Mandate … …we can't support our troops with the capability they need unless we achieve greater efficiency (doing “more without more”) Army USA/VCSA memo (30 Dec 2009) Directed CBA's are to be prepared (For APGM and TGM, Force Design Updates, Concept Plans, Part of VCSA portfolio analyses, ACP, BRP, AR2B, etc..) SECARMY McHugh at AUSA, 10 October 2011 USA Efficiency Memo, 2 September 2010 ASA-FM&C Cost Management Memo, 7 January 2011 Army Campaign Plan Object 9.4 and 9.8 OSD SECDEF Memo, 16 August 2010 SECDEF Robert Gates 24 May 11 SECDEF Leon Panetta, 5 Jan 12 USD (AT&L) Dr. Ashton Carter, June 28, 2010 Better Buying Power DEPSEC William Lynn, 11 May 11 9 May 2013 DASA(CE)

10. Army Cost Culture Army Campaign Plan Objective 9 OBJECTIVE: Increase the number of Generating Force (Infrastructure) organizations executing quarterly cost management reviews, increase the use of cost benefit analysis and improve the Cost Management Maturity Model index score. Slide 10 10 May 2013 DASA(CE)

11. Army Cost Culture Army Campaign Plan Objective 9 MeasureBaseline & TargetInitiativesFrequency Output: The number of generating force organizations (operating on GFEBS) that are executing quarterly Cost Management process reviews. -Organizations will be defined by Fund Centers within a Command (ACOM, DRU, and select ASCC). -The baseline for number of organizations executing quarterly reviews will be assessed by Command at the beginning of year (assume start point is zero) -Target Set to Achieve 90% of Army Organizations executing Quarterly Reviews by 2013. -Cost Management Training (Cost Management Certification Course, Cost Mgmt 101, GFEBS Modeling and Deployment) -Issue Survey by Command to Establish Baseline. -Develop requirement linked to GFEBS deployment for conducting Quarterly Cost Management Reviews -Define CP-11 Manpower Requirements to Adapt Workforce for more Analytical Skills Measured Quarterly: Calculated as “ Number of organizations executing quarterly CM reviews / Total number of organizations within command" Output: The number of organizations utilizing Cost Benefit Analysis (CBAs) in making resource-Informed decisions -Organizations will be defined by Fund Centers (for those on GFEBS) or Allotment Serial Number (for those on Legacy Financial Systems) within a Command (ACOM, DRU, and select ASCC). -The baseline for number of organizations utilizing CBAs will be assessed by Command at the beginning of year (assume start point is zero) -Target Set to Achieve 90% of Army Organizations making resource-informed decisions using CBAs by 2012 -USA/VCSA memo (30 Dec 2009) Directed CBA's are to be prepared (For APGM and TGM, Force Design Updates, Concept Plans, Part of VCSA portfolio analyses, ACP, BRP, AR2B, etc..) -Prepare additional ASA(FM&C) guidance requiring use of CBA practices to support Resource-Informed Decision-Making throughout Army -Continue CBA Training, CMCC and Cost Management Training Across Army Measured Quarterly: Calculated as "Number of organizations utilizing CBA's / Total number of organizations within command" Output: The percent improvement in Cost Management Maturity Model (CM3) score index. -Establish Baseline Index Score by organization -Initial Target Set as % Increase from Baseline by Command (Measure Twice per Yr) than % Increase from Previous Period -Direct Initial Army-wide Assessment using Cost Management Maturity Model Survey to Establish Baseline -Reassess at Mid-Year and Year-End (Annually) Measured Bi-Annually: Calculated as “Percent change In index score from previous period by organization" Slide 11 1 11 May 2013

12. Army Cost Culture Cost Management Policy and Guidance Cost Management Policy and Guidance 12 1 May 2013

13. Army Cost Culture Cost Culture Activities Mapped to Process, Technology, and People Cost Culture Activities Mapped to Process, Technology, and People 13 May 2013

14. Army Cost Culture Cost Management Acronyms 14 May 2013