Finance Orientation & Miscellaneous Topics

EMPOWER & Ground Rules

Communication Minute ― André Gide, Journals, 1889-1949 “The most important things to say are those which often I did not think necessary for me to say — because they were too obvious.” ― André Gide, Journals, 1889-1949 (e.g. explaining in detail in DLMS changes the background and procedures, which may seem obvious to us, but not to all… same for meetings)

Agenda - Major Topics Firehose: Working on: Interfund Billing… take the money and run! Three DLMS Transactions: Bill (810L), Adjustment Request (812R), Reply (812R) Working on: ADC 1043 - Standard Line of Accounting (SLOA) Edits; Supply & Finance PDC 1288 – Supply Status to Bill-to DoDAAC; SLOA ADC 1308 – Extend DLMS Exchange Pricing to Navy FMS Supply/Finance Policy Alignment WG PDC 1309 Planned Initiative – Synchronize Fund Code Tables

Agenda - Backup STORES DLMS Implementation/Customer Master DLMS Bills Failing DAAS DoDAAC Edits Credit Adjustments Army Contractor DoDAACs DHA Mail Order Pharmacy Multi-Year Appropriations Default lines of accounting DoD FM Certification

Agenda – Backup Continued “Offline Orders” Processed Outside Component Ordering System Potential new 821 Obligation Transaction Rolled up Interfund bills Miscellaneous Obligation Reimbursement Documents (MORDs) Credit Adjustments Invoice Processing Platform (IPP)/Intragovernmental Transactions (IGT) More Fund Code Stuff

Billing and Interfund Reimbursement The Interfund billing process is required for capable trading partners and is the predominant reimbursement system used within logistics ($58B/yr.). It is both an automated billing process and a means by which the Seller can immediately reimburse their organization from the funds identified by the Buyer on the order. It may be considered a point of sale (POS) debit transaction. For the Buyer, the bill is really a bill and a notice of funds withdrawn (payment) from their account. Buyer must accept a billing or charge and may seek adjustment if needed. Seller reports the funds transfer between the Buyer’s and Seller’s accounts to Treasury. Buyer may adjust transfers between their accounts, but may not “charge back” or adjust Seller’s account. Narrator: These are high level business rules associated with the billing and reimbursement process. The issue of material on a reimbursable basis ends the order fulfillment process and begins the billing and reimbursement process. For material issues from stock, a source of supply is authorized to bill the customer when shipment occurs. The interfund billing process is required by policy for capable trading partners; it is the primary reimbursement system used within DOD logistics. It is both an automated billing process and a means by which the Seller can immediately reimburse his/her organization from the funds identified by the Buyer on the order. It may be considered a point of sale debit transaction. For the Buyer, the bill is really a bill and a notice of funds withdrawn from his account. The Buyer must accept a billing or charge and clear the in-transit disbursement but may seek an adjustment, if needed. The Seller reports the funds transfer between the Buyer’s and Seller’s accounts to the US Department of Treasury. The Buyer may adjust transfers between his accounts at Treasury, but may not “charge back” or adjust the Seller’s account.

Billing and Interfund Reimbursement Key features of Interfund: Seller’s Central Accounts Office (CAO) (DFAS). Reports the funds transfer to Treasury at the summary level. Only authorized to report transfers for bills which passed DLMS prescribed DAAS edits. Notifies the Buyer’s Central Accounts Office of the transfer by sending summary and detail billing records. Buyer’s Central Accounts Office. Ensures that the Buyer processes the payment. The Buyer must process the charge. Use adjustment procedures to request adjustment of charges, if needed. Narrator: The Seller’s Central Accounts Office or CAO Reports the funds transfer to Treasury at the summery level. No detail or line item billing records are sent to Treasury. Sellers are only authorized to report transfers through their Central Accounts Offices for bills which passed DLMS prescribed edits. The Seller CAO notifies the Buyer’s by sending summary and detail billing records to the Central Accounts Office. Buyer’s Central Account Office must accept the Sellers charge and ensure that the Buyer processes the disbursement. The Buyer must process the charge and request that the Seller initiate any required adjustments to correct billing errors or to follow up on authorized credits resulting from approved discrepancy reports, etc.

Why DLMS? MILS 80 Record Position Fixed Length Transactions Limited data content conveyed in transactions; 80 record positions (rp). Necessary billing data is derived by linking codes in transactions with business rules and external relational Fund Code Tables, using: Service/Agency Code. Signal Code. Fund Code. DLMS Variable Length Transactions Convey all MILS data to support legacy environment. Offer great flexibility to convey additional data beyond MILS 80 RP needed for financial compliance, audit and process improvement. Also uses relational Fund Code Tables to effectively convey consistent data among business partners. DLMS is based on industry Electronic Data Interchange (EDI) standards ASC X12 Implementation Conventions (ICs) release 4010 and 4030. Narrator: The legacy MILS transactions are 80 Record Position Fixed Length Transactions, which severely limits data content in transactions. Data content that can’t be carried in the legacy transaction must be derived by linking codes in transactions with business rules and external relational tables, such as the fund code tables. The three codes below are all within the customer’s MILS requisition; these three codes are used in combination to identify the bill-to party and to map to the appropriate appropriation within the fund code tables, which will be discussed later in this module. The Service/Agency Code is a one character code identifying the Military Service/Defense Agency to whom the customer is affiliated and which Service/Agencies Fund Code Tables apply. The Service Code is the first character of the DoDAAC, which is the first character of the document number of the requisition and the bill-to party. The Signal Code is a one character code in the customer’s requisition that designates which data fields contain the intended consignee (ship-to DoDAAC) and the activity to receive and effect bill payment. The Fund Code is a two character code within the customer’s requisition that relates to an appropriation line of accounting in the SFIS Fund Code to Fund Account Conversion table for a particular Service/Agency. In some cases the fund code also identifies the bill-to party through another relational table, the Fund Code to Billed DoDAAC Table. It also identifies which defense agencies are authorized to use Interfund billing. These relational fund code tables, external to the transactions themselves, were originally developed as a result of MILS 80 record position limitations. Fund code tables are discussed later in this module. The DLMS Variable Length Transactions make it possible to carry as much information to support financial compliance, audit and business process improvement. Unlike the legacy MILS transactions which are limited to 80 characters of data the DLMS have an unlimited data capability. The DLMS transactions also carry and use the Fund Code to assure consistent, approved line of accounting data exchange between trading partners, to assure consistency between the resulting Summary level bill and supporting detail bills, to enable DAAS edits and to support conversion between business partners while in a mixed MILS and DLMS transition environment. DLMS electronic data interchange (EDI) is based on American National Standards, Accredited Standards Committee X12 standards. Later in this module, we will examine EDI and the DLMS 810L Logistics Bill Implementation Convention along with DAAS maps for conversion between MILS and DLMS in more detail. DLMS Video: https://www.youtube.com/watch?v=kC13t3m3yHs&feature=youtu.be

810L, Logistics Bill PURPOSE: DLMS Enhancements Used to bill for sales of material, reimbursable logistics services, and related refunds between DOD Components and participating Federal Agencies. Incorporates the Summary bill and all legacy Detail Bill transactions into a single IC. DLMS Enhancements Standard Line of Accounting (SLOA). Point of Contact information. Narrator: The DLMS 810L, Logistics Bill, is used to bill for sales of materiel, reimbursable logistics services, and related refunds between DOD Components and participating Federal Agencies. The billing processes that the DLMS 810L supports are documented in DLM 4000.25, Volume 4, or MILSBILLS. The primary use is for interfund billing, but the DLMS 810L can also be used to transmit non-interfund bills. Some DLMS enhancements over the MILS formats include the discrete SLOA data elements and Point of Contact information.

MILS - DLMS Cross Reference Extract from MILS-DLMS Cross Reference Available from DLMS Website Narrator: The DLMS 810L provides the functionality to replace over 60 F and G series MILS financial transaction formats. The DLMS 812R and 812L are the DLMS equivalents of 15 MILS billing adjustment request and reply transaction formats. A cross-reference of all MILS to DLMS formats is available on the DLMS website. On the website’s navigation menu, select the DLSS-DLMS Cross ref link and you will be taken to a page were you can select to see the cross-reference in order by either the MILS document identifier or the DLMS implementation convention ID.

812R, Billing Adjustment Request PURPOSE: Used to request adjustment of a Logistics Bill; using billing advise code that identifies the nature of the request or problem. Used to request or follow-up on a promised (validated) discrepancy report adjustment for: Supply Discrepancy - Reply promised Financial Adjustment. Product Quality Discrepancy - Report Accepted. Transportation Discrepancy - Report Accepted. Used to follow up on promised credit for materiel return, including storage quality control report. Used to request copies (retransmission) of bills. Only Table 1 is used. Requests normally done by Web in MILSINQ. Narrator: When a billed Component believes there is an error with a bill, they have to request an adjustment from the billing office. The DLMS 812R Billing Adjustment Request is used to request a change to or reversal of a logistics bill, or follow-up on a previous request for adjustment. Accepted discrepancy reports should trigger the Seller to automatically adjust a bill, but the Buyer may use the 812R to follow-up on promised adjustments. The 812R is also used to follow up on promised credit for material returns, including storage quality control report or request copies (retransmission) of bills. The processes for using the DLMS 812R are documented in DLM 4000.25, Volume 4, Chapter 4.

812L, Reply to Billing Adjustment Request PURPOSE: Used to reply to requests for adjustment of a Logistics Bill; using billing status codes to respond. Replies can be directed to other than the requester. Billing offices must reply to requests for adjustments and follow-up requests. Use the prescribed automated transactions. Sent to the office identified in the request. The actual financial adjustment or refund is provided as part of the normal billing process. Sent to the TAC 3 of the DoDAAC originally charged or TAC 1 if no TAC 3 exists. Same amount as originally charged. Narrator: The Seller will respond to a request for adjustment with an DLMS 812L, Billing Adjustment Reply. The sender of the request can direct replies to be sent to another party. The Billing office must reply to requests for adjustments and follow-up requests using prescribed transactions and send them to the office identified in the request. The actual adjustment or refund is provided as part of the normal billing process. The adjustment is sent to the TAC 3 (billing address) of the bill to party DoDAAC.

Billing Adjustments By Billing Office BAC 34: Requisitioned material received. Request billing status. Seller - delayed revenue Buyer - funds obligated Likely no MRA 107K 8K

Order Submission and Fulfillment Seller CAO Buyer CAO Treasury B UYER Finance Supply Finance S E L L E R Supply *6 .(810L) 6. (810L) DAAS 1 2. (870S) 2. (870S) Narrator: Let’s review the DLMS requisition lifecycle leading to the DLMS 810L Logistics bill. Understanding the lifecycle is useful in researching bills and providing evidentiary matter for audit. The bill is the financial transaction that closes out the requisition lifecycle, but it is not the only transaction that has a financial impact. Information to support bills, billing adjustments and financial inventory valuation originates in supply transactions. [Click 1] In our example for an issue from stock, the 511R requisition from the buyer is sent to DAAS for validation, editing and routing to the designated inventory control point. [Click 2] The source of supply inventory control point, or ICP, acknowledges the order with an 870S supply status transaction indicating intent to fill this order from on-hand depot stock and in step 3 [Click 3] sends a materiel release order to the depot. [Click 4] Multiple things happen in step 4 The depot confirms release to the materiel to the ICP Shipment status is sent to the customer The item is shipped. An issue transaction is sent to the ICP updating inventory balance and financial valuation records Remember that the source of supply or billing office may bill for an item issued from stock when it is dropped from inventory, but billing may not occur for Direct Vendor Delivery, or DVD, items until they are received and accepted. [Click 5] In step 5 the customer acknowledges receipt of the materiel to close out the source of supply in transit record. Depending on source of supply billing cycle, the bill may actually precede the Materiel Receipt Acknowledgment for items issued from stock. [Click 6] And, in step six the source of supply bills the bill-to party designated in the order, which may not always be the requisitioner. We will see later that DAAS performs several validations on the source of supply bills and rejects any bills failing edits back to the source of supply with the reason for reject for rework and rebilling. We will show you later how to see and download copies of rejected bills 1. (511R) 1. (511R) 5. (527R) 5. (527R) 4b. (856S) 4a. (945A) 3. (940R) 4d. (867I) Retail Base 4b.(856S) Distribution Depot * Stock – may bill on drop from inventory; 527R is not required DVD - bill on receipt acknowledgement/acceptance 4c. Item shipped 511R: Requisition (Order) 527R: Material Receipt Acknowledge 810L: Logistics Bill 856S: Shipment Status 867I: Issue 870S: Supply Status 940R: Material Release 945A: Material Release Confirmation

Billing and Interfund Payment 7. Stm of Trans 10. Stm of Trans 8. Collection Buyer CAO Seller CAO Treasury 6a. (810L) 9. Buyer Interfund Report 6c. (810L) 6. Seller Interfund Report B UYER Finance Supply Finance S E L L E R Supply 6. (810L) 6b (810L) DAAS 1 Narrator: This slide depicts interfund billing at a high level following the order fulfillment process. Remember that all transactions pass through DAAS for editing and routing. The Seller’s interfund bill is transmitted through DAAS for editing and onward routing. Bills that fail DAAS edits are rejected back to the billing office and do not reach the billed office. Bills that fail DAAS edits are not eligible for Treasury reporting and revenue recorded by the Seller at the time of billing must be reversed, pending rebilling. Routing via DAAS is determined by Communication Routing Identifiers associated with the bill-to party DoDAAC and the DoDAAC TAC 3. There will be more on this latter in this training. The Seller’s Central Accounts Office (or DFAS Center for DOD entities) reports both the disbursement of Buyer funds and collection of Seller funds to Treasury. The Buyer CAO must accept the Seller CAO reporting ensure that the Buyer records the charges and reconcile any differences and request any required adjustments from the seller. Note that Treasury reporting is only done at the Summary level, for interfund billing. Retail Base 810L Logistics Bill Distribution Depot

Billing and Discrepancy Report Adjustment Requests and Replies Buyer CAO Seller CAO Treasury B UYER Finance Supply Finance S E L L E R Supply Reply (812 L) 6 Reply (812 L) 6 5 DAAS Request (812R) 5 Request (812R) Bill (Credit) (810 L) 3 3 Bill (Credit) (810 L) SDR Reply 842AR 2a SDR Reply 842AR 1 2b Narrator: This slide depicts the credit adjustment request and reply process involving a Supply Discrepancy Report or SDR. [Click] In this case, the Buyer has submitted an SDR for wrong item received and is requesting financial credit in step 1. In DLMS this is an 842AR; there is no MILS equivalent. [Click] In step 2, the distribution depot conducted an inventory and determined that in fact the wrong item was shipped and replied to both the Buyer and the Inventory Control Point recommending that credit be granted. [Click] The inventory control point promised credit in step 3, [Click] and the Buyer returned the wrong item in step 4. [Click] When the Buyer did not receive the promised credit on the next billing cycle, the Buyer submitted a request for adjustment in step 5 using the DLMS 812R to (Request for Billing Adjustment) and citing the appropriate billing advice code. [Click] The Seller acknowledged that the promised credit had not been granted in step 6 using the DLMS 821L (Reply to Request for Billing Adjustment). The promised credit would be issued using the DLMS 810L Logistics Bill in the next billing cycle. Retail Base SDR Reply 842AR SDR Discrepancy Report Submission (842AW) 2 Discrepancy related 1 SDR (842 AW) Distribution Depot Financial related 4 *Return Wrong Item (*Sequence for US. For FMS mat’l returned prior to credit)

ADC 1043 SLOA Edits Insert SLOA data from the SFIS Fund Code to Fund Account Conversion Table into select DLMS transactions where it is missing or upon conversion from incoming MILS to outgoing DLMS. Excludes post-post (after the fact) transactions & bills. Extend edits to Signal Codes A, B, J, K. Reject transactions with missing fund codes when applicable. Reject transactions where SLOA data in a DLMS transaction does not match SLOA data in the SFIS Fund Code to Fund Account Table. Components extend DAAS edits in ordering processes/systems where orders are placed outside of the Component Supply ordering system (e. g. DoD EMALL, call centers, STORES (subsistence), etc. Narrator:

ADC 1043 SLOA Edits Components need to validate fund codes are all up to date and implement fund code edit in all ordering systems. DAAS recently implemented ADC 1043E, extending DAAS SLOA edits to certain scenarios in a phased implementation. Edits were immediately withdrawn from production, when transactions not covered by ADC 1043E were rejected, together with transactions that the edits were designed to catch in order to preclude inaccurate Treasury reporting. Analysis and retesting are ongoing. Meanwhile, no new or resubmitted transactions have been rejected. Edits will not be placed back into production until after resolution of known issues. Narrator:

ADC 1043E SLOA Edits Highlights Not applicable to other signal codes (e.g. D or M for free issue). Not applicable to transactions other than those identified. Not applicable to Service Codes which are not on FCA ( e.g. Federal Agencies, Army FMS (S/A =B), etc.). Not applicable when Interfund billing is not authorized (e. g. most service code H DoDAACs). Note contractor DoDAACs should not be billed via Interfund, but do not reject transaction under Status Code CF. Not applicable when BEGINNING and ENDING POA are blank on the FCA (e.g. FY indicator = # (as BEG & END POA are computed from the Julian date of the transaction) or fund code indicates non-Interfund billing (e.g. XP, etc.)). Narrator:

ADC 1043 Known Issues FMS requisitions do not initially contain a fund code or signal code. How do we exclude them? PDC needed. EBSO/DSCA. FMS orders for Building Partner Capacity cases incorrectly cite the FMS trust fund, vice the correct appropriation. Non- complaint with SLOA. Clarification needed on post-post issue transaction logic. PDC. EBSO. Narrator:

ADC 1043 Known Issues Some rejected transactions contained fund codes which were not on the FCA. Component action. Some single character fund codes remain. Component action. Some Component systems not ready to receive CF and BU status rejections. Lower case letters (FEDMALL). Narrator:

ADC 1043 Known Issues Some signal code C/L transactions did not contain fund codes. If intended to bill to default LOA, use fund code. If intended for non-interfund billing, need new fund code other than XP, which is reserved for FEDMALL credit card billing. Component action. Reserved Fund Codes (e. g. 26 (ADC 1176, DMISA), Y6 (Navy)). Edits did not initially function as intended. Correct known logic issues and component issues, then retest. Components, DAAS, EBSO. RELATED ISSUE. Some confusion exists regarding BK status when errant SLOA data is removed from Supply Status Transactions (PDC 1288, separate EBSO presentation). Narrator:

ADC 1043 Way Ahead Components Implement ADC 1043 SLOA edits in all offline ordering processes (mostly DLA). Implement status code CF and BU reject logic in component systems, so that rejects do not “fall on the floor” or go to the “dead letter file”. Correct known ADC 1043 SLOA reject issues; advise FPRC Chair. Explore system-to-system fund code table synchronization with DAAS. Narrator:

ADC 1043 Way Ahead DAAS Retest ADC 1043 SLOA reject logic using past failed transactions; advise FPRC Chair. Synchronize the Fund Code to Fund Account Conversion Table (FCA) for Signal Codes C & L with the Fund Code to Billed DoDAAC Table (FCB). Only applicable to Service codes on FCA (e.g. excludes federal agencies) Validate that LOA is contained within the OUSD(C) SLOA Master Account File (MAF). When DoDAAD Central Service Point deletes a DoDAAC that is on the FCB table initiate notice to Fund Code Monitor. Fund Code Monitor must either delete the Fund Code or update to valid DoDAAC. Narrator:

ADC 1043 Way Ahead EBSO/DSCA PDC to address FMS requisitions received from countries. EBSO clarify post-post issue transaction logic. There is a code in the beginning segment.  Look for DLMS 511R beginning segment (1/BR02/020 Code A0 or BM) with Action Code J. COA/C01 is the DLA version of post-post. Army version in production and others could implement as needed. So better to use the DLMS code if possible. Narrator:

PDC 1288 Background PDC 1288 addresses a gap that exists when an obligation is not recorded against a requisition or appropriately updated based upon order processing. Missing obligations may be due to an order that is placed outside of a Component ordering system (e.g., orders submitted using web ordering systems). Other instances where the bill-to DoDAAC may not have visibility of the requisition (such as third party billing via the Fund Code to Billed Office DoDAAC Table). Providing supply status to the bill-to DoDAAC allows the financial system supporting the bill-to activity to establish an obligation based on the information conveyed by the status code in the event that one was not previously assigned.

PDC 1288 Background Cont. Financial system will also use the supply status to update the obligation based on the original order data as this information changes during order processing. Order fulfillment systems must support creation of MILSTRIP supply status and financial systems must support use of the supply status to establish or update obligations for requisitions. Components must integrate supply and financial systems to create/adjust obligations based on receipt of applicable supply status. PDC 1288 requires the Defense Automatic Addressing System (DAAS) to provide mandatory supply status to the bill-to DoDAAC. Staffing Note: Components please comment regarding whether routing supply status to the bill-to DoDAAC’s Billing COMMRI vice the Data Processing (DP) COMMRI will route status to the correct financial system for recording/adjusting the obligation. In the absence of an automated interface between supply and financial systems, please comment on whether or not and obligations are adjusted, and if so, how

1288: Bridging the Gap Modify DAAS processes to furnish mandatory supply status to the bill-to DoDAAC based on Communications Routing Identifier (COMMRI). For third party billing, DAAS will retrieve the bill-to DoDAAC from the Fund Code to Billed Office DoDAAC Table (FCB) when necessary pending full DLMS implementation of the bill-to party in the DLMS requisition format. DAAS will transmit supply status to the bill-to party associated with third party billing by legacy DIC AE9. DAAS will provide this status regardless of the M&S code. DAAS will implement this requirement in a way that does not transmit multiple supply status transactions to the same activity. Ref para 4.c. (1) Staffing Note: Components please comment regarding whether routing supply status to the DP COMMRI vice the bill-to DoDAAC’s. Billing COMMRI will route status to the correct financial system for recording/adjusting the obligation.

1288: DLMS 870S and SLOA Modify the DLMS 870S to carry Standard Line of Accounting (SLOA) data content. Source of supply systems processing DLMS 511R transactions containing SLOA data will perpetuate the SLOA data content to the supply status field. Ref. Section 4.c.(2) & (3) Ref. 4.c. (2)

1288: DAAS Actions DAAS will edit supply status transactions for SLOA data content. DAAS will use the Standard Financial Information Structure (SFIS) Fund Code to Fund Account Conversion Table (FCA) to populate SLOA data when no SLOA data is present in the supply status. If discrete values for the SLOA data elements in the transaction do not match data elements from the SFIS Fund Code to Fund Account Conversion Table for the Fund Code in the transaction. Unmatched SLOA data elements are removed from the supply status. DAAS will not reject supply status transactions. DAAS generates a separate supply status transaction (870S/legacy Document Identifier Code (DIC) AE9) with Status Code BK providing an audit trail of the DAAS update to the transaction. REF Section 4.c.(4)

1288: Identified FMS Concerns Navy FMS requisition from customer (Service Code “P”) does not have the signal and fund code from customer. Added by DOD FMS Systems (MISL or SCES). Note this also impacts ADC 1043 series SLOA edits. FMS Media & Status with the Distribution Code will provide duplicative data. Answer: “DAAS will implement this requirement in a way that does not transmit multiple supply status transactions to the same activity.” BK status, indicating that the requisition has been modified may be confusing and make supply events appear out of sequence (e. g. item backordered then BK status received).

1288: FMS Concerns – Multiple Meanings for BK REQUISITION TRANSACTION STATUS CODES Modified Requisition data elements have been modified as requested. Examine data fields in this status document for current requisition data. (2) Used by DAAS on DIC AE9 and by GSA on DIC AE_ to advise that the requisition contained a requisition priority for which the activity was not authorized. The requisition priority has been downgraded as shown and the requisition forwarded for processing.  

1288: FMS Concerns – Multiple Meanings for BK REQUISITION TRANSACTION STATUS CODES Modified Used by DAAS on DIC AE9 to advise that the requisition contained an invalid/expired OSD/CJCS category D project code. The project code has been blanked out and the requisition forwarded for processing. Used by DAAS on DIC AE9 or by source of supply to advise the customer that the requisition priority designator and/or required delivery date (RDD) data fields continued invalid or incompatible data. Customer entry has been modified or blanked out and the requisition forwarded for processing.  

1288: FMS Concerns – Multiple Meanings for BK Continued REQUISITION TRANSACTION STATUS CODES Used by DAAS on DICC AE9 or by the source of supply to advise that submitter’s fund code has been replaced by Fund Code XP requiring non-interfund billing. (6) Used by DAAS on DIC AE9 to advise customers that SLOA data content mismatched to the Fund Code on the SFIS Fund Code to Fund Account Conversion Table has been removed.    The beauty of DLMS… what if we make the DLMS status codes three characters with staggered implementation? “CX” is another candidate. Separate PDC.

1288: MILSBILLS Changes C2.1.7.3. The bill-to party should obligate the entire properly made amount of a reimbursable order when the order is accepted. [FMR] C2.1.7.4. The bill-to party must record obligations in the official accounting records at the time a legal obligation is incurred, or as close to the time of incurrence as is feasible. In no instance will the requesting agency record obligations any later than 10 calendar days following the day that an obligation is incurred. [FMR] C2.1.7.5. The bill-to party must record obligations at the line item level with one requisition per line item. This supports required line- item detail billing for requisitions that will be billed via the DLMS 810L Logistics Bill. Staffing Note: Components, please comment on any business process for which this will be problematic in the near term.

1288: Impacts to DLA/GSA Many off-line ordering processes; each unique: Call Centers Bearer Walk-through STORES (Subsistence) DMLSS (Medical) EMALL/FEDMALL DLA Tailored Vendor Relationship (TVR) DLA “C & E MIPR Replacement” DLA Integrated Prime Vendor DLA Fuels (VILkeys) SOCOM MIPR Replacement DLA KYLOC DHA/DLA Tricare Pharmacy Program (Express Scripts) GSA Self Service Stores GSA Advantage

1288: Actions Components EBSO Respond to PDC 1288; due date extended Address staffing notes. Provide comments. EBSO Address/resolve component comments. Modify from PDC as necessary => ADC.

ADC 1308 - Extend Exchange Pricing Extends Navy MILS exchange pricing process for FMS/ Security Cooperation to DLMS via DAAS map for S/A = P. Security Cooperation Enterprise Solution (SCES) needs for DLMS Implementation. A future Defense Audit Remediation Working Group (DARWG) decision regarding Generally Accepted Accounting Principles (GAAP) with respect to advance credit for Supply Turn-Ins may later nullify this DLMS Change.

Supply/Finance Policy Alignment WG Supports the SES-Level Defense Accounting Solutions Board (DASB). FIAR issue: cost, operational, systems, working capital fund cash-flow and DLMS process impacts for three options for standardizing the Department's accounting to fill a gap in the books while material is in-transit during intra-governmental transfer. FIAR Issue: Lack of Material Receipt Acknowledgement (MRA) FIAR issue: advance carcass turn-in credit for depot level repairables through exchange pricing. See ADC 1308. EBSO Role: provide expert analysis; defer to policy

Synchronize Fund Code Tables Planned initiative (PDC 1309) Synchronize the Fund Code to Fund Account Conversion Table (FCA) for Signal Codes C & L with the Fund Code to Billed DoDAAC Table (FCB). If add or delete to FCA, then add or delete for FCB. If add or delete to FCB, then add or delete to FCA. Only applicable to Service codes on FCA (e.g. excludes federal agencies). Validate that LOA is contained within the OUSD(C) SLOA Master Account File (MAF). When a DoDAAD Central Service Point deletes a DoDAAC that is on the FCB table, => initiate notice to Fund Code Monitor. Fund Code Monitor must either delete the Fund Code or update to valid DoDAAC.

Synchronize Fund Code Tables Concept Combination of Signal Code, DoDAAC and Fund Code provides: A line of accounting for Interfund billing. Identity of a bill-to party. Signal Code Identifies both the ship-to party and the bill to party. Bill-to party may be: Requisitioning DoDAAC (Signal Code A or J). SUPPAD DoDAAC (Signal Code B or K). DoDAAC Identified by the Fund Code (Signal Code C or L). Fund Code Tables Fund Code to Fund Account Conversion Table. Fund Code to Billed Office DoDAAC Conversion Table. Table of H Series DoDAACs Authorized Interfund Billing.

Synchronize Fund Code Tables Signal Code Designates which data fields contain the intended consignee (ship-to) and the activity to receive and effect payment of bills for Signal Codes C or L. When material is to be shipped to activity identified in document number (rp 30-35), Signal Code will be: Code A – Bill to activity in 30-35 Code B – Bill to activity in 45-50 Code C – Bill to activity in 52-53 Code D – No billing required - free issue Code W – Intra-Service use only When material is to be shipped to the activity identified in the Supplemental Address (rp 45-50), Signal Code will be: Code J – Bill to activity in rp 30-35 Code K – Bill to activity in 45-50 Code L – Bill to activity in rp 52-53 Code M – No billing required – free issue Code X – Intra-Service use only

Synchronize Fund Code Tables Table Example AP1.2 APPENDIX 1.2. FUND CODE TO BILLED OFFICE DODAAC CONVERSION TABLE (as of May 1, 2014) FUND (The authoritative source table is located at the DAAS)   Fund Code Billing Address DoDAAC Eff Date/Action APPENDIX AP1.2.A REQUISITIONING SERVICE CODE = A,C,W (ARMY)    FUND BILLING CODE ADDRESS DODAAC 2P DFAS COLUMBUS 23204 W58RG0 1989121 ADD DFAS JDCBB CO PO BOX 182559 COLUMBUS OH 43218-2316 21 DFAS COLUMBUS 23204 W58RG0 2010242 ADD COLUMBUS OH 43218-2559 APPENDIX AP1.2.B REQUISITIONING SERVICE CODE = B (ARMY) How it works: Send bill to DFAS Get DFAS DoDAAC Use LOA from AP1.1 2P BILL VIA NON- INTERFUND 21 021 # 2020

Prior DAAS Fund Code Edits Reject transactions with Signal Code C or L that do not have a fund code on the Fund Code to Billed Office DoDAAC Conversion Table for that Service Code. Reject Transactions for H Series bill-to DoDAACs not on the Table of H Series DoDAACs Authorized Interfund Billing citing other than Fund Code XP (non-interfund). Narrator: DAAS cannot determine if the Buyer is using the correct fund code; only that it is a valid fund code

Example: Fund Code not on FCA, Signal Code A Customer cited Signal Code A, vice C (3rd party billing – LOA 097 X 8242 2899 011 000) Fund Code 48 is not on the FCA table for Signal Code A, B, J, K Order did not pass thru DAAS; DLA ordering system has not implemented ADC 1043E SLOA edits and accepted the order DLA billed charges to Navy default LOA, current year funds, 177180, vice correct LOA Solutions: Implement SLOA ADC 1043E Fund Code Edits in Off-line Ordering Processes Perhaps extend SLOA ADC 1043E Edits to 810L Bills? Narrator: APPENDIX AP1.1.N BILLED SERVICE CODE = N (NAVY) 1. SIGNAL CODE IS A, B, J, OR K: *FUND ACCOUNT* FUND DPT F MAIN SUB DPT SUB TRY BEG END L A AGENCY NARRATIVE EFF ACT CODE REG Y ACCT ALLO TRN ACT SUB POA POA E T DATE CDE CDE R CODE CDE CDE CLS YEAR YEAR G C 40 097 X 4930 FD20 000 003 F X 34 2015125 DEL 45 097 X 4930 FD20 000 003 F X 34 2015125 DEL 47 097 X 4930 FD20 000 003 F X 34 2014330 DEL 49 017 # 1319 U577 000 000 T 19 2014308 CHG 50 097 X 4930 FD20 000 003 F X 34 2014330 DEL

Web Fund Code Example Fund Code to Fund Account Conversion Table (FCA) Most Components apply the fund codes across multiple Service/Agency designations Fund Code to Fund Account Conversion Table (FCA) Fund Code to Billed Office DoDAAC Table (FCB) Narrator: There is not a check that a fund code in FCA w/signal code C/L has a companion record on FCB, and vice versa.

Single Character Fund Codes Proposal is to ensure all fund codes are two character alphanumeric. DAAS identified fund codes with either a single character or use of special characters. Use of pseudo fund code table is problematic. Will require changes to Web Fund Code Application. Will require deleting and/or replacing fund codes. Narrator:

Service/Agency & Fund Code Navy is unique in breaking out all their fund codes by Service/Agency vice grouping. On FCB, Army separate FMS from their other Service/Agency group. Grouping of fund codes introduces potential or significant error, particularly for Foreign Military Sales. Any change in service code grouping would require a DLMS change. Narrator:

Questions

BACK UP DLMS Bills Failing DAAS DoDAAC Edits Credit Adjustments Army Contractor DoDAACs DHA Mail Order Pharmacy Multi-Year Appropriations Default lines of accounting DoD FM Certification Invoice Processing Miscellaneous Obligation Reimbursement Documents (MORDs) Platform (IPP)/Intragovernmental Transactions (IGT) More Fund Code Stuff Offline orders

DLMS Bills Failing DAAS DoDAAC Edits Background: DoDAAC edits added in 2008; not fully implemented Not all orders pass through DAAS, but all Interfund bills do Issues: Seller’s DLMS bills fail DAAS edits Seller has already taken revenue on books and must make a journal voucher entry – Red Flag for audit Typical resolution find a workable DoDAAC, manipulate source transaction; impacts buyer Results in unmatched disbursements and (offsetting) unliquidated obligations creating a difference between buyer and Treasury accounts Offline ordering processes, lack of “customer master” validations is the primary cause Deleting DoDAAC/changing Authority Code after order may contribute

DLMS Bills Failing DAAS DoDAAC Edits DAAS will reject Interfund bill Data Processing COMMRI terminates. No BILL COMMRI. DAAS cannot route bill.

DLMS Bills Failing DAAS DoDAAC Edits DLA Proposed DLMS Change DLA J3 proposal (under development) reaffirms buyer responsibility to provide valid DoDAACs & proposes: Sellers validate DoDAAC existence and authority code in all processes before accepting order Sellers cancel orders with invalid authority codes when: Changes are made to the authority code by the customer without the proper notification of an AM_ transaction to change the bill-to (or ship-to) DoDAAC when order is on backorder. Won’t work if the requistioner DoDAAC does not have ordering authority Orders are submitted through an offline entry system without the proper upfront authority code validation, authority code is incorrect DLA Contact Information Center (CIC) ensure that proper authority code is in place before entering orders into EBS; otherwise, the order cannot be submitted DLA notify the customer with a "Rejection Status Code" via AE9 transaction that will allow the customer 7 days to submit an AM_ before cancellation is made. After 7 days, cancel the order

DLMS Bills Failing DAAS DoDAAC Edits Resolution/Status: Components must do root cause analysis to correct business processes DLA complete internal PDC staffing & provide draft to EBSO. DLA/SoS perform validations to implement DoDAAC edits (including authority codes) in all off-line ordering processes FPRC explore the impact of not allowing failed Interfund bills to be reprocessed via Interfund Bill via non-Interfund with original unaltered source transactions Not clear who the bill-to party would be Would maintain auditability via DLMS transactions Would improve the integrity Interfund billing DoDAAD Team also working this issue

Credit Adjustments Issue: The DLMS credit adjustment process (Legacy DIC FAE/FAR) is not being used or is not being used effectively by ERPs Manual process is extremely labor intensive, prone to error and does not provide Audit evidential matter Resolution/Status: DLA has implemented; other Components are implementing Issued ADC 1213 provided legacy mapping for various types of “bill numbers” in this process: original, duplicate, adjustment, unknown

Billing Adjustments By Billing Office Annual Totals (FY 17 – To Date) TOTAL REQUESTS1 Adjustment Billing Advice Code TOTAL REPLIES2 Billing Status Code Reply to TDR (21) / PQDR (24) / SDR (26) Materiel Received, Request Billing Status (34) All Other Codes Adjustment Rendered for Shown Bill # (DD) Request Rejected: No QDR(EL)/ TDR(EM) on File ARMY 13,046 17 5,578 7,451 USAF 814 6 771 37 51 NAVY 114 47 67 MARINES 63 26 DLA 947,078 801 152,646 793,631 295,905 GSA 23,083 122 21,665 1,296 24,961 23,507 68 1,386 CG OTHER 558 457 101 GRAND TOTAL 984,756 946 181,201 802,609 320,917 297,342   1 - Query for specific occurrences of BACs Incomplete Bill (19) & Request Copy (41) returned zero instances for all S/A. 2 - Query for specific occurrences of BSCs: Retention Period Lapsed (AH); Cited Doc / Bill # not Found (DF); Adjustment Granted Next Billing Cycle (CA); Advised Adjustment Next Billing (DH) returned zero instances for all S/A.

Billing Adjustments By Billing Office BAC 34: Requisitioned material received. Request billing status. Seller - delayed revenue Buyer - funds obligated 107K 8K

Army Contractor DoDAACs Issues: (Not unique to Army) Army is citing Contractor “C” DODAACs as bill-to party for Government Furnished Material (GFM) and citing fund codes associated with Army lines of accounting Government pays for GFM Contractor DoDAAC TAC 3 & Billing COMMRI directs bill to Army When material is Contractor Furnished Material (vice GFM) contractor pays Those orders should correctly identify the contractor as the bill-to party and not cite an Interfund billing fund code Federal vs Non Federal determinations Contractor DODAAC indicates Non-Federal Army LOA is being billed indicates Federal GFM vs CFM Structure of transaction would indicate CFM; shows contractor bill-to Management Control Authority validation of authorized materiel may be problematic for some Components

Army Contractor DoDAACs Issues Continued: Contractors are not authorized to be billed via Interfund LMP (AWCF ERP) bills the “C” DODAAC by Interfund if the fund code is citing an Army appropriation which is not consistent with the regulations GCSS-Army only has Interfund bills in scope and did not expect to see or process any 1080/IPAC billings DLA bills this same situation as Non-Interfund. Bills sent directly to the Contractor address or 1080 IPAC process DLA has many aged open receivables Resolution/Status: (EBSO Recommendation) Structure transactions to designate the Government bill-to party either in the Supplementary Address or use signal code C or L to direct the bill to the correct Government entity via the Fund Code to Billed Office DoDAAC Table. Are there sufficient fund codes for signal code group C/L for each Component? Do we need additional data elements in DLMS to distinguish multiple processes using the same bill-to party via third party billing? DoDAAD Team also has an interest

DHA Mail Order Pharmacy Issue: $2.5B/yr program expected to grow to $6B/yr with new TRICARE requirements Currently billed via IPAC, but wanting Interfund Contactor, Express Scripts, orders from McKesson to fill inventory and DLA bills DHA via a largely manual IPAC process No individual document number per line item - Detail Billing is at the call order number with paper supporting documentation Non-Standard process; DHA has no logistics or financial system associated with this process to receive transactions Many process concerns: SD DoDAAC bypasses MCA edit & shows expired contract; contractor doing acceptance; MRA (ADC199?), FC1/FC2 DIC improperly used; GFM controls, no SDR, but there are (unsupported?) financial adjustments after billing; obligations Resolution/Status: No recent progress. Options: Continue via IPAC Process via DMLSS using Interfund billing & complaint process Request waiver via OUSD(C)

Multi-year Appropriations Issue: The fund code table relies on # (use - Requisition date) and * (use - Bill date) to compute beginning and ending periods of availability Prone to error for multi-year appropriations Seller reports incorrectly; buyer must adjust his LOA at Treasury Initiated by: FPRC Chair Resolution/Status: Web Fund Code has a Multi-year to Indicator identify applicable fund codes Full DLMS implementation of SLOA by all will resolve this DFAS Systems are not yet DLMS capable

Multi-year Appropriation Adjustment Fund Code Table (old) BILLED SERVICE CODE = D,E,F (AIR FORCE) 1. SIGNAL CODE IS A, B, J, OR K: Fund Code Fund Account Eff Date/Action 11 57*3010 1986314 ADD USAF Billing Adjustment at Treasury (Department Code 057) Appropriation Reimbursements Disbursements 57 2005 2007 3010 000 .00 -143,216.28 57 2007 2009 3010 000 00 55,848.27 57 2008 2010 3010 000 00 191,193.53 57 2009 2011 3010 000 00 364,775.27 57 2010 2012 3010 000 00 1,387,974.05 57 2011 2013 3010 000 00 -2,682,147.90 ** For a bill in 2007, which appropriation applies?

Default Lines of Accounting Continued Resolution/Status: Work through audit readiness and FPRC to resolve root causes DLA has the most to do Periodic query of “**” Fund Code by billing office to assess magnitude ADC 1043E Prescribes fund code edits in all processes before accepting orders Indicates that default lines of accounting may be eliminated as a future DLMS Change

Default Lines of Accounting Continued DocID Billing Office Dollar Value Transaction Count FS1 FGZ $750,436.96 7 FHZ $629,106.97 5 FLZ $1,874,991.08 10 NRP $3,453,851.92 474 NUA $1,518.45 9 SMS $2,598,049.11 826 Total   $9,307,954.49 1331 FS2 B16 $4,585.00 1 B17 $6,891.95 2 $525,014.33 8 $503,184.52 6 $266,147.00 4 N35 $223,452.00 $4,911,268.69 680 $5,654.26 $814,638.00 193 $7,260,835.75 903

Default Lines of Accounting Issue: MILSTRIP & MILSBILLS allow use of blank fund code MILSBILLS: “When a fund code is not found on the fund code to disbursement fund account conversion table the appropriation charged shall be assigned as follows: Not auditable; may need buyer adjustment Organization (Billed Service Code) Interfund Default Appropriation Contractor (C, E, L, Q, U) Not applicable, noninterfund Non-DoD (G, Z, HX, Numeric) Not applicable, noninterfund Army (A, W) 21*2020 Air Force (D, F) 57*3400 Navy (N, P, R, V) 17*1804 Marine Corps (K, M) 17*1106 Defense Logistics Agency (S, T) 97X4930.5CBX Other Defense Agency (H) Not applicable, non-Interfund

DoD FM Certification Program Background: The National Defense Authorization Act for Fiscal Year 2012 (Public Law 112-81) provided the Secretary of Defense with the Authority to Prescribe Professional Certification and Credentialing Standards for Financial Management Nov 2013 - DoDI 1300.26 Operations of the DoD FM Certification Program published Applies to civilians/military who perform financial management tasks Initiated by: USD(C) Resolution/Status: Two FM Certification Courses approved: DLMS Functional Lifecycle Web Fund Code training to the community.

Miscellaneous Obligation Reimbursement Documents (MORDs) Issue: In lieu of accepting a MIPR, sellers (DLA and GSA) processes require buyers to record a MORD to support subsequent supply orders Examples: PBL, self service stores, maintenance DFAS (banker) monitors funds status via bills and must post detail bills to clear the bills Potential ADA concerns; no “stop work” internal control At least for USAF, each and every Interfund bill must be manually processed to clear the unmatched disbursement against an unliquidated obligation (best case) Unsustainable manual processing and cost for DFAS and units USAF SES led working group ongoing over the past year; EBSO has been a key participant DFAS systems and underlying USAF and contractor systems are not all DLMS capable nor are they integrated; legacy mitigation strategies are limited and vary by process Resolution/Status: Support as needed; promote DLMS

Invoice Processing Platform (IPP) Intragovernmental Transactions (IGT) Background: OUSD(C)/Treasury Strategic Initiative; Treasury $10M+ Applies to Intra-Governmental Transactions (IGT) Interfund & iRAPT/WAWF currently excluded; there is significant non-Interfund logistics business including all federal agency buys Primarily addressing MIPRs; DLA and components migrating to DLMS Requires initiating transactions, receipt/acceptance, invoice to be entered into IPP. Buyer and Seller must agree prior to funds transfer at Treasury. USMC prototype was all manual. Defined data standards and processes are immature Relates to DoD material weakness for financial eliminations (buyer/seller balances differ at Treasury Relies on GEX for data exchange

Invoice Processing Platform (IPP) Intragovernmental Transactions (IGT) Background: OUSD(C) Audit Concerns Lack of supporting automated transactions Unsupported Journal Vouchers Financial Eliminations imbalance $92B internal + $32B Treasury Treasury/DOD unable to get a clean audit opinion due to IGT Reliance on Seller records; seller must demonstrate performance, e.g. goods provided/received (Interfund has the same issue) Non-Treasury Direct Disbursement (DFAS) Component concerns: seller cash flow, meeting targets, systems and processes, swivel chair, etc. Status: Interfund to be integrated into IGT in FY 2017 Concerns: offline processes, rolled up Interfund bills, miscellaneous obligation reimbursement documents, multi-year appropriations Opportunity: gain OUSD Comptroller visibility and support for needed process changes

Fund Codes – How do they work? Concept: Combination of Signal Code, DoDAAC and Fund Code provides: A line of accounting for Interfund billing Identity of a bill-to party Signal Code: Identifies both the ship-to party and the bill to party Bill-to party may be: Requisitioning DoDAAC (Signal Code A or J) SUPPAD DoDAAC (Signal Code B or K) DoDAAC Identified by the Fund Code (Signal Code C or L) Fund Code Tables: Fund Code to Fund Account Conversion Table Fund Code to Billed Office DoDAAC Conversion Table Table of H Series DoDAACs Authorized Interfund Billing

Fund Code MILSBILLS, AP 1.1 AP1.1 APPENDIX 1.1 DLM 4000.25, Volume 4, April 12, 2012  AP1.1 APPENDIX 1.1 FUND CODE TO FUND ACCOUNT CONVERSION TABLE (as of May 1, 2014)(The authoritative source table is located at the DAAS) ***** ABBREVIATIONS ***** DPT REG CDE - DEPARTMENT REGULAR CODE MAIN ACCT CODE - MAIN ACCOUNT CODE APP LIM SUB - APPROPRIATION LIMIT SUBHEAD DPT TRN CDE - DEPARTMENT TRANSFER CODE SUB ACT CDE - SUB ACCOUNT CODE TRY SUB CLS - TREASURY SUB CLASS LEG - LEGACY MULTI YR FUND IND ATC - AVAIL TYPE CODE FYR - FISCAL YEAR NOTE: BEG POA AND END POA IS BLANK IF FYR = # OR * (CALCULATED BY TRANSACTION) ********************************************************************************  

Fund Code MILSBILLS, AP 1.1 APPENDIX AP1.1.A BILLED SERVICE CODE = A,C,W (ARMY) 1. SIGNAL CODE IS A, B, J, OR K: *FUND ACCOUNT* FUND DPT F MAIN APP DPT SUB TRY BEG END L A AGENCY NARRATIVE EFF ACT CODE REG Y ACCT LIM TRN ACT SUB POA POA E T DATE CDE CDE R CODE SUB CDE CDE CLS YEAR YEAR G C 01 021 # 2020 000 F 2014066 CHG 03 021 0 2040 000 2010 2011 F 1986314 ADD DD 097 X 1030 18E1 019 000 F X 2014037 ADD 2. SIGNAL CODE IS C OR L: 1P BILL VIA NONINTERFUND 2010181 ADD 2B 021 # 2031 000 T 2010242 ADD 21 021 # 2020 000 F 2014066 CHG YT 021 # 1082 011 000 F 2014108 CHG APPENDIX AP1.1.F BILLED SERVICE CODE = D,E,F (AIR FORCE)

Fund Code MILSBILLS, AP 1.2 How it works: 1P BILL VIA NONINTERFUND AP1.2 APPENDIX 1.2. FUND CODE TO BILLED OFFICE DODAAC CONVERSION TABLE (as of May 1, 2014) FUND (The authoritative source table is located at the DAAS)   Fund Code Billing Address DoDAAC Eff Date/Action APPENDIX AP1.2.A REQUISITIONING SERVICE CODE = A,C,W (ARMY)    FUND BILLING CODE ADDRESS DODAAC 1P DFAS COLUMBUS 36253 W25P02 2010181 ADD ATTN ROCK ISLAND JAIQBAC P O BOX 182316 COLUMBUS OH 43218-2316 21 DFAS COLUMBUS 23204 W58RG0 2010242 ADD DFAS JDCBB CO PO BOX 182559 COLUMBUS OH 43218-2559 APPENDIX AP1.2.B REQUISITIONING SERVICE CODE = B (ARMY) How it works: Send bill to DFAS Get DFAS DoDAAC Use LOA from AP1.1 1P BILL VIA NONINTERFUND 021 # 2020

Fund Code MILSBILLS, AP 1.3 AP1.3 APPENDIX 1.3 TABLE OF H SERIES DODAACS AUTHORIZED INTERFUND BILLING (as of May 1, 2014) (The authoritative source table is located at the DAAS) DODAAC BILL-TO ADDRESS H91253 FINANCE AND ACCOUNTING OFFICE MENWITH STATION APO AE 09468   H98230 FINANCE AND ACCOUNTING OFFICE 9800 SAVAGE ROAD ATTN BF211 FORT MEADE MD 20755-6000

Web Fund Code Facilitate legacy and future processes Support Treasury Account Symbol (TAS) & SFIS/SLOA; add key data elements to SFIS Fund Code to Fund Account Conversion Table Enhance edits to improve financial processes; improve audit readiness Facilitate real time update of fund codes by Fund Code Monitors Allow for staging fund codes for future effective dates Replace email distribution of fund code updates with system-to-system synchronization DLA has completed this; working with other Components & Agencies

Offline Orders (Issues) Background: When orders are not originated in a Component’s ordering system: Traditional logistics transactions to support audit evidentiary matter may be suppressed/not initiated Examples: STORES, DMLSS, EMALL, GSA Advantage, Self-service Stores, DLA Tailored Vendor Relationship, DLA Troop Support C&E A single document number may be used to order multiple line items, which is non-compliant and does not support (any) traditional logistics transactions May result in unmatched financial transactions, failed bills, costly resolution, delayed revenue, journal voucher entries, erroneous reporting to Treasury DoDAACs & Fund Codes used may not be appropriate or valid Not subject to DAAS edits prior to seller processing Seller "customer profiles” may not be not current due changes in DoDAAC authority code or fund code

Offline Orders (Issues) Background Continued: Receipt and Materiel Receipt Acknowledgement (MRA) may not be processed in Component systems MRA may not contain a unique document number for each line item (uses contract number, call number, CLIN – see PDC 1170) Obligations may not be recorded at the line item level to support compliant Interfund detail bills at the line item level Some customers requesting IPAC billing due to audit concerns; requires a waiver from OUSD(C) Unable to achieve three way match: obligation/order to receipt to bill DLA currently offers two approaches for customer to record obligation Funds verification process developed for EMALL /GSA Advantage Web service (seller to buyer to seller) - verifies financial data, funds availability and posts obligation before order is placed Point to point user defined files (UDF) for DLA fuels/SOCOM and KYLOC process for uniforms. Components preload obligation data for DLA customer master Fuels/SOCOM is daily; KYLOC is monthly

Offline Orders (Issues) GAO audit GAO-15-198 of USMC 2012 Schedule of Budgetary Activity. For DLA situational awareness, this audit: Notes department-wide material weakness with DLA business systems/processes with resulting inability [of Components] to provide evidentiary matter related to obligations, orders, receiving reports and invoices” [Situation is not unique to DLA] USMC Clean Audit Opinion Withdrawn DLA received “disclaimer of opinion” Relates to DASB policy initiative to synchronize billing, in-transit inventory.

DLMS Procedures (Obligations) DLM 4000.25, Volume 4, MILSBILLS:   C2.1.7. Obligations for Requisitioned Materiel. Establishing an obligation for the proper amount under the requisition document number is essential for the timely and automated processing of interfund bills. Failure to do so is a violation of financial management procedures and may delay processing and increase workload for both DFAS and submitting Component personnel. DoD Components that either (1) establish business processes for requisitioning outside their customer's Component sponsored supply system, e.g., via internet ordering applications, or (2) authorize their own Component personnel to satisfy requirements through the use of external ordering processes, will support adherence to standard DoD financial business processes. C2.1.7.1 DoD Components may authorize manual recording of the financial obligation by the customer as a separate action until such time as an automated interface between the ordering application and a Component-sponsored financial system is available. Where an interface is not available, external ordering applications will alert users to comply with their Component-directed financial procedures.

FMR Policy (Obligations) DoD 7000.14-R Financial Management Regulation Volume 11A, Chapter 3 030404. Appropriation Policy A. Obligation. An Economy Act order obligates the applicable appropriation of the requesting agency or unit upon acceptance of the order by the servicing agency. The entire properly made amount of a reimbursable order should be obligated by the requesting agency when the order is accepted. DoD 7000.14-R Financial Management Regulation Volume 3, Chapter 8 0803 OBLIGATIONS 080301. General A. Ten-Day Rule. Obligations shall be recorded in the official accounting records at the time a legal obligation is incurred, or as close to the time of incurrence as is feasible. In no instance shall obligations be recorded any later than 10 calendar days following the day that an obligation is incurred (to include obligations incurred when invoices are overpaid or duplicate payments are made). Every effort shall be made to record an obligation in the month incurred. Notwithstanding the 10-day rule, obligations of $100,000 or more--per fund citation or accounting line on the obligation document--shall be recorded and included in the official accounting records in the same month in which the obligation is incurred. If an obligation is not recorded within the specified timeframe, the guidance in section 0813 shall be followed.

Some Processes/Systems of Interest Call Centers Bearer Walk-through STORES (Subsistence) DMLSS (Medical) EMALL/FEDMALL DLA Tailored Vendor Relationship (TVR) DLA “C & E MIPR Replacement” DLA Integrated Prime Vendor DLA Fuels (VILkeys) SOCOM MIPR Replacement DLA KYLOC DHA/DLA Tricare Pharmacy Program (Express Scripts) GSA Self Service Stores GSA Advantage

Parallel Approaches  1. Funds Verification and Obligation Process. Records obligation and validates LOA and funds availability via DAAS web service before EMALL/GSA Advantage shopper checks out to initiate the order. In use by Army; USMC to follow near term at FEDMALL implementation; others considering. a. Available today, subject to Component funding and programming. b. Status. May be integrated into EMALL or similar system with user-restricted custom catalog in some cases (C & E). No changes allowed to EMALL/FEDMALL. 2. Buyer Records Obligation on First Status Transaction From Seller. Believe Army systems do this. Works well in cases where there is an NSN or manufacturer cage and part number, but not well for non-cataloged items where item identification would be problematic. Ellen briefed at SPRC/FPRC. Action items to review internal procedures to ensure appropriate financial actions are taken based upon Supply Status; ensure assess enhancements, etc. a. Available today. Not uniformly implemented. b. Status. Generally, Supply and Financial systems are not integrated. c. Plan to add to MILSBILLS

Parallel Approaches 3. User Defined File (UDF). Point-to-point files from DLA to Buyer for fuels and uniforms (KYLOC process). Buyer provides and DLA returns to buyer information needed to record the obligation before DLA bills. Components pre-stage obligation data by various means, including EBS accounts. a. In use today. b. Not SLOA/SFIS compliant. c. KYLOC process for uniforms, obligations posted monthly - non-complaint with FMR 10 day rule; potential anti-deficiency act concerns. d. Fuels posts daily, but goes immediately to “goods receipt” for bill payment. Works for fuels, where the fuel has actually been received. Not well suited for other scenarios. e. DLA is expanding Fuels UDF to USAF DEAMS for TVR, C & E (1) In production now (2) SOCOM has unique DoDAACs tied to each LOA to make this work. (3) Initial population via spreadsheet; then user maintains via EBS access. (4) No integration with between USAF DEAMS financial and USAF Supply systems supporting this process.

Parallel Approaches  4. Initiate Order in Component Ordering System. Army, DLA and EBSO explored taking all of the data requirements associated with orders initiated through DLA Prime Vendor process and having DLA pass back to buyer (Army) the information needed to create a DLMS variable length transaction with extended data in order for buyer (Army) to initiate the order in their system and seller (DLA) to process order with vendor. Traditional Supply/Finance transactions would follow. a. Requires Proposed DLMS Change to add data content to DLMS 511R requisition. Staggered implementation. b. Status. USA dropped initiative. Suggested funds verification process instead. No action ongoing. 5. Potential DLMS 821 Financial Reporting Obligation Transaction. Buyer uploads and seller returns to buyer info needed to record obligation; same as UDF process. a. Draft PDC given to DLA/USAF/SOCOM/DEAMS b. Incorporates SFIS/SLOA data c. Would initially require DAAS mapping from DLMS to UDF d. Systems and process changes would be needed e. Meetings ongoing

Offline Orders “Roll-up” Detail Billing Issue: Interfund bill contains a Summary Bill and up to 494 detail bills linked by common bill number In some processes (e.g. TVR) & for some customers, DLA (GSA & others) suppress detail lines and use a pseudo document number for multiple lines Component (e.g. Army) obligates and clears bill based on the pseudo document number, which may be repeated in subsequent bills with a different price Qty 1 each, NSN/PN/LCN 999999999, unit price (varies in each bill) Interfund bill does not contain true detail bills and is not auditable at the transaction level No policy or procedures, nor is this appropriate FIAR concern; what is the evidentiary matter supporting the bill; why did you pay it? Resolution/Status: Root cause is that Components do not have line item obligations