1. Review of Fiscal Law December 4, 2002 DRAFT

2. 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

3. 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

4. Change Management Center 4 DRAFT 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 No wall-to-wall review of Fiscal Law 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.

5. Change Management Center 5 DRAFT Assertions Congress receptive to DoD financial streamlining recommendations DoD Fiscal Policy can accommodate commercial best practices DoD resources available to manage the exercise 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.

6. Change Management Center 6 DRAFT Partnership CMC/OSD (Comptroller) partner to: –Engage key stakeholders to bolster support for Fiscal Law modernization –Scope modernization efforts to address immediate Fiscal Law concerns and impediments –Transform our current way of doing business to respond to dynamic business environment –Craft framework to support and promote business reform and financial modernization

7. Change Management Center 7 DRAFT Basic 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 Financial Management Services, Inc. Two distinct Modules –Financial Management Law –Contract Law Initially specialize in each module –Focus on expertise within each module End product will ensure consistency in overall recommendations

8. Change Management Center 8 DRAFT Review of Fiscal Law Appropriation Law Anti-Deficiency Act Disbursements & Collections Accountability Acquisition Law Procurement Law Financial Mgt Contract Law Fiscal Law Modules Executive Sponsor Change Management Center

9. 9 DRAFT Process CMC Consortium Led by Science Applications International Corporation (SAIC) –Keane Consulting Group –Financial Management Services, Inc. (FMSI) Consortium Has Subject Matter Experts for each Module –Develop As Is Fiscal Law –Conduct interviews with current key decision-makers/managers Basic question: What needs to be changed and why? –Develop Draft To Be Fiscal Law After completion : Submit to Section 800 Fiscal Law Advisory Panel –Current Public/Private Decision-Makers

10. Change Management Center 10 DRAFT Project Organization Advisory Panel & Subject Matter Expert Approach for Fiscal Law Modernization DoD Executive Sponsor Fiscal Law Advisory Panel Change Management Center Team Fiscal Law Subject Matter Experts Fiscal Law Legislative Changes Fiscal Law Contractor Support

11. Change Management Center 11 DRAFT Envisioned Changes Legislative Change Examples Anti-Deficiency Act –Problem - Fund managers can not pay vendors for purchases to required to perform work for working capital fund customers. –Possible Solution - Modify over-expenditure requirement 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) –Possible 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, 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.

12. Change Management Center 12 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

13. Change Management Center 13 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

14. Change Management Center 14 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

15. Change Management Center 15 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

16. Change Management Center 16 DRAFT Next Steps Executive Sponsor Drives Change Establish Executive Sponsor/CMC Partnership Identify & Allocate Funding Identify Scope Identify DoD Technical Resources Identify/Establish Advisory Panel