DSN: 2206006

1
DFAS ROME YEAREND CONFERENCE
August 8, 2006
Presented by Director
[phone] DSN
220-6006
2
Agenda

• Welcome you to DFAS Rome
• Current DFAS Rome Operations
• DFAS Future Vision and Transformation
• BRAC Impact on DFAS
• BRAC Impact on DFAS Rome
• DFAS Reorganization Highly Performing
  Organization (HPO)
• Our Workforce and Our Challenge

3
DFAS MISSION
4
Demographics Vital Statistics
DFAS Rome NY Site

• LOCATION Central New York State on Griffiss
  Business and Technology Park
• MISSION Provide Travel Reimbursements, Vendor
  Payments, and Accounting services for our Army
  Customers Worldwide for over 100 Billion per
  year.
• CURRENT ON BOARD 557 Civilian Employees (over
  200 hired since 1 April 2006)
• STATUS 11 YEARS LATER
• Recognized by DoD/Army for providing superior
  customer service
• Employees focused on providing best value
  finance and accounting services
• for DoD
• National/Agency level awards received for
  transformation leadership
• KEYS TO OUR SUCCESS Aggressive customer
  service, a caring workforce, building
  partnerships with our customers, focusing on
  flexibility, communication, and results.

5
Facilities

• A State-of-the-Art Facility
• 10M renovation project completed in 2001
• 50 year permit on building, at no cost
• Plenty of expansion capability
• Building houses 343,764 square feet
• DFAS presently occupies 157,885 square feet
• Office space available to house 1000 employees
• Ample parking for over one thousand employees
  exists today
• Excellent training facilities to include
  computerized classrooms
• Secure area for processing classified materials
• Dedicated, well educated, caring, and highly
  motivated workforce

6
DFAS ROME IN JANUARY
7
DFAS Reorganization 23 Jan 06
Business Intelligence Client Executives Informatio
n 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

• 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
8
DFAS VISION AND TRANSFORMATION
9
Transformation Vision
VISION Transforming Today To Be The Trusted
Financial Partner For Tomorrows Warfighter
10
Transformation Blueprint
Vision Transforming Today To Be The Trusted
Financial Partner For Tomorrows Warfighter

• NSPS
• Human Capital Strategy

People

• Benchmarking
• Business Enterprise Information System
• Dashboard Technology
• Information Security

• BRAC
• Anchor Sites
• Centers of Excellence

Information
Structure
Leadership Vision

• High-Performing Organizations
• Lean/6Sigma
• Customer Service Delivery Model

• DBSMC
• ERPs
• eCommerce

Technology
Process
11
Structure2005 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)

1 FTEs effective EOM August 2005 (Geographic
Location Report, Military Personnel Report)
12
BRAC 2005
FY 2006 (30 Sites) 14,000
FY 2008 (19 Sites)
FY 2009 (11 Sites)
FY 2007 (25 Sites)
FY 2010/2011 (10 Sites) 9,915
Arlington Charleston Cleveland Cleveland
Bratenahl Columbus Dayton Denver Europe Indianapol
is Japan Kansas City Lawton Limestone Norfolk Omah
a Orlando Pacific Patuxent River Pensacola
NAS Pensacola Saufley Red River Army Depot Rock
Island Rome San Diego St Louis
Arlington Charleston Cleveland Cleveland
Bratenahl Columbus Dayton Denver Europe Indianapol
is Japan Kansas City Lawton Lexington Limestone No
rfolk Oakland Omaha Orlando Pacific Patuxent
River Pensacola NAS Pensacola Saufley Red River
Army Depot Rock Island Rome San Antonio San
Bernardino San Diego Seaside
Arlington Charleston Cleveland Cleveland
Bratenahl Columbus Denver Europe Indianapolis Japa
n Kansas City Limestone Omaha Patuxent
River Pensacola NAS Pensacola Saufley Red River
Army Depot Rock Island Rome San Diego
Arlington Cleveland Cleveland Bratenahl Columbus D
enver Europe Indianapolis Japan Limestone Red
River Army Depot Rome
Arlington Liaison Cleveland Cleveland
Bratenahl Columbus Europe Indianapolis Japan Limes
tone Red River Army Depot Rome
Staffing Floor (FTEs)
Site
DFAS Cleveland 1,500 DFAS Limestone 600 DFAS
Rome 1,000 DFAS Columbus 2,064 DFAS
Indianapolis 2,632
Indicates site scheduled for realignment in
fiscal year
Indicates site scheduled for closure in fiscal
year
13
StructureProcess - 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

Centers of Excellence Indianapolis
Security Assistance Accounting Out of Service
Debt
Centers of Excellence Rome

• Medical Accounting
• Special Ops Accounting

NOTES 1. Redundant capability for Travel Pay
will reside in Columbus, OH until DTS is fully
implemented 2. Arlington Liaison (Ft Belvoir),
Bratenahl, Texarkana and OCONUS (Japan, Germany)
locations also continue mission operations 3.
Departmental Reporting was previously known as
Departmental Accounting.
14
Notional End State for the Army Work

• Major Command Supporting Site
• AMC Columbus
• FORSCOM Rome
• IMA Indianapolis
• MEDCOM Rome
• NGB Indianapolis
• TRADOC Rome
• USAREUR Rome

• This includes all accounting and vendor pay
• Civilian Pay for all Army will reside in
  Indianapolis

15
Employee HR Support Services

• Move with DFAS
• Complete mobility survey at Mobility Survey
• Permanent Change of Station
• Chamber of Commerce visits
• Workforce Transition
• VERA/VSIP (37 of employees at closing sites)
• Priority Placement
• Inter-governmental Career Transition Assistance
• Training
• Change Management,
• Team Building,
• Communication Skills
• Interviewing Skills
• Resume Writing
• Retirement Seminars
• State Rapid Response
• Local business and community partnerships

16
Workforce Transition

• Placement Process will
• Support transformation by encouraging people to
  move with their work when their work moves
• Support employees work life decisions by
  providing choices for dates and locations to the
  extent possible
• Balance mission requirements of gaining and
  losing sites
• For enduring sites, facilitate the movement to
  the target structure

17
Placement Process Steps

• Mobility Survey Processfirst
• Closing site employees moving with their work
  when work moves will be placed at enduring site
  in the 08 structure at their current grade
• People who choose not to move with their work
  will be placed in the best fit vacancy
  available
• Employees temporarily promoted to positions not
  aligned with the approved structure will be
  returned to their permanent grade prior to moving
  to enduring sites
• Placement Assistance List (PAL) proceduressecond
• Used to place employees whose position or grade
  are not in alignment with the target structure at
  enduring sites
• Regular recruitment proceduresthird
• Exceptions can only be granted by a DFAS Deputy
  Director or Director of the Agency

18
Performance Matters
NOTE Source for Site Operational Status is
Operations Metrics office
19
DFAS-Rome (Gaining Site)
Ft. Bragg/ Ft. Leavenworth Ft. Campbell/ Ft.
Belvoir Ft. Lewis Ft. Stewart Ft. Jackson
06 Aug
06 Mar-May
06 Jul
06 Aug-Nov
06 Dec
06 Jun
06 Feb
06 Jan
Assume SA/SS/LX as Mission Requires
SA Transition Complete
Notional Plan to Transition SA/SS/LX
SS/LX Transition Complete
Notional Plan to Transition LW
LW Transition Complete
Assume LW as Mission Requires
Establish On-boarding Requirements

• Challenges
• Hiring/security clearance for new employees
• CAPS-Clipper Foreign Currency Fluctuation
• IT Infrastructure (bandwidth, CER)
• HPO Transition in coordination with workload
  realignment (RM buy in to organization change)

• Risk Mitigation
• Aggressive Recruitment with outstanding community
  support
• Some of Seasides Accounting functions moved to
  Rome in Jan 06
• Lexington Accountant functions, BEIS/ELECTRA
  transferred to Rome in Jan 06
• IPR with affected customers to begin phased
  approach to workload realignment
• Creating and resolving detailed issues list

Performance Metrics
April May
June VP Overaged 4.46
4.5 3.2 NULO (120d)
12.2M/363 35M/0 32.9M/51.5K UMD
(120d) 8M/0 7.4M
8.9M
20
DFAS Functional Contacts for Army Customers

• Indianapolis Site Command Group
•        
• Director                     317
  510-2133            
• Deputy Director              317
  510-2136               
• Director of Finance            
  317-510-2133            
• Director of Accounting       
  317-510-3895             
•                    
• Functional Area                 
• Military Pay                            317
  510-3039               
• Travel Pay                      
  317-510-7124               l
• Vendor Pay                        
  317-510-5197              
• Transportation Pay                
  317-510-2464              
• Disbursing                             
  317-510-4273          
• Departmental Accounting        
  317-510-6192          
• NAF Accounting             
  903-334-2763           

21
IMPACT OF BRAC ON DFAS ROME AND OUR CUSTOMERS
22
DFAS Notional Site Closure Schedule
FY 2006
FY2007
Site
Closure Date
Site
Closure Date
Dayton Jan 2007 Lawton Jan 2007 Norfolk Jan
2007 Pacific Mar 2007 St Louis Jun 2007 Orlando
Aug 2007
San Bernardino Jun 2006 Lexington Jun
2006 Oakland Jun 2006 Seaside Jun 2006 San
Antonio Aug 2006
Pax River Oct 2007 Charleston Dec 2007 San
Diego Feb 2008 Omaha Feb 2008 Pensacola Apr
2008 Saufley Field Apr 2008 Rock Island Jun
2008 Kansas City Aug 2008
FY 2008
FY 2009
Site
Closure Date
Site
Closure Date
Denver Oct 2008 Arlington Dec 2008
Enduring Site Work Transfer
Site
Transfer Date
Limestone FY08
23
After Closing of DFAS Sites Work To Be Performed
By Rome
Accounting and Vendor Pay

• Army Mission (vs Base Operation Support - IMA)
• Medical Command for Army and Navy
• Special Operations for Army, Navy, Air Force and
  Marine Corp

Travel Post Payment Audit Function (DTS
Vouchers) Travel Office? Support current
customers (Still being considered) or some other
work Military PCS (Still being considered)
24
Status of BRAC Implementation

• Rome to grow to 1,000 employees over the next 3
  years
• Schedule as follows for 2006
• - Lexington Jun 06 IMA TRADOC Indy
  Switch Oct 06
• - Seaside Jun 06 Travel to Indy Oct 06
• - San Antonio Aug 06 Lawton Jan 07
• Responsible Employer Program Relocation of
  employees
• Work to come into Rome in increments or Phase
• Cooperation from the personnel at the closing
  sites has been outstanding!
• Final details are being worked. Transfer of
  work action items are being
• captured and worked by many of our employees.

25
Status of BRAC Implementation (Cont)

• Director personally involved in all transfers at
  315-330-6006
• Assigned transformation officer, 315-330-6023
• Teleconferences being held weekly with customers
  and closing DFAS site
• Currently doing Lexington, Seaside, and San
  Antonio work and started
• some of Lawton 1 Aug 06
• Phasing in the work for closing has worked very
  well
• Customer conferences being held at DFAS Rome

• MEDCOM Apr 06
• TRADOC May 06
• Yearend All Aug 06
• Others TBD

26
Senior Point of Contact (POCs) for Work Transfer

• NLT Date Site
  Telephone Nbr
• Jun 06 Lexington 315-330-6105
• Jun 06 Seaside 315-330-6105
• Aug 06 San Antonio 315-330-6360
• Oct 06 Indianapolis 315-330-6105
• Dec 06 Lawton 315-330-6102
• Jan 07 Norfolk (SOCOM) 317-510-1980
• Mar 07 Pacific 315-330-6105
• Aug 07 Orlando 315-330-6360
• Feb 08 San Diego 315-330-6102
• Jun 08 Rock Island TBD

NOTE 1. Transfer between Indy and Rome IMA
and TRADOC workload 2. Vendor Pay
315-330-6081 3. DSN is 220
27
DFAS Rome Work Year Increase for
Mission Accounting and Vendor Pay Workload
Date New Workload Site
Closes Employees Cumulative
Prior to BRAC workload 354 Lexington
(Knox Gordon) Jun 06 14
368 Seaside (Huachuca NETCOM) Jun 06
13 381 San Antonio (Army MEDCOM) Aug
06 151 532 Lawton Jan 07
120 557 Norfolk (SOCOM Only) Feb
07 2 Pacific Mar 07
38 Orlando Aug 07 94
Red Numbers - planned
On Board as of 31 July 07
28
DFAS REORGANIZATION HIGHLY PERFORMING
ORGANIZATION (HPO)
29
Accounting BCA/HPO Background

• Accounting Business Line conducted Business Case
  Analyses (BCAs) of DFAS accounting networks
  (vertical and horizontal)
• Looked at competitive sourcing options
• Decision made to pursue HPO option
• Initiated full scale HPO development in January
  2005

30
Objectives for HPO Study

• Reengineer accounting end-to-end processes
• Eliminate redundancy on organizations and
  operations
• Anticipate efficiencies through new systems
  implementations
• Reduce footprint for accounting operations

31
Expected Outcomes

• Accounting operations at fewer locations
• Improved end-to-end processes
• Staffing and compensation in line with benchmarks
• Be prepared for future initiatives
• Significantly reduced cost of business
• Better support for unqualified opinion journey
• Better work for a more professional workforce

32
Building the Organization - Assumptions

• Other business line functions would be merged
  into the HPO structure
• Organization structure would be flattened
• Supervisor/employee ratio would be at least 1 to
  15
• Organization structure would be standard and
  flexible

33
Accounting HPO Savings Drivers

• Consolidation of Operations
• More Efficient Organization Structure
• Anticipated technology improvements
• Process improvements

34
Accounting Field Level HPO Structure
35
Accounts Payable Structure
36
Accounts Payable Directorate Split of Key
Activities
Accounts Payable Directorate combines accounting
and entitlement processes into a mission centric
structure at three sites. This Directorate
accurately and timely records transactions which
establish and liquidates A/P in the general and
subsidiary ledgers, in addition to providing
entitlement computation and initiating payments
to commercial vendors and/or individuals. The
customers supported, in partnership with DFAS,
are an integral part of the process.
Accounts Payable Directorate

• Receive commercial pay documents
• Scan and index documents
• Process payment
• Create electronic payment file
• Maintain tax records
• Prepare 1099s
• Update financial records
• Interfund (Buyer)

• Perform A/P account reconciliations
• Research and clear problem disbursements
• Close A/P sub-ledger
• Coordinate cash management

Customer
Shared Activities

• Place orders for goods and services
• Create procurement instruments
• Approve and forward receipt of goods and services
  
• Establish LOA
• Record commitments, obligations, and A/Ps

• Record corrections
• Address vendor inquiries
• Resolve discrepancies
• Conduct three-way matching
• Contract close-out
• Payment Certification
• Pre-validation
• Validate obligations and A/Ps

37
Accounts Receivable Structure
38
Accounts Receivable Directorate Split of Key
Activities
The Accounts Receivable Directorate is a mission
centric organization with Public and Government
teams performing end to end processing. Account
Manager positions exist to aggressively manage
overage and high dollar receivable balances
through horizontal control. The customer is an
integral part of this process.
Accounts Receivable Directorate
Shared Activities

• Prepares and processes bills
• Post collections
• Establish public A/R
• Process demand letter
• Research and reconciles aged receivables
• Reconciles direct and reimbursable programs
• Prepare and submit debt packages to DMO/DCM
• Process write-offs, post allowance for doubtful
  accounts.
• Resolve unmatched collections

• IPAC
• Prepare A/R reports
• Update financial records
• Reconcile collections
• Perform account reconciliations
• Identify elimination data
• Receivable management
• Interfund (Seller)

Customers

• Coordinate billing cycle
• Resolve billing discrepancies
• Reconcile unfilled orders

• Initiate and post reimbursable orders
• Record earnings

39
Accounts Maintenance Control Structure
40
Accounts Maintenance and Control Directorate
Split of Key Activities
The mission of the Accounts Maintenance Control
Directorate is to maintain general ledger account
balances, perform funds control, record and
maintain property, plant, and equipment accounts
maintain inventory accounts perform payroll
accounting functions and provide research and
analyses support to Accounting Operations. This
directorate will ensure all accounts are in
balance prior to generation of monthly,
quarterly, and annual reports.
Accounts Maintenance and Control Directorate
Customers
Shared Activities

• Maintain and reconcile general and subsidiary
  ledgers
• Post journal entries
• Perform cash reconciliation
• Validate fixed assets
• Maintain chart of accounts
• Close period (month and year)
• Develop metrics
• Customer interface
• Systems Production/Operations

• Establish budget authority
• Establish commitments and obligations

• Perform Transaction Processing
• Perform tri-annual reviews
• Reconcile funds control discrepancies
• Establish closing schedule
• Generate period ending adjustments
• Perform account reconciliations

41
Financial Reporting Structure
42
Financial Reporting - Split of Key Activities
The Financial Reporting serves as the customers
professional accounting staff, presenting all
financial conditions to organizational elements
within the Department of Defense (DoD), Audit
community, and other Federal entities.
Customers
Financial Reporting
Shared Activities

• Authorized funding distribution
• Obligation certification
• Business event resolution

• Timely and accurate preparation and delivery of
  accounting, budget, or financial statements and
  reports (e.g., daily, weekly, monthly, quarterly,
  annual)
• Compile, edit, validate, reconcile, and record
  statements of accountability (monthly expenditure
  and collections data, deposit, and check issue
  data),
• Ensure reconciliation with Treasury (FBWT Fund
  Balance With Treasury).
• Analyze and perform research to clear
  chargebacks, balance cash appropriations totals
  to accounting records, and reconcile deposits and
  transits

• Joint review and certification of
• BE/AFS
• Analyze and resolve abnormal
• balances and discrepancies
• Funding reconciliation

43
HPO Implementation Approach

• Conduct site visits to enduring sites
• Rome - Completed Dec 2005
• Limestone - Completed Jan 2006
• Columbus - Completed Jan 2006
• Cleveland and Indianapolis - Scheduled Feb 2006
• Finalize ConOps
• Finalize organization and staffing levels
• Develop implementation plans for enduring sites
• Move new workload into the final HPO structure

44
DFAS Rome Organizational Chart Before HPO
Implementation
DIRECTOR
FIELD OPERATIONS
ACCOUNTING
SYSTEMS
VENDOR PAY
TRAVEL PAY
45
DFAS Rome HPO Reoganization
Frank Branch
Dave Branch
Sue Branch
Tom Branch
Kathy Branch
Mary Branch
46
DFAS Rome Organizational Chart After HPO
Implementation
Travel Office
Director Deputy Director
Field Support / Business Office
Accounts Maintenance Control
Accounts Payable
Accounts Receivable
47
Rome Philosophy

• EXTERNAL
• 1 priority is quality customer service.
• Partnership with our customers.
• INTERNAL
• Instill core values of individual respect,
  dedication to helping
• customers, integrity, innovation, and teamwork
  (DFAS Rome Values).
• Work to Treat People Right.
• Emphasis on training - Grow our People.
• Always looking to make improvements.
• Communication, Communication, Communication (CCC)

48
Our First Class Work Force
We Commit to the Following
Our Employees Are

• Skilled and trained
• Competent and capable to do the best
• Highly educated
• Sensitive to the customers needs (they care)
• Strive for excellence to thrill the customer!
• Dedicated and highly motivated

• Respect for individuals
• Dedication to helping customers
• High standards of integrity
• Innovation
• Teamwork

Our Philosophy Focus on external and internal
49
Customer Satisfaction From Recent Survey
of
Favorable Responses Category
Rome Actual Timeliness
97 Accessibility
95 Courtesy
94
Reliability
92 Knowledge
90