 Business rules (BR) identify which outputs and clients a system or indirect/G&A charge supports o System managers provide input as to which outputs and customers their systems support (Direct and Indirect systems) o BR23 is defined by System Managers during budget formulation; no updates are made during execution 1 Sample Project Code: Fiscal Year Indicator *2107 is the SID for DJMS-AC Output Identifier DJMS-AC Output 03: (Active Duty Military Pay) ARMYNAVYUSAF

2 Costs A Unit Cost Perspective

3 Key Concepts (Workcount Projections & Billing Rates)  All direct, indirect, and G&A costs for a program or output make up its budgeted total cost  An NOR/AOR adjustment is included based on prior year gains or losses  Managers estimate workcounts for the budget in collaboration with customers  Total budgeted cost (President’s Budget) divided by estimated workcounts equals the billing rate  Billing rates are stabilized two years in advance of the year of execution

4 SAMPLE: Output 07--Travel Vouchers Paid - Manual  Manager and customer project a requirement of 512,841 manual travel vouchers paid during the fiscal year  Historical OP 07 productivity rates provide data for estimating labor hours from which labor dollars can be formulated  Other direct and indirect costs are estimated; G&A costs are spread to the output for rate development based off of direct cost proportions

5  DFAS bills three types of reimbursable work for customers: 1) Rate-Based  Consist of “outputs” such as civilian pay, direct billable hours, travel pay, etc.  Actual work counts X by stabilized rates for outputs are basis for customer billing 2) Support-to-Others (STO) Projects  Total project cost is billed to customer 3) Direct Systems Reimbursement (DSR)  Total cost is billed to customer  Bills are generated monthly by the U.S. Treasury Intragovernmental Purchasing and Collections (IPAC) system ◦ Prior to month-end ◦ Some charges are accruals needed for GAAP revenue recognition

6  Charges or billed amounts that are unable to be collected due to lack of funds receipt or funding shortfalls from customer or reimbursements owed to DFAS by the public  Vast majority of the accounts receivable balance is comprised of charges that are unable to bill, also known as suspended earnings or suspended work counts

7 Unbilled Public Debt and Journal Vouchers Financial Statement Subsidiary Reports AR005: Unbilled AR003: Billed but not collected PC016A: Public Debt

 PPBE is critical to DFAS as a WCF ◦ Not profit-driven; rather self-sustaining  Self-sustaining when costs are offset by sales – breakeven basis  Goal is to ensure accurate recovery of costs ◦ Imperative to estimate workcounts accurately ◦ Factor costs into prices to not lose money

11 Work Counts (Sales)-WC001 Bill-AR002 Revenue Subsidiary-AR006 Cash Collection-AR007

12 Initial Goals Workcount VariancesCost Variances Variance Concepts Key Concepts (Variances)  In all cases, revenue is calculated from workcounts X stabilized billing rate  Variances to either workcounts or cost have NOR impacts

 Per Client Executive (CE) funding requests based on budgets, customer provides funding document to Central Revenue Office (CRO): o MIPR, Funding Letter, etc. o CRO shared mailbox for customer submissions o CE Support Analysts identifies Support Agreement # associated with funding documents  CRO assigns customer code to funding and loads into DFAS eBiz system (Project Cost Accounting System (PCAS) module o PCAS contains several key data elements:  Funding Document Number  Funding end date  Amount  Customer code(s)  Project code  Billing is provided separately for each customer funding document o Outputs listed separately on itemized billing reports (AR002)  Include work count, rate, and earnings for rate-based work  Include reimbursable project cost for STO and reimbursable systems costs for DSR if applicable

14  All year-to-date charges (earnings including accruals) appear on customer’s AR002  Per working capital fund rules, billing may not exceed amount of funding  Per working capital fund rules, billing may not exceed amount of charges  Therefore charges are categorized on billing reports as either “Billed” or “Unbilled”  Suspended earnings:  Unbilled charges (on insufficiently funded MIPR) are automatically recorded to revenue and accounts receivable in eBiz  Unfunded charges (no existing MIPR to charge or bill) require a line-by-line scrub by CRO and are then are recorded to revenue and accounts receivable with a monthly journal voucher  Client Executives and their support staffs work with customers to obtain additional funding when required Unfunded: No funding has been received from the customer for services performed Unbilled: The shortfall that occurs when existing funding received from the customer is insufficient to bill all of the cost for services performed