1. Transformation Update to DFAS Workforce
<NAME>
Site Director
Defense Finance and Accounting Service
December 2005
Good (morning or afternoon).
As part of our ongoing dialogue with you as members of the DFAS team, we’re going to spend some time together today bringing you up to date on DFAS Transformation. Having recently returned from the DFAS Executive Offsite, several DFAS leaders had the opportunity to hear first hand from our Director and key staff what’s happening internal to DFAS and what lies ahead us and the Department. With so many exciting events on the horizon, including the recent conclusion of the BRAC legislative period, it’s a great time to meet and discuss ongoing events. Specifically, we’ll discuss.. next slide please...
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Agenda
DFAS Transformation
Strategic Goals/Balanced Scorecard
Human Capital Strategy
DFAS Strategic Organizational Alignment
Base Realignment and Closure
Summary
First of all, we’ll review our DFAS Transformation goals and strategy, see how the 2006 Balanced Scorecard has evolved, and what our Transformation blueprint looks like. Then we’ll spend a few minutes reviewing highlights for the National Security Personnel System, how we will experience upgrades to our our future DFAS organization structure from a top down view, followed by an update on DFAS Base Realignment and Closure (BRAC) plans. Finally, we’ll do a brief recap and open the floor up for questions
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Transformation Blueprint
Human Capital Strategy
Information
People
Leadership & Vision
Process
Technology
Structure
Business Intelligence
Benchmarking
Information Security
High-Performing Organizations
Lean6
NOTE: Presenters should briefly discuss the information, technology, process, structure and people components as highlighted in the schematic as discussed at the DFAS offsite, citing one or more examples under each block to set the stage for the remainder of the briefing.
DBSMC
ERPs
eCommerce
BRAC
Centers of Excellence
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Transformation Vision
VISION:
Transforming Today
To Be The Trusted Financial Partner
For Tomorrow’s Warfighter
It’s an exciting time to be in DoD. Within DFAS, in addition to BRAC we’re going to be experiencing refreshing upgrades to our work processes. Our next phase of DFAS transformation has begun.
For our workforce, that means we’re going to be experiencing a shift from a lot of our manual data entry and reconciliation processes to more analysis. So our predominantly technical workforce of today will evolve over time to a workforce with greater analytical capability. This is in part because of the benefits of streamlining processes, implementing systems improvements and achieving benefits from electronic commerce. As the number of systems we’ll be operating on behalf of customers will decrease, so will some of the costs associated with operating today’s applications.
We’ll work together with our customers to standardize finance and accounting business processes, which will also make us more efficient as a service provider. And under NSPS, we can recognize and reward members of our workforce in a manner that truly distinguishes high performers from good solid performers.
Under the BRAC law our footprint becomes smaller as we migrate to 10 locations (5 primary, and 5 other sites). BRAC 2005 provides an opportunity to implement site consolidations, streamline DFAS operations,and support our goal to provide best value to the warfighter. BRAC 2005 allows this to occur in a manner that is equally beneficial to the employee, the customer, and the American taxpayer. So let’s talk now for a minute about how we measure that performance.
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5. Leadership & Vision 2006 Strategic Plan and Balanced Scorecard
Involves senior leaders, external customers, and cross section of internal staff in defining strategic goals and key initiatives
Strategy links to OUSD(C) plan, the BMMP, and PMA
Cascades to mission areas and corporate organizations
Balanced Scorecard:
BSC links directly to DFAS Strategy
BSC Measures are:
More outcome oriented and focused on results
Tied to benchmarked performance targets
Measures track to OUSD(C) plan, the BMMP, and PMA
It’s important to incorporate the strategy and balanced scorecard as part of this update. The metrics that we report on regularly shape our business behavior-- have you ever heard someone say “You get what you measure?” Also, as a high performing DoD entity it’s important for us to realize our vision through a strategy, with objectives and the associated measures.
First of all we should start with some reflection on our FY 2005 balanced scorecard and metrics. When we did analysis and conducted interviews with BSC stakeholders after closing out our FY 05 BSC, there were themes that stood out, including things that didn’t go as well as we had hoped. The group’s conclusions included:
BSC not tightly linked to the DFAS strategy
Measures not fully cascaded across DFAS
Corporate BSC focused too much on President Management Agenda (PMAs)
Little interest in monthly status reports
Perspectives not strategically linked
The objective for this year was to ensure that the appropriate linkages existed. Also, supporting the Business Management Modernization Program and PMA, we ensured that we incorporated items from those initiatives into our DFAS profile when/if it made sense to do so.
And so what’s the FY 2006 strategy and objectives look like?
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6. Leadership & Vision FY06 Strategic Goals
Strategic Objectives
Implement best business practices to increase productivity and reduce costs
Attain operational excellence in finance and accounting services
Integrate e-solutions through state-of-the-art technology
Provide instant access to comprehensive financial data
Deliver financial information on-demand for decision-makers
Provide quality financial analysis and timely advice
Establish dynamic partnerships to execute ERP solutions
Our strategic goals as shown on the left hand side of the slide align to OSD Comptroller’s strategy. Each goal defines the capabilities we will address and objectives we will achieve this fiscal year.
We’ll deliver financial information, specifically timely, meaningful information and advice and by partnering with others to achieve delivery of the enterprise systems being worked by each of our military service and defense agency customers.
We will strive for operational excellence in finance and accounting services through the commitment to standard business practices and by optimizing the use of electronic commerce. Many of you are already using eCommerce applications like Wide Area Workflow and (insert appropriate examples here) to do work for our DFAS customers.
We’ll transform DFAS beginning in FY06 by beginning the implementation of the DFAS BRAC. By implementing the upgrades to our organization structure (including the roll out of our High Performing Organization initiatives) we’ll establish our Centers of Excellence and execute NSPS in the near future.
Finally and perhaps most significantly, we’ll create our success through the dedication and talent of the talented DFAS workforce. We’ll be retooling our skills to meet the requirements of the future. We’ll go through some changes as some of us go forward to other locations, and continue our mission support, while we’ll also add some new team members, while some of us will move on to other great opportunities outside of the Agency.
Fulfill BRAC requirements
Transform DFAS to become a Center of Excellence
Create Centers of Excellence and HPOs
Execute NSPS requirements
Attain a highly professional workforce with indispensable skills and competencies
Reshape workforce to meet mission needs
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7. People Human Capital Strategy
National Security Personnel System (NSPS) Status
Employees will receive the approved pay raise
Implementation is event driven
Labor relations voluntarily postponed
Implementing issuances are in process
Proposed details can be found on NSPS website
Continuing collaboration process occurring with the unions at the DoD level
Implementation schedules will be provided once determined by DoD
Pay Raise: Employees will receive the 2006 pay raise once approved
Employee Transition Plan (Spiral Strategy):
Implement Spiral 1:Assess and certify performance management system
Implement Spiral 2 (FWS, OCONUS employees, and other eligible employees)
SecDef makes determination on Spiral 3 (DoD Labs currently excluded by NSPS statute)
Continuing Collaboration and Development of Implementing Issuances
DoD continues to collaborate with employee representatives in developing implementing issuances (details to carry out provisions of NSPS regulations)
A coalition of unions filed a lawsuit in the U.S. District Court for the District of Columbia to block portions of NSPS regulations dealing with labor relations, mandatory removal offenses, and appeals. After a series of discussions among DoD, OPM, Justice, and those labor unions, the DoD voluntarily agreed to delay the implementation of portions of NSPS until February 1, 2006, at the earliest. This agreement requests that the Court set a hearing on the case in early January. The Department began the continuing collaboration process on December 1. This is the process in which DoD seeks union input on the NSPS regulations' implementing issuances, which provide the detailed guidance on the human resources system (e.g., pay banding, performance management, and job classification).
These implementing issuances will not go into effect before February 1, They will also advise on communication efforts and training implementation. Once we have the implementation strategy from DoD, we will provide updates to all.
NSPS web site has the latest information and includes frequently asked questions. The DFAS e-portal has a hot link to the NSPS website.
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8. Process Accounting High Performing Organization (HPO)
HPO effort began in January 2005
Objectives:
Reengineer accounting end to end processes
Eliminate redundancy in organizations and operations
Anticipate efficiencies through new system implementations
Reduce footprint for accounting operations
Conclusions:
Integrate and enhance end to end processes
Develop accounts maintenance and control function
Establish a corporate accounting organization
Consolidate operations and support functions
Outcomes:
Accounting operations performed at fewer sites
Standardized organization for operations
Significant savings realized through implementation
Improved business processes
HPO objectives included:
Reengineer Accounting end-to-end processes performed, including Finance functions
Eliminate redundancy in organizations and operations by looking for opportunities to standardize
Anticipate efficiencies thru new system implementations including short term (DDRS), and long term (ERPs)
Reduce footprint for accounting operations
Conclusions:
Integrate and enhance end to end processes where feasible
Accounts Payable & Accounts Receivable
Develop Accounts Maintenance and Control Function
General Ledger Reconciliation
Analysis
Link between Business Operations (field processes) and Financial Reporting
Establish a Corporate Accounting Organization
Consolidate financial statement preparation
Standardize business processes for generation and analysis of financial statements
Improve efficiency and value of financial reporting
Consolidate operations and support functions
Perform accounting at fewer sites
Consolidate business office functions & systems support
Outcomes:
Accounting Operations performed at fewer sites
BRAC – 5 sites
Standardized organization for operations
Structure
Staffing
Significant savings realized through implementation
Significant FTE reduction from baseline (FY04)
Improved business processes
Accounts Payable
Accounts Receivable
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Structure 2005 BRAC Law
Grow the DFAS site at Cleveland, OH, to not less than 1,500 Full Time Equivalents (FTEs)
Grow the DFAS site at Limestone, ME, to not less than 600 FTEs
Grow the DFAS site at Rome, NY, to not less than 1,000 FTEs
Maintain not less than the current FTEs1 at the DFAS sites at Columbus, OH (2,064 FTEs), and Indianapolis, IN (2,632 FTEs)
Japan
Europe
Honolulu
Denver
Indianapolis
Cleveland
Columbus
Arlington (HQ Liaison)
Kansas City
Oakland
Seaside
San Bernardino
San Diego
San Antonio
Lawton
Omaha
St Louis
Rock Island
Orlando
Pensacola &
Saufley Field
Lexington
Norfolk
Rome
Limestone
Dayton
Charleston
Red River
Patuxent River
Bratenahl
Site Closed by BRAC
Remaining Site
Site Not Affected by BRAC
Texarkana
As a result of the BRAC Commission recommendations recently passed into law, DFAS will reduce our current 30 sites by 20 locations. In this scenario, our continuing sites will be:
Arlington Liaison
Cleveland
Cleveland Bratenahl
Columbus
Europe
Indianapolis
Japan
Limestone
Rome
Texarkana
In conjunction with our BRAC planning process, business line and corporate organization experts have participated in significant planning efforts to implement these recommendations in a timely and efficient manner. Furthermore the plan considered key business events including the business calendar and the requirement to stabilize work at a site before adding to much additional work to quickly.
The implementation schedule you will see in a moment defines the proposed by location BRAC implementation for site closure. Workload will be realigned incrementally over the next few years in the following timeframe.
Next slide please….
1 FTEs effective EOM August 2005 (Geographic Location Report, Military Personnel Report)
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10. Business Model for Workload Realignment
Create Centers of Excellence
Incorporate customer requests
Align accounting by network
Ensure strategic redundancy
Meet BRAC staffing floors
Use existing excess capacity
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Structure Business Model under BRAC
Schedule Assumptions
End of Fiscal Year requirements and holiday blackout periods were considered:
Accounting - September to October
Accounts Payable (Vendor Pay) - September
Payroll - January and February
Holiday period - last 2 weeks of December and first week of January
Sites with pending lease termination dates (i.e., San Antonio, Oakland) prior to end of lease to avoid penalties/other costs
Complex and comprehensive workload movement and reconstitution requirements - acquisition accounting - are scheduled in 6-month intervals
Other events - such as travel pay transformation - may occur in advance of the site closure
Implementation of HPOs
ERPs and systems consolidation impact
Smaller sites considered
Early workforce migration potential from closing sites located near remaining sites (i.e., Dayton proximity to Columbus/Indianapolis)
Redundancy of operations during closing process
BRAC Risks
Funding
Impact on customer rates
Date funds will be available
Operational Impact
Contracts
Operational capability at gaining site
People
Hiring for the right skills
Training
Attrition of key personnel
Security clearance processing
Customer
Synchronize with customer plans
Consider BRAC impact on customers
Systems
Infrastructure
New implementations
Interfaces
Risk Mitigation
Obtain BRAC funding
Parallel processing
Performance metrics
Tiger teams
Incentive programs
Staff augmentation
Centralized hiring program
Hiring 90 days in advance of defined needs
Initiative Examples
Site surveys
BRAC implementation planning
Customer Advisory Forum
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12. Structure Current DFAS Organization
Functional Model
For those of you who were here in August 2000, you recall that summer of our last visible organization transformation. While we did not change the products and services we delivered, we changed that year to the Business Line and Corporate Organization alignment we’ve known for the past several years. So from 1991 when DFAS was created until late Summer 2000, we were organized geographically. At that time you may remember our field sites depending on their military service customer reported to either DFAS Cleveland, Denver, or Indianapolis.
Then in 2000 during the significant event known as the DFAS Business Evolution or DBE implementation, we shifted our operations to a functional alignment.
We’ve experienced many business process efficiencies and benefits for stakeholders under this alignment model.
As of Feb. 28, 2005
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13. Structure The Case for Change
Customer perspective:
Better service for less
Better information to support decision-making
Clients want improved service and quality at lower cost
Financial perspective:
DoD budget availability declining
Internal perspective:
ERPs and technology – radical changes in our business
BRAC/fewer sites creating more efficient operations
Align responsibility for operations at a single site
Growth and learning perspective:
Changing environment creates human capital challenges
New technology – training & skill gaps
Location – losing institutional knowledge
NSPS – performance based culture
As part of the next phase of DFAS transformation, we re-visit the organizational alignment model to see how it measures up for our future. We believe there is a strong case to retain features like a focus on standard services across DFAS but also place responsibility for operational functions at a site under the site director.
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14. Structure Proposed DFAS Organization
Business Intelligence
Client Executives
Information Technology
Corporate Resources
Internal Review
Acquisition Management Organization
Office of General Counsel
Chief of Staff
Key Points
Retains focus on clients and customers
Provides opportunity to organize along functional lines/Centers of Excellence and consider customer groups
Aligns work along service mission lines
Operational effectiveness must be sustained during transformation
Final organizational structure and staffing to be driven by benchmark standards/HPOs
Partnership between DFAS and client/customers must be maintained and enhanced during transformation
Director
Deputy Director
Deputy for
Strategic Business
Management
Deputy for
Operations
DFAS key leaders and advisors considered a multitude of business operations. They reviewed various business models that during DFAS’s transition the structure would have to:
Align with the DFAS Strategy
Operate from fewer locations
Have the capability to reset quickly to ongoing transformation initiatives
After reviewing multiple business models for large finance and accounting organizations, we decided on the matrix oorganization model, and to deploy it in a flatter, leaner structure.
NOTE: Briefers then should now discuss the key points and wiring diagram.
And so what are some of the operations highlights?
Strategic Management
Transformation
Business Requirements/Integration
Policy/Procedures and Performance
Accounting and Finance Operations
Accounts Payable
Accounts Receivable
Corporate Accounting
Account Maintenance
Disbursing
Travel Pay
Civilian, Military, and Retired Payroll
Standards and Compliance
Note: January 2006 target date for command and control
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15. Structure Roles and Responsibilities
Provide client executive services for DFAS customers
Provide business intelligence for internal and external customers
Oversee HQ Support Organizations
Deputy
Director
Focus on the DFAS core mission
Implement new systems and processes
Standardize operations across product lines
Deputy for
Operations
Executive Level attention is targeted towards
Lead transformation/transition initiatives
Standardize and integrate functional requirements
Integrate and operationalize new systems, policies and procedures into agency business processes
Lead business integration initiatives
Deputy for Strategic Business Management
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16. Organizational Structure - January 2006
Business Intelligence
Client Executives
Information Technology
Corporate Resources
Internal Review
Acquisition Management Organization
Office of General Counsel
Chief of Staff
Director
Deputy Director
Office of Strategic
Management
Deputy for
Strategic Business
Management
Deputy
for
Operations
Sites included:
Charleston Pensacola
Norfolk Japan
Oakland San Diego
Pacific
Director Standards & Compliance
Director
Cleveland Site
Director
Policy &
Performance
Director
Transformation
Implement the High Performing Organization
Operationally, we’ll be implementing our High Performing Organization as a part of this realignment. Although we’ll be eliminating the business lines as we know them today, the DFAS product lines (like travel, civilian pay, contract pay, etc.) will continue.
Align mission work by functional areas
Our new “Standards and Compliance” organization will provide the necessary oversight to monitor the performance and service delivery of each of our business areas, so we’ll retain the benefits we achieved under DBE by making services more standard.
Empower site director with responsibility for all site personnel and functions
We’ll also empower site directors at enduring locations with responsibility for all personnel (excluding corporate organizations like OGC or contracting). For CR personnel at sites that will close during BRAC, there is a proposal to keep you as part of Corporate Resources during the site transition.
Increase electronic processing
Standardize DOD work processes and policies (See next page for notes on Corporate Accounting)
Shift from focusing on processing of data to providing financial analysis and information
With this realignment DFAS will align work by functional areas and customer groups that we’ll explain more in a few minutes. We’ll do this while implementing electronic processing and teeing up our financial analysis capability.
Implement Phase I (Command and Control), January 2006
We’ll stand up Phase I (Command and Control) in January 2006, followed by full implementation shortly thereafter. There will be more information in the coming weeks on the DFAS realignment through your management team and our ePortal capability.
Corporate Accounting
Mission Area Director
Director
Columbus Site
Sites included:
Dayton
San Bernardino
Omaha
Limestone
Accounting Operations
Mission Area Director
Director
Denver Site
Director
Business Requirements
& Integration
Finance
Mission Area Director
Director
Indianapolis Site
Sites included:
Lawton Lexington
Orlando Rome
Rock Island Europe
San Antonio Seaside
Texarkana St Louis
Disbursing
Mission Area Director
Director
Kansas City
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17. Organizational Structure - FY 2009
Business Intelligence
Client Executives
Information Technology
Corporate Resources
Internal Review
Acquisition Management Organization
Office of General Counsel
Chief of Staff
Director
Deputy Director
Office of Strategic
Management
Deputy for
Strategic Business
Management
Deputy
for
Operations
Director Standards & Compliance
Director
Cleveland Site
Director
Policy &
Performance
Director
Transformation
Corporate Accounting
Mission Area Director
Oversight
Japan
By 2009 we will be finished with most BRAC actions and will realign responsibility for sites as you see here.
The accounting HPO team recommended a single site operation for all financial reporting, which included field, Departmental, and DoD consolidated reporting. Today, Departmental Accounting exists at five DFAS central sites.
Corporate Accounting or Corporate Reporting is the migration of all Departmental Accounting to a single organizational structure that is not service specific, performs like functions and processes and utilizes standard systems.
The following events will trigger this change: implementation of DDRS and DCAS; development of horizontal processes; consolidation of functions; and development of a well-trained and diversified workforce capable of working with multiple service customers.
When departmental accounting migrates to corporate accounting, the command and control will change from Site Directors to the Director of Corporate Accounting.
Director
Columbus Site
Accounting Operations
Mission Area Director
Limestone
Director
Business Requirements
& Integration
Finance
Mission Area Director
Director
Indianapolis Site
Disbursing
Mission Area Director
Rome
Europe
Texarkana
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18. Process FY2009 End State - Operations Highlights
Center of Excellence
Limestone
Center of Excellence
Columbus
Transportation Working
Capital Fund Accounting
Acquisition Accounting
including Contract Pay
Centers of Excellence
Cleveland
Retired and Annuitant Pay
Garnishments
And so when the workload migrates during BRAC between locations, what will DFAS Operations ultimately include within each of our primary locations? Our Centers of Excellence will include Retired and Annuitant Pay at Cleveland, Acquisition Accounting at Columbus, Security Assistance Accounting at Indianapolis, Transportation Working Capital Fund Accounting at Limestone and Medical and Special Ops Accounting at Rome. In addition to acting in the capacity of Centers of Excellence for one of a kind workloads, each of these locations will also support multiple business functions for our DFAS customers.
Also during this time our DFAS Arlington Liaison, Cleveland Bratenahl, Europe, Japan and Texarkana locations will continue mission operations.
NOTE: Briefers should at this point point out the workload and customers for each location.
Center of Excellence
Indianapolis
Security Assistance Accounting
Centers of Excellence
Rome
Medical Accounting
Special Ops Accounting
NOTES:
1. Backup for Travel Pay will reside in Columbus until DTS is fully implemented
2. Arlington Liaison, Bratenahl, Texarkana and OCONUS locations also continue mission operations
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19. Insert site specific workload realignment chart(s)
Closing sites will have one slide - Enduring sites will have multiple slides for outgoing and incoming workload Cleveland (3 slides) Columbus (3 slides) Indianapolis (3 slides) Limestone (3 slides) Rome (3 slides)
Let’s take a look at our site workload impacts.
Briefer will discuss workload realignments specific to his/her site.
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20. People Maximum Employee Assistance
Employee transition options include
DFAS will pay PCS costs for employees who move to an enduring site
PPP registration
Retirement seminars
VERA/VSIP
Severance pay
Other federal agencies
Resume and interviewing assistance
Private sector employment
Realignments outside of BRAC (to reduce footprint or other) may not provide the same comprehensive transition options
So to refresh on the transition options for our people during BRAC, DFAS offers a considerable number of transition options for our people. First, unlike some other organizations, payment for PCS for permanent personnel will occur. Having experienced other realignments and consolidations, and if one follows the trend of DoD civilians and previous BRAC rounds, some of us choose not to move with the workload for a variety of reasons. While we hope that more DFAS personnel will take the opportunity for a paid relocation, the reality is we understand for some of us, moving is not an option. What are the overall options and tools available if we don’t move and our site is targeted for closure?
NOTE: Briefer then covers the transition options beginning w/PPP on down, and states that HR will provide additional information and support for each location in conjunction with the implementation schedule. Also remind employees that they can access BRAC HR FAQs on the “AROUND DFAS / BRAC NEWS” community.
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DFAS Transformation
FY 2011
FY 2005
30 locations1
13,8792 employees
92 systems
$1,615M operating costs3
70% technicians / 30% professional
Aging workforce
General Schedule Pay System
Fewer locations: 101
9,9152 employees
18 systems
$1,368M operating costs3
70% professional / 30% technicians
Right employees with right skills
Optimum number and mix of civilians/contractors
Pay for performance under NSPS
In conclusion, the DFAS transformation will result in a dramatic reduction in the number of sites over the next few years. We will also reduce our costs to the warfighters, which is a very important outcome for DoD. We will be changing the way work is performed, how people are recognized and rewarded, and provide higher levels of service to our customers.
Change is a difficult and confusing time for many people. Senior leaders in DFAS are committed to training our workforce for the new work processes, moving people to the enduring sites, and helping people make other decisions.
We hope that you are excited about the opportunities that lay ahead and will remain part of the DFAS family. Even if you choose not to relocate, DoD still needs your dedicated and professional support during the next several years.
1 Includes Europe & Japan
2 Source: HR Flash Report September 2005 (civilian & military)
3 Current$
1 Includes Europe & Japan
2 Projected Civilian & Military
3 Current$
Information
People
Leadership & Vision
Process
Technology
Structure
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