Transformation Update to DFAS Workforce NAME Site Director

Transformation Update to DFAS Workforce <NAME> Site Director Defense Finance and Accounting Service December 2005 Integrity - Service - Innovation

Agenda • DFAS Transformation • Strategic Goals/Balanced Scorecard • Human Capital Strategy • DFAS Strategic Organizational Alignment • Base Realignment and Closure • Summary 2/27/2021 Integrity - Service - Innovation 2

Transformation Blueprint • Human Capital Strategy People • Business Intelligence • Benchmarking • Information Security Information • DBSMC • ERPs • e. Commerce 2/27/2021 Leadership & Vision Technology Integrity - Service - Innovation Process Structure • High-Performing Organizations • Lean 6 • BRAC • Centers of Excellence 3

Transformation Vision VISION: Transforming Today To Be The Trusted Financial Partner For Tomorrow’s Warfighter 2/27/2021 Integrity - Service - Innovation 4

Leadership & Vision 2006 Strategic Plan and Balanced Scorecard Strategic Plan: • 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 ― Cascades to mission areas and corporate organizations • 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 2/27/2021 Integrity - Service - Innovation 5

Leadership & Vision FY 06 Strategic Goals Attain operational excellence in finance and accounting services Strategic Objectives Implement best business practices to increase productivity and reduce costs Integrate e-solutions through state-of-the-art technology Provide instant access to comprehensive financial data Deliver financial information ondemand for decision-makers Provide quality financial analysis and timely advice Establish dynamic partnerships to execute ERP solutions 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 2/27/2021 Reshape workforce to meet mission needs Integrity - Service - Innovation 6

People Human Capital Strategy • National Security Personnel System (NSPS) Status ü Employees will receive the approved pay raise ü Implementation is event driven ü Labor relations voluntarily postponed ü Implementing issuances are in process - Proposed details can be found on NSPS website - Continuing collaboration process occurring with the unions at the Do. D level - Implementation schedules will be provided once determined by Do. D 2/27/2021 Integrity - Service - Innovation 7

Process Accounting High Performing Organization (HPO) • HPO effort began in January 2005 • Objectives: ü Reengineer accounting end to end processes ü Eliminate redundancy in organizations and operations ü Anticipate efficiencies through new system implementations ü Reduce footprint for accounting operations • Conclusions: ü Integrate and enhance end to end processes ü Develop accounts maintenance and control function ü Establish a corporate accounting organization ü Consolidate operations and support functions • Outcomes: ü Accounting operations performed at fewer sites ü Standardized organization for operations ü Significant savings realized through implementation ü Improved business processes 2/27/2021 Integrity - Service - Innovation 8

Structure 2005 BRAC Law Limestone Rome Cleveland Bratenahl Columbus Arlington (HQ Liaison) Rock Island Omaha Oakland Denver Seaside Indianapolis Kansas City St Louis Patuxent River Dayton Norfolk Lexington Lawton San Bernardino San Diego Charleston Texarkana Red River San Antonio Pensacola & Saufley Field Orlando • 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 FTEs 1 at the DFAS sites at Columbus, OH (2, 064 FTEs), and Indianapolis, IN (2, 632 FTEs) Japan Honolulu 1 Site Closed by BRAC Remaining Site Not Affected by BRAC Europe FTEs effective EOM August 2005 (Geographic Location Report, Military Personnel Report) 2/27/2021 Integrity - Service - Innovation 9

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 2/27/2021 Integrity - Service - Innovation 10

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 2/27/2021 BRAC Risks • Funding üImpact on customer rates üDate funds will be available • Operational Impact üContracts üOperational capability at gaining site • People üHiring for the right skills üTraining üAttrition of key personnel üSecurity clearance processing • Customer üSynchronize with customer plans üConsider BRAC impact on customers • Systems üInfrastructure üNew implementations üInterfaces Integrity - Service - Innovation 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 11

Structure Current DFAS Organization Functional Model As of Feb. 28, 2005 2/27/2021 Integrity - Service - Innovation 12

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: • Do. D 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 2/27/2021 Integrity - Service - Innovation 13

Structure Proposed DFAS Organization Director Deputy for Strategic Business Management • Strategic Management • Transformation • Business Requirements/Integration • Policy/Procedures and Performance Business Intelligence Client Executives Information Technology Corporate Resources Internal Review Acquisition Management Organization Office of General Counsel Chief of Staff Deputy for Operations • Accounting and Finance Operations • Accounts Payable • Accounts Receivable • Corporate Accounting • Account Maintenance • Disbursing • Travel Pay • Civilian, Military, and Retired Payroll • Standards and Compliance 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 Note: January 2006 target date for command control 2/27/2021 Integrity - Service - Innovation 14

Structure Roles and Responsibilities Deputy Director Deputy for Operations Deputy for Strategic Business Management 2/27/2021 • Provide client executive services for DFAS customers • Provide business intelligence for internal and external customers • Oversee HQ Support Organizations • Focus on the DFAS core mission • Implement new systems and processes • Standardize operations across product lines • 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 Integrity - Service - Innovation 15

Organizational Structure - January 2006 Director Deputy Director Office of Strategic Management Business Intelligence Client Executives Information Technology Corporate Resources Internal Review Acquisition Management Organization Office of General Counsel Chief of Staff Deputy for Strategic Business Management Deputy for Operations Director Standards & Compliance Director Policy & Performance Director Transformation Director Business Requirements & Integration 2/27/2021 Director Cleveland Site Corporate Accounting Mission Area Director Columbus Site Accounting Operations Mission Area Director Denver Site Finance Mission Area Director Indianapolis Site Disbursing Mission Area Director Kansas City Integrity - Service - Innovation Sites included: Charleston Pensacola Norfolk Japan Oakland San Diego Pacific Sites included: Dayton San Bernardino Omaha Limestone Sites included: Lawton Lexington Orlando Rome Rock Island Europe San Antonio Seaside Texarkana St Louis 16

Organizational Structure - FY 2009 Director Deputy Director Office of Strategic Management Business Intelligence Client Executives Information Technology Corporate Resources Internal Review Acquisition Management Organization Office of General Counsel Chief of Staff Deputy for Operations Deputy for Strategic Business Management Director Standards & Compliance Director Policy & Performance Director Transformation Director Business Requirements & Integration Japan Corporate Accounting Mission Area Director Accounting Operations Mission Area Director Cleveland Site Director Columbus Site Oversight Limestone Finance Mission Area Director Indianapolis Site Disbursing Mission Area Director Rome Europe Texarkana 2/27/2021 Integrity - Service - Innovation 17

Process FY 2009 End State - Operations Highlights Center of Excellence Limestone Center of Excellence Columbus Centers of Excellence Cleveland Retired and Annuitant Pay Garnishments Transportation Working Capital Fund Accounting Acquisition Accounting including Contract Pay Center of Excellence Indianapolis Security Assistance 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 2/27/2021 Integrity - Service - Innovation Centers of Excellence Rome Medical Accounting Special Ops Accounting 18

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) 2/27/2021 Integrity - Service - Innovation 19

People Maximum Employee Assistance • Employee transition options include ü ü ü ü 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 2/27/2021 Integrity - Service - Innovation 20

DFAS Transformation FY 2005 FY 2011 • • Fewer locations: 101 9, 9152 employees 18 systems $1, 368 M operating costs 3 70% professional / 30% technicians Right employees with right skills Optimum number and mix of civilians/contractors • Pay for performance under NSPS • • • 30 locations 1 13, 8792 employees 92 systems $1, 615 M operating costs 3 70% technicians / 30% professional • Aging workforce • General Schedule Pay System Includes Europe & Japan Source: HR Flash Report September 2005 (civilian & military) 3 Current$ 1 2 People Information Leadership & Vision Technology 2/27/2021 Includes Europe & Japan Projected Civilian & Military 3 Current$ 1 2 Process Structure Integrity - Service - Innovation 21