Assistant Secretary of the Army for Financial Management

Assistant Secretary of the Army for Financial Management & Comptroller 2015 Washington-ASMC National Capital Region PDI Honorable Robert M. Speer 3 Mar 2015

Army Budget (BU) MG Thomas Horlander 2

America’s Army PACOM JAPAN 2, 360 SOUTH KOREA 19, 790 ALASKA 11, 860 HAWAII 21, 980 OEF – PHILIPPINES 120 NORTHCOM EUCOM CONUS SPT BASE 19, 080 USAREUR 27, 270 CENTCOM OFS – AFGHANISTAN 9, 030 OAR – BALTICS & POLAND 960 SOUTHCOM OJG – BALKANS 710 AFRICOM JTF – BRAVO 430 JTF – HOA 900 OUA – WEST AFRICA 1, 010 132, 000 SOLDIERS IN 150 LOCATIONS WORLDWIDE OSS – KUWAIT 10, 500 OSS – QATAR 1, 650 JTF – GTMO 1, 540 OTHER WORLDWIDE OPERATIONS 10, 760 OIR – IRAQ 2, 020 OSS – JORDAN 890 MFO – SINAI 690 As of: 24 Feb 15 v The world is experiencing an increased velocity of instability v America’s Army remains indispensable to National Defense v Nine of ten active Army division headquarters are actively engaged around the world v The Army is the backbone of the Joint Force, providing command control to Joint Forces, setting and sustaining theaters, and securing and controlling people and terrain 3

Army Topline At FY 16 PB Levels v The FY 2016 request begins to restore balance between Endstrength, Readiness, and Modernization v Sustains a planned drawdown of the Active Component to 475 K v Transitions from Tiered Readiness resourcing to more balanced Total Readiness across the Force v v Balanced, rotationally focused, and surge ready force to meet combatant command demands Modernizes helicopter fleets; Armored Multi-Purpose Vehicle, Paladin Integrated Management, and Stryker Double-V Hull Under Sequestered Budget Levels v Continues Tiered Readiness resourcing v Provides a Contingency Force where only 9 of ~30 Active Component BCTs are ready at a given time; supports only priority Global Force Management Missions v Accelerates the drawdown of the Active Component v Cuts Modernization Accounts by ~12% v Supports only critical life, health, and safety repairs to facilities Readiness and modernization will feel the brunt of BCA 4

FY 2015/2016 Budget Comparison (Base Funding Program) FY 14 FY 15 Actuals Enacted Request Military Personnel 56. 1 56. 4 56. 2 56. 3 Operation and Maintenance 43. 1 44. 71 41. 82 44. 7 Procurement/RDTE 23. 1 21. 2 20. 6 23. 1 Military Construction 3. 4 2. 6 . 9 1. 1 Other Base (FHA/BRAC/CAMD/AWCF/ANC) 1. 7 1. 3 1. 6 1. 4 127. 4 126. 21 121. 12 126. 5 Request ($B) Totals FY 13 Other Base: Chemical Agent and Munitions Destruction, Army Working Capital Fund, Arlington National Cemetery 1: Includes $3. 1 B OCO for Base Transfer 2: Includes $. 85 B OCO for Base Transfer and $. 27 B in Readiness Increase FY 15 Base Enacted $121. 1 B Military Other Base Construction 1% <1% Procurement RDTE 17% Operation & Maintenance 34% Military Personnel 47% FY 16 Base Request $126. 5 B Other Base 1% Procurement RDTE 18% Operation & Maintenance 36% FY 16 Budget Request Equals FY 14 Expenditures Military Construction <1% Military Personnel 45% 5

FY 16 Budget Highlights v Total Army Forces: End-strength of 1, 015 (AC 475 K/ARNG 342 K/USAR 198 K) v Total Readiness across the force • • 19 Combat Training Center (CTC) rotations 16 Decisive Action (14 AC/2 RC) 2 Functional Brigades 1 Mission Rehearsal Exercise (MRE) v Regional Engagements • Pacific Pathways • BCT rotation to South Korea • Aviation and BCT rotations to USAREUR v Installations • Funds Base Operations (95% AC/ 92% ARNG/90% USAR) • Funds Sustainment , Restoration & Modernization (79% AC/80% ARNG/76% USAR) v MILCON • 32 Projects (13 AC/14 ARNG/5 USAR) v RDA Significant Events • Protects S&T funding to support Force 2025 • Continues Aviation Restructuring Initiative (ARI) 6

Cost & Economics (C&E) Mr. Stephen Barth 7

Cost Management Providing Army Financial Transparency Challenges • DOD Audit Readiness • Visibility into Cost and Spending • Meaningful Business Analytics for Decision Making • Financial System Interface Errors and Rework • Cost Tracking to Output / Outcome Opportunity • • • Stewardship of nation’s resources Continuous improvement Cost informed decision making / Accountability Progress • Cost Culture and Cost Management (CM) Initiatives • Army General Fund Enterprise Business System (GFEBS) • Addressing Financial Material Weaknesses - LSS • Army Financial Management Optimization (AFMO) • Army Financial Benefits Reporting and Tracking (AFBRT) • Army CM Steering Group

Army GO/SES Cost Management (CM) Steering Group Purpose: To shape and inform the implementation of cost management policy, strategy, system design and practices in alignment with Army Leadership priorities. Provide guidance and understanding on Army enterprise level cost needs, performance metrics, capability gaps, and recommendations required for more agile, effective, and efficient decision making processes. Expected Outcomes: Successfully implement Cost Management and meet the information needs across the Army, starting with: • CMSG Charter review • CMSG input on key CM information needs and strategies required to successfully support the resource information decision making process and Army leadership priority goals and missions. • Cost Managed Organizations Across the Army Slide 9

Defining Cost Information “Why & What is Needed” Cost Information Needs: • Cost of Readiness • Cost of Training Readiness • Cost of BCT • Cost of Post Production SW Support • Cost of IT Services and Support • Cost of Installation Services • Cost of Recruiting a Soldier • Total Ownership Cost of Equipment • Cost of Etc… Varies by: - Proximity – “Where you sit” - Periodicity – “Duration” - Purpose – “Decision” Different Meaning by: - Function – Budget vs Functional - Stakeholder – “Internal vs External” - Role – “Customer vs Provider” Cost Terms / Definitions: • Fixed and Variable Cost • Funded and Unfunded • Must Fund and Discretionary • Direct and Indirect Cost • Reimbursable and Direct Fund • Overhead, G&A, Fee • Sunk Cost • Investment and Sustainment • Recurring and Non-Recurring • Etc…

Cost Management Documentation • 4 Feb 15: Draft document distributed for staffing • Implementation Plan Contents: § Goals &Objectives § Assessment Areas (Measures of Effectiveness) § Implementation Plan & Tasks § Overview of Cost Management Process, Tools, and Resources § Aligns Cost Management and Army Financial Management Optimization Objectives / Key Tasks • 1 Mar 15: Draft document • Standard Cost Model Contents: • May 15: Draft document with updates for the Help • Documenting the 43 Desk transition Command Unique Cost Model Documents • SOP Contents: • Dec 2014 -May 2015 – Overview and usage of all • 19 CCM Documents published Cost Master Data objects on the Cost & Performance (e. g. Cost Centers, Orders, Portal WBS Elements) • Living Documents – ERP Cost Planning • Reference Documents to – Capturing Actuals (Payroll, understand the Command’s Labor, Non-Pay/Labor, current cost model in multiple Depreciation) ERPs – Performing Cost Allocations/ Cost Assignments – Inbound cost interfaces – Cost Reporting – Roles & Responsibilities – Links to required supporting documentation (e. g. Faces-to-Spaces, policies for Cost Master Data) – Command unique cost model requirements – Procedures to review & update Cost Master Data 11

Financial Operations (FO) Ms. Laura Jankovich 12

Audit Readiness Accomplishments to Date v November 2013: Unqualified opinion on more than 50% of real property assets, the largest successful audit of fixed assets in the Do. D. v April 2014: Completion of General Fund Statement of Budgetary Resources (SBR) Examination at 22 installations, including DFAS. v November 2014: Unqualified opinion by Do. DIG on an examination of the existence and completeness (E&C) of General Equipment (GE) assets. v December 2014, Began audit of the Schedule of Budgetary Activity (SBA), by an IPA, the largest external validation of the Army’s financial activity to date. v 100 percent of fiscal year 2015 Army-specific appropriations are now under independent audit. v Rigorous controls and substantive test program for SBR and Asset categories reviewed regularly by the Vice Chief of Staff and senior tactical commanders. v Trained more than 23, 000 Army personnel on audit standards and procedures 2

General Fund Audit Readiness Timeline – Way Ahead Full Financial Statements - Valuation SBR Q 2 FY 15 Q 3 FY 15 SBA Financial Reporting Q 4 FY 15 Q 1 FY 16 Q 2 FY 16 SBA FBw. T Recon FY 2015 SBA Audit Continues Q 3 FY 16 Q 4 FY 16 ` Q 2 FY 17 FY 2015 SBA Audit Report Q 4 FY 17 FY 2016 SBA Audit Begins RP and OM&S E&C Report FY 2016 SBA Audit Report Real Property Assertion Other Balance Sheet & Statement of Net Cost Line Items Assertion Environmental Liabilities Exam (DERP Only) Q 1 FY 18 FY 2017 SBA Audit Report FY 2017 SBA Audit Begins Internal Use Software Exam OM&S General Equip Assertion Enviro Liabilities Assertion (DERP Only) Q 3 FY 17 FBw. T Exam Internal Use Software Assertion RP and OM&S E&C Exam Q 1 FY 17 Real Property Exam OM&S General Equipment Exam FY 2018 GF Full Financial Statement Audit Begins Other Balance Sheet & Statement of Net Cost Line Items Exam Enviro Liabilitie s Assertion (Remaining) Enviro Liabilities Exam (Remaining) “Assertion” means Army is ready to be audited SBR: Statement of Budgetary Resources SBA: Schedule of Budgetary Activity E&C: Existence & Completeness FBw. T: Fund Balance with Treasury OM&S: Operating Materials & Supplies DERP: Defense Environmental Restoration Program Complete Underway 3

Army ADA Root Causes – Cases Closed in FY 14 23 ADA Investigations Completed in FY 14 Common Root Causes • Using O&M for significant system modifications • Prohibited purchases • Use of Army funding to support non-Do. D missions • Project splitting • Exceeding Military Construction thresholds • Improper work classification • Unlimited indemnification clauses in contracts • Augmentation of appropriated funds • Relocatable buildings 4

Army Business Initiative for Travel Efficiencies v Savings Opportunities ü increased use of restricted fare air tickets ü minimizing centrally billed government travel accounts ü reducing manned air ticket offices ü reducing the number of credit cards being declined at ticketing ü increasing use of the government travel card ü dining pilot ü lodging pilot ü tax exemption 5

Financial Information Management (FIM) COL John Vogel 17

Enterprise Resource Planning (ERP) Systems GFEBS • Fully deployed • Consolidates Army General Fund (GF) data for management and audit GFEBS GCSS-Army • Deploying worldwide by 2017 • Source of supply, maintenance and property book transactions • Leverages GFEBS financial template • Interfaces with GFEBS for GF execution • • GFEBSSensitive Activities • Beginning development • Includes secure capabilities • Will interface with GFEBS LMP IPPS-A Fielding ~ 2019 Will provide military pay capability Will be source of pay transactions Will interface with GFEBS to trigger GF posting • Fully deployed to depots & PEOs • Enables some GF Procure-to-Pay and Asset Accounting processes • Interfaces with GFEBS to trigger GF posting Legend: • Logistics Modernization Program (LMP) • Global Combat Support System-Army (GCSS-A) • Integrated Personnel & Pay System-Army (IPPS-A) 18

Where We Are With GFEBS v. Where we are with GFEBS § GFEBS (Main) o Military Personnel/Expenditure Reporting for Active, Army National Guard & Army Reserve o SPS Pre-Contract Award Interface o HQIIS and Real Property Inventory Management (RPIM) compliance updates o SFIS 10 and DDRS Enhancements o DCAS Interface and Auto-Recycle Program enhancements to reduce unmatched transactions o Tie Point and IDOC reporting in BI o Architecture in BI to support future Real Property reporting § GFEBS-SA o Supporting Business Process Design (BPD) and Functional Design (FD) documents o Assessing unique business processes that affect the sensitive activity workforce o Conducting functional process familiarization workshops at commands to advance understanding and prepare for later training 19

Where We Are Going With GFEBS • Where we are going with GFEBS – GFEBS (Main): o Prioritizing enhancements for “Increment II” o Financial statement preparation and automated reconciliation in BI o Extension of Business Intelligence technical infrastructure to enable: § Cross-system Army-wide & Defense-wide financial data Consolidation § Data refreshes multiple times in a single day to support users in all time zones § Faster query response times § Complex analysis and research of distantly related data sets v Example: Tank miles driven compared to equipment maintenance costs v Example: Asset information compared to general ledger postings – GFEBS-SA: o Go-live limited to INSCOM and related DFAS organizations 3 QFY 16 o Full Go-live 1 QFY 17 20

AFMS HQDA DFAS Commands FMSOC USAFMCOM PROPONENCY DASA-FO DASA-CE ABO DASA-FIM/ AFMO TF Army Financial Management Optimization (AFMO) Lines of Effort ENDSTATE (AFMO Goals & Objectives) -Enhance Auditability OPR: DASA FIM LOE 1: Maximize Financial System Domain/ ERPs Capability -Leverage Financial System Domain/ ERPs OPR: DASA FO LOE 2: Standardize Business Practice and Processes -Optimize Workforce LOE 3: Transformation/Pilot OPR: USAFMCOM LOE 3 a: USAFMCOM Transformation OPR: USAFMCOM LOE 3 b: FMSOC Transformation OPR: CMD G 8/OA LOE 3 c: OA Transformation OPR: PROPONENCY/AFMS LOE 4: Fully Trained & Certified Workforce OPR: DASA FO LOE 5: Financial Improvement Plan OPR: DASA CE LOE 6: Establish Army Cost Framework OPR: AFMO TF LOE 7: Strategic Communications Transformation Maturity -Sustain readiness in FM units -Minimize redundant capabilities -Right-Size the Workforce -Develop Training and Certification -Reduce cost of FM operations -Better Analysis for Decision Making 21

Comptroller Proponency (PO) Ms. Ivonne Reid-Borland 22

Enterprise Talent Management (ETM) v Civilian Education System (Constructive credit may be granted ilo course completion based on assignment history/past academics. TRADOC assesses and G 3/5/7 has final approval authority) v DOD FM Certification / CDFM v Recognize and promote Senior Enterprise Talent Management (SETM) and ETM and take a personal interest in selection of SETM and ETM candidates and nominate only the best candidates v Participate on selection and placement boards for Talent Management candidates v Provide and protect resources for Civilian Talent Management v Provide developmental opportunities for SETM and ETM candidates v Assess and provide feedback on Talent Management Programs v Be willing to serve as mentors to SETM and ETM participants v Recognize, profile and incentivize those candidates selected by the HQDA Civilian 23 Talent Management Board

Do. D FM Certification Program Update Major Command Status 1, 616 1, 555 1, 397 1, 305 989 ) Ot he rs (1 34 (0 B NG ) CO M ED M Implementation Through 30 Mar 15 USAR 2, 292 1, 305 Launched ARNG 1, 848 1, 555 Launched (1 ) (0 A AA US US AR C( ) AC E( 19 ) US 17 AR PA C( (3 US US AR EU R (5 CO M IM C( AD O ) 7) ) 32 4) TR SC OM (8 28 478 0) 477 355 FO R 1, 001 908 699 AM C( 12, 422 ) 1, 642 ) 1, 800 1, 600 1, 400 1, 200 1, 000 800 600 400 200 0 14, 000 Mitigation Actions 12, 422 - Educate/Train Leaders 12, 000 - Monthly Training (Fewer 10, 000 Rejections) Total Certifications - Communicate via Mil. Suite 8, 000 a/o 25 Feb 15: 375 - Provide Course Listings 7, 741 FMs 6, 000 (CL 1, 2 and 3) - Develop and publish 4, 000 updated FM Certification 2, 000 Information 11 0 CY 2 Q 14 3 Q 14 4 Q 14 1 Q 15 2 Q 15 3 Q 15 4 Q 15 1 Q 16 2 Q 16 3 Q 16 4 Q 16 1 Q 17 Launched Cum 7, 741 9, 677 10, 499 12, 422 12, 422 12, 422 Certified Target Cum 0 0 300 900 2, 268 3, 636 5, 004 6, 372 7, 741 9, 677 10, 499 12, 422 Certified Actual Cum 11 64 201 375 375 375 As of 01 July 2014, all persons must be certified within 2 years from launch. Requires that the 30 Jun 14 Cum Total 7, 741 persons launched be certified by 30 Jun 16. 24

Questions/Discussion

ASMC National Capital Region: Professional Development Institute Speed Mentoring Polaris Room 16: 30 EDUCATION TRAINING PROFESSIONAL DEVELOPMENT 26