1. Rebecca Beck Director of Finance - DFAS Columbus
Winning the Procure-to-Pay Battle
Procure to Pay
Rebecca Beck
Director of Finance - DFAS Columbus

2. Supports more people than any other financial agency
DFAS Today
Supports more people than any other financial agency
Pays more vouchers, accounts, and appropriations and funds
Supports DoD in decreasing Overseas Contingency Costs in a complex environment of cost containment 2

3. MOCAS – FYTD 10* (through April)
DFAS – What We Do (2009 Data)
DFAS Mission: Lead the Department of Defense in finance and accounting by ensuring the delivery of efficient, exceptional quality pay and financial information.
Sales & Service - $1.6B
Scope of Business
Military Pay $160.6M
Civilian Pay $ 82.8M
Retiree Pay $ 68.9M
Travel Pay $ 46.9M
Commercial Pay $182.1M
Accounting Services $473.5M
Support to Others $201.7M
Others $355.2M
Processed 181 Million Pay Transactions (6 million people)
Made 7.8 Million Travel Payments
Paid 12.8 Million Commercial Invoices
Maintained Million General Ledger Accounts
Managed $426.7 Billion in Military Retirement and Health Benefits Funds
Made $553 Billion in Disbursements to Pay Recipients
Made $37.7 Billion in Foreign Military Sales (reimbursed by foreign governments)
Account for 956 Active DoD Appropriations
*Source: HR Flash Report 04/30/10
12 sites: Arlington, Cleveland, Columbus, Rome, DMPO (Maryland), Europe (Germany), Indianapolis, Japan, Limestone, Pax River, Pensacola, Texarkana
8 states: Virginia, Ohio, Indianapolis, Texas, Maine, Florida, New York, Maryland
3 countries: USA, Germany, Japan
MOCAS – FYTD 10* (through April)
346,010 Active Contracts
18,970 Active Contractors
615,431 Invoices Processed
$132.1 Billion Disbursed
MOCAS – FY 09
336,819 Active Contracts
18,792 Active Contractors
1,324,577 Invoices Processed
$195.4 Billion Disbursed
MOCAS – FY 08
$214.3 Billion Disbursed
People
13,329 employees * (Civilian and Military)
Located in:
12 sites
8 states
3 countries 3

4. Major Acquisition - MOCAS
MECHANIZATION OF
CONTRACT
ADMINISTRATION
SERVICES
Integrated system supporting post award contract administration
Used by:
DCMA Contract Administration Offices
DFAS
Procurement Offices / Resource Managers
Funding Stations (Prevalidation Business Partners)
Pays More Complex Contracts
High Dollar
Multiyear Contracts
Multiple Deliverables
Makes Financing Payments
Progress payments
Performance-based payments
Commercial item financing
Interim cost payments
- On Line in the 50’s – COBAL Based
- Became MOCAS in 1963
- DLA took over from the Air Force
- Split in 1990 – DFAS/DCMA
- Last major update in the 1980’s
- Defense Supply Agency (DSA) became DLA 4

5. Need for the P2P Initiative: MOCAS Magnitude
MOCAS – FYTD 10* (through April)
346,010 Active Contracts
18,970 Active Contractors
615,431 Invoices Processed
$132.1 Billion Disbursed
MOCAS – FY 09
336,819 Active Contracts
18,792 Active Contractors
1,324,577 Invoices Processed
$195.4 Billion Disbursed
MOCAS – FY 08
339,296 Active Contracts
17,893 Active Contractors
1,139,548 Invoices Processed
$214.3 Billion Disbursed
$180 Billion – Prompt Payment Act (PPA)
MOCAS – FY 07
333,532 Active Contracts
17,645 Active Contractors
1,123,544 Invoices Processed
$158.1 Billion Disbursed
As of April 2010
Unique Contract Structure
Small percentage of “one and done” contracts
Contracts have unique and complicated structures
In some cases, payment processes must take place prior to invoice payment
Business Activity Monitoring (BAM) tool
Prompt Payment /Cash Management
Prevalidation
Invoice Certification
*As of 04/30/10 5

6. P2P - Supports ERP Implementations
Increased Manual Transactions After ERP Implementation
P2P Mission: Decrease Manual Workload in ERP Environment
First deployment was NAVAIR Q2 FY2008
Navy ERP
P2P 6

7. The Procure to Pay (P2P) Initiative
Purpose
To provide a more cost-effective procure-to-pay process in support of equipping and supplying the Services.
Goals
Standardization and consistency
Identify areas that require manual touch points
Identify areas that require Policy and Procedure changes
Scope
Manual process or touch points
Initial scope Navy with the ability to export to other components
Main P2P entitlement system analyzed is MOCAS
Failure of the alignment
leads to delays and
mismatches in expenditures
that delays critical
information needed to
manage the Program.
The mismatch of information
delays impacts payments
to vendors, inhibits the
government from meeting
contractual obligations,
creates rework, and impacts
the ability to close contracts.
Program Managers
Acquisition
Logistics
Finance
Incompatible Datasets surrounding CLIN/SLIN/ELIN between SPS, Navy ERP, WAWF and MOCAS creates the need to manually intervene on a high percentage of transactions. Initiative is to review the end to end process to identify core elements of inefficiencies and make recommendations on how to achieve significant improvement. Similar conditions will exist when other services/agencies move forward with their ERP transitions.
Goal – to reduce errors on electronic documents, increase automatic invoice payment rate, and to provide electronic solutions to eliminate manual processing.
The failure to align
requirements across the P2P
process leads to inefficient
material management.
Disconnects in the level of
data between contractual
and accounting requirements
leads to manual process
in entitlement, prevalidation,
and disbursement posting. 7

8. P2P Projects Targeting Identified Gaps
Core Processes:
Goods Receipt
10 Gaps
Invoice Receipt
15 Gaps
Expenditure
13 Gaps
Purchase Requisition
9 Gaps
Purchase Order
11 Gaps
Procure Pay
P2P Projects to Improve Core Gaps in Process :
Requirements Alignment
Data Driven Contracting
Contract Quality
Preponderance of Funds

9. Requirements Alignment
Proposed Solutions
Problem:
Non standard and manual data in P2P front end (e.g., ELIN) is driving rework throughout the P2P process.
Solution:
Focused Improvement Pilot
Isolate the minimum data requirements necessary for P2P processes across functional areas
Using Lean6 methods, establish a pilot with a specific customer and contract type
Status:
Team has 30 days to identify resource requirements 9

10. Requirements Alignment
Exhibit Line Item Number (ELINs)
Problem: ELINs not sent as part of Contract Data
ELIN text is provided through contractual attachments
ELINs require manual input
DFARS 10

11. Requirements Alignment
ELIN Alignment
CLIN 0001
Contract
Accounting
ELIN
Entitlement
Inventory
Disbursement 11

12. P2P Success with ELINs
DoD policy change requiring these contract line item numbers to be passed as data fields in lieu of images
Automates the process
Eliminates significant delays, reduces rework, and lowers costs previously rising from manual contract input, prevalidation, and disbursement posting
Since September 2009, the Navy, as the first Military Department to use this solution, successfully began transmitting electronically contracts containing ELINS to the entitlement and accounting systems
Overall baseline figures indicate the ELIN solution will impact approximately 17,000 contracts and 400,000 ELINs
Rework from the manual contract load, obligation validation and disbursement posting is steadily declining 12

13. Special Payment Instructions Timeline
Data Driven Contracting
Special Payment Instructions
Problem:
Special payment instructions required manual intervention. During fiscal year 2009, more than 20,000 contracts were manually entered. Delay in contract closeout notices are increasing administrative costs, reconciliation and delaying recovery of excess funds to obligate for other procurement, etc.
Solution:
DFARS PGI case added clause driven payment instructions and eliminated manual text.
Status:
Special Payment Instructions Timeline
Published clauses and instructions in DFARS – Oct 15, 2009
Begin updating Entitlement systems at contract level – August, 2010
Initial set of instructions as text published in DFARS PGI
(processed as text)
(not in tables)
FY 2006
FY 2007
FY 2008
FY 2009
FY 2010
FY 2011
Benefits:
Facilitate end-to-end electronic processing (API rate)
Reduce interest payments
Accurate payment of the contract
Required contracting system tables to be updated – April 1, 2010
MOCAS accept special pay instructions at CLIN level - July, 2011
DFARS case linked numeric IDs to payment instructions

14. Data Driven Contracting
Contract Closeout
Problem:
In the current business environment, there is limited visibility on contract closeout. Accounting systems are not notified that contract closeout has occurred.
Solution:
Contract Closeout ECP to electronically post notifications to EDA in FY11.
Benefits:
Preparation for system conversion
Improved communication
Reconciliation and audit ability
Visibility of funds remaining and financial status
New obligation existing funding
Status:
MOCAS system changes being prepared to be submitted to the Operational Requirements Committee.

15. Data Driven Contracting
Electronic Document Access
Problem:
Availability of contracts and contract data in Electronic Document Access (EDA) system.
Solutions:
EDA Scorecard.
Transition to Procurement Data Standard. (PDS)
Policy for Procuring Contracting Officers to be registered in the Electronic Document Access (EDA) system:
Over an 11.5% increase!
Status:
EDA Scorecard in pilot production expected June, 2010.
PDS Phase I in test.
Green lines are new or modified parts
Interim Step

16. Data Driven Contracting
EDA Scorecard Q1 FY10
Goal: High 90%
DoD Total
75.3% EDA PDF Match to FPDS
36.9% EDA XML Match to FPDS
Excluding DLA
90.6% EDA PDF Match to FPDS
50.0% EDA XML Match to FPDS

17. Contract Quality
Overview
Problem:
Problems in contract structure and distribution can cause significant manual intervention and rework to process the contract and actions resulting from the contract, i.e. receipt and acceptance, invoice processing, expenditure and disbursement processing.
Solution:
Implement SPS for all customers
Complete SPS/MOCAS interface for modifications
Implement SCRs to improve data mapping
Introduce data validation within SPS

18. Success with Standard Procurement System (SPS)
Contract Quality
Success with Standard Procurement System (SPS)
SPS to MOCAS Interface for Contracts:
Navy – all sites
Air Force – 55 sites
USMC
WHS
MDA
Next Steps:
DTRA
Army
Testing SPS Solution with Contract Modifications - Go “live”~ Summer 2010
Past State: PDF File
(Manually Reviewed and Input into System
EDA (Electronic Document Access System)
MOCAS (Entitlement System)
(Contract Writing System)
SPS to MOCAS feed:
-Navy implemented in June 2009
-This solution has been expanded to 55 Air Force sites since October FY 10
-Army is planning on implementing SPS solution in FY 10, approximately 12 sites
-Modifications estimated for July 2010
SPS to MOCAS Interface
- Successfully completed the upgrade of the mapping and preliminary tests on the SPS to MOCAS modification interface
- Ability to electronically translate the SPS 860 or modification from the contract writing system into MOCAS
- Estimated 70% of files translate correctly
Contracts Now
Transfer Systemically!
MODs in FY 10! 18

19. MOCAS System Enhancements
Contract Quality
MOCAS System Enhancements
To further improve the MOCAS acceptance rate, the P2P team developed 4 System Change Requests (SCRs)
Mandatory Review Code – Eliminate manual effort by DFAS to have to manually review simple contracts without financing
Accept Alphanumeric Units of Measure – Allow for more contracts to be submitted and accepted
Issue by DoDAAC & Ship-to-Code – Eliminate the failed contracts that did not pass a valid ship-to DoDAAC
Automatically Recycle Processed Electronic Contracts – Allows for more electronic contracts to process
SCRs:
Contract Closeout ECP to electronically post notifications to EDA in FY10
3 of the 5 MOCAS SCRs scheduled with testing and implementation dates
Remove mandatory manual 9 review; implementation - October 14, 2010
Reprogram MOCAS to accept Alpha/Alpha or Alpha/Numeric units of measure – April 27, 2011
Insert “Z + 6-position Issue By DoDAAC” in NSN field whenever a NSP ELIN is received and no responsible party is identified as the destination acceptor for the ELIN / Automatically code ship-to DoDAACs as “U” on electronic contracts; implementation - May 31, 2011
Program MOCAS to automatically recycle/retry processing rejected electronic contracts – Not scheduled yet
Functionally to allow release of short payment – Not scheduled yet 19 19

20. Initiatives to Continue Improving EC Rate
Contract Quality
Results
Contracts
FY08
FY09
FY10
Navy
18.1%
16.8%
40.2%
Air Force
31.7%
29.8%
32.9%
Army
35.8%
36.9%
38.4%
DLA
93.5%
88.9%
92.8%
All
47.1%
49.2%
61.9%
* Reflects all contract writing systems
* FY10 data as of March 2010
Initiatives to Continue Improving EC Rate
Implementing Army SPS – MOCAS interface to 12 sites
Developing procurement trends and analysis
Reduce or eliminate improper use of informational SLINs
Roll-out ELIN solution
Continue cross-agency lean6 certifications

21. Enterprise-level initiatives
Contract Quality
Enterprise-level initiatives
Problem:
Reduced systemic processing of contracts and invoices are due to cascading errors within the P2P process, such as missing Ship-to-Code and Not Separately Priced (NSP) Exhibit Line Item.
Current business practices do not reflect the increase in system assurance, for instance, manually reviewing simple contracts under $100k.
Solution:
Enterprise level initiatives:
Standard Procurement System Improvements
Validate Ship-to-DoDAAC during Contract Construction.
Reprogram informational Sub-CLIN to be in compliance with the DFARS
Electronic Document Access – Contract Deficiency Report (2 SCRs)
Status:
Developing Business cases. Estimated Closing Date – June 10

22. Procurement Data Standards EDA (Electronic Document Access System)
Preponderance of Funds
Procurement Data Standards
Problem:
Financial Managers have limited capability to see their own funding on outside entity documents.
Solution:
Procurement Data Standards Implementation:
Funding notification sent to Financial Managers at the time the contract is posted to EDA which provides visibility for Financial Managers to see notifications when funding is provided by other services on the contract. (See diagram below).
Status:
PDS solution currently being tested.
Procurement Data Standards
EDA (Electronic Document Access System)
Funding Notification
(Contract Writing System)
(Management)
Benefit Adds Visibility!

23. Preponderance of Funds
Memorandum
Problem:
In today’s current environment, the ERP systems have demonstrated limited readiness to process multi-service funded contracts.
Solution:
PoF memorandum:
Use MOCAS as interim solution.
Objective:
Need Components to configure and implement ERP capability to process transactions for others (TFOs) and transactions by others (TBOs).
Status:
Memo in coordination.
Action: Require all stakeholders to reach concurrence.

24. P2P Accomplishments Increased Electronic Acceptance Rate
Standard Procurement System (SPS) to MOCAS Interface
Contracts (Navy and Air Force)
Contract Modifications
Improvements to Entitlement System (System Change Requests (SCRs) to MOCAS)
Enhanced Special Payment Instructions
Procurement Data Standard Implementation
Increased Electronic Document Access (EDA) / Contract Deficiency Report (CDR) Registration Rates by over 11.5%
Navy ELIN Solution
EDA / CDR
The team drafted an OSD policy change signed by Acquisition, Technology and Logistics (AT&L) requiring all Contracting Officers (COs) to be registered in the Electronic Document Access (EDA) system. When used, EDA enables extensive savings through cost avoidance of mailing documents, maintaining physical files, and ensuring that processing partners share common, complete, and current information. Obtaining an EDA account promotes effective communication and enables the second action taken by the team, which was to more thoroughly identify then notify contracting officers of contract defects using the Contract Deficiency Report (CDR). Use of the CDR was not uniform within DFAS. As a result, contracting officers did not always know of the defects which meant that defective contracts were generating payment anomalies indefinitely. In response of the team’s findings, DFAS implemented a policy requiring the use of the CDR by all technicians. Prior to mandating registration of an EDA account, there were 22,474 Procurement and Administrative Officers with active CDR accounts. In a few short months, the number of registrations increased to 25,439, representing an initial increase of 11.66%. This policy improvement will have notable savings on the billing rate for the DoD financial community.
Informational SLINs
UMDs in DAI due to info SLINs, January/February 2010:
Successfully determined a root cause of the high number of unmatched disbursements in DAI after testing the DCAS interface
Removed the informational sub line item number from the contract, approximately 2,400 contracts were corrected
Line Items for Dummies, February 2010:
Reviewed common question areas on line item construction, provided guidelines and regulatory references for their solutions, discussed the new Procure to Pay Blackbelt initiatives to improve how line items are created and processed in the Department
Informational SLIN working group, April 2010:
Proposed DFARS case on an alternative line item structure (Sumpter/Propert/Lowery)
Procurement trend analysis:
Columbus entitlement systems within the Department of Defense from fiscal years 2006 to 2011
The level of detail incorporated into the analysis was conducted down to the sub-project level for the Office of the Secretary of Defense (OSD), Army, Air Force, Navy and the top procurement spending Military Departments.
Goal is to be able to forecast resource allocation more efficiently based on the procurement changes and priorities of OSD. 24 24

25. The P2P Initiative Moving Forward
Implement additional MOCAS Improvements
Increase electronic rates
Apply SPS solution to all Services
Roll out contract interface to the Army/DTRA
Implement SPS/MOCAS interface for modifications
Continue to reach goals:
Standardization and consistency
Identify areas that require
manual touch points
Identify areas that require Policy and Procedure changes
Develop informational Sub CLIN Solution 25

26. BACK UP 26

27. Prompt Pay Act $ Disbursed Overage Invoice Percentage
MOCAS Operations at a Glance
Interest $ Per Million
Prompt Pay Act $ Disbursed
FY10 Goal $55
In Billions
$195
$180
$74
$148
$158
$56
$59
$116
$52
$51
Interest Paid
Overage Invoice Percentage
Goal 2%
In Millions
Data as of April 2010
FY 10 Goal $/Mil for MOCAS
April 2010 metrics:
Int $/M = $59
Total Int $ Paid = $6.8M
Total PPA $ Paid = $116.4B
Overage = 1.71%
$14.5
2.01%
$9.17
1.71%
$7.64
$7.99
1.56%
$6.8
1.19%
.98%
FYTD as of 04/30/10 27