Defense Trust Account Financial Management

1. Department of DefenseTrust Account Financial Management Defense Trust Account Financial Management Department of Defense Trust Account Financial Management

2. Overview • Background • Trust Fund Requirements • Trust Fund Organization & Funding • Trust Fund Accounts & Finances • Orion Fund Management System • Projected Cost • Small Business • Acquisition Results and Added Value

3. Responsibility for tracking, managing and reporting for the funds identified on Slide 5 has been recently transferred from Denver to Indianapolis. The tracking and management of these funds are being maintained on a sub-standard system, not suitable for the value and importance of these assets, as these funds total approximately $700 million. The present system is well below the standards for government accountability, and specifically, well below DoD standards. There are no controls to verify the accuracy of the transactions. There are no checks and balances for verification of the throughput of the entries. The results of the transactions are not auditable. There is no audit trail or transaction register to identify or analyze the accumulated totals. The system is extremely unreliable and unstable and produces unpredictable and unexplainable results, with no capability to ascertain the reason or remedy to correct. The system does not have the ability to produce financial statements. The system cannot produce mandatory reports, such as 224, 133, etc. The present system is incapable of interfacing with feeder systems to automatically incorporate payments and other transactions made on behalf of the funds. Background

4. A replacement system should have a history of successfully accommodating these types of funds in a federal environment. The system should be in accordance with generally accepted government standards. The system should contain the proper management controls to assure the accuracy of the transactions. The system should be able to produce financial and mandatory reports, and be customizable to accommodate the needs of the users, including the ability of automatically producing consolidated financial statements The system should produce an audit trail and a transaction register to allow auditors to trace summary totals back through to the original source documents. The system should provide security controls that allow for the profiling of users to meet separation of duties internal control requirements. The system should allow for import and export of data from feeder systems and upload data to parent organizations in a format that will be in accordance with that organization’s accounting standards. The system should accommodate work flow capabilities to properly notify and route documents to the next processing individual. Trust Fund Requirements

5. DOD Organization: Parent Organization Name: Operating Division: Trust Accounts Division Address Principle Supervision: Elizabeth Ridge Office Tel: 317-510-3154 Email: elizabeth.ridge@dfas.mail) Principle Supervision: Donna Cox Office Tel: 317-510-3022 Email: donna.cox@dfas.mail Project Justification for making the planned conversion Office that is responsible for the conversion of "old to new" Planned conversion date, during FY 07 MIPR approved value for the project (The holder of the funds) Amount of funds available but constrained for use in FY 07 Approval authority for the obligation of the FY 07 Funds Contracting: MIPR DD Form 448 - Military Interdepartmental Purchase Request MIPR - Paying Station DODAAD/DODDAC Block 13 of the DD FM 448 Acceptance of MIPR – DD Form 448-2 Contracting office that will receive the MIPR's funds Accounting CAGE code of the DFAS office that will receive the funds Period of Performance MIPR fund site for obligation of funds DFAS/OSD office has imposed the hold on the FY 07 funds Trust Fund Organization, Project, & Contracting

6. Trust Fund accounts maintained: 97X4179  Reserve Mobilization Income Insurance Fund (RII) - 110 Stat. 412  97X5187  Defense Cooperation Account (DCA) - 40USC 485(h)(2)(A)(B) 97X5472  Medicare-Eligible Retiree Health Care Fund (MERHCF) - 114 Stats. 179-184 97X8097  Military Retirement Fund (MRF) - 10 USC 1331 97X8098  Education Benefits Fund (EBF) - 10 USC 2006 97X8168  National Security Education Trust Fund (NSE) - 105 Stat. 1274 97X8335  Voluntary Separation Incentive Fund (VSI) - 105 Stat. 1397 97X8337  Host Nation Support for U.S. Relocation Activities (HNS) - 10 USC 2350k Total………………………………………………………. Trust Fund Accounts & Finances Undisbursed Funds Securities $2,778,052.47 6,069,198.15 N/A N/A N/A 5,960,831.65 614,734,612.25 17,031,650.03 $643,796,292.08 $2,778,052.47 0.00 N/A N/A N/A -61,076.32 2,445,520.19 296,713.63 $5,459,209.97

7. The Orion Fund Management System supports all the funds management functions of the Federal Government. All fund transactions are assigned a fund classification structure. This structure is recorded when each document is processed. Orion performs a funds control check at each stage of spending to ensure that there is funding available. Any adjustment to documents processed at each stage of the spending cycle is immediately reflected in the appropriate budget balances and in the fund ledgers. Orion permits authorized users to create and modify the level of funds control to provide the greatest level of control and flexibility to the user. Thus, funds can be economically and efficiently managed; obligation, expenditures, commitments or disbursement cannot exceed the amount authorized/available. Funds control is established using elements of the classification structure, including object class, program, organization, project and fund to assure compliance with user defined requirements. Orion performs funds control checks at each stage of the spending cycle (commitment, obligation, invoicing, vouching and payment.) Orion Fund Management System

8. Projected Cost • License………………………………………..……… • Implementation…………………………….………... • Total License & Implementation • G&A on ODC – 5%................................................ • Fee on ODC – 3%................................................. • On-Going Support Year 1 • Total Year 1……………………..………………….. • Optional Tasks – Years 2 – 5..…………………….. • Maintenance (15% x License)……………………... • On-Going Support………………………………….. • Subtotal Optional Tasks…………………………… • G&A on ODC – 5%............................................... • Fee on ODC – 3%................................................ • Total Years 2 – 5…………………………………… • Grand Total…………………………………………. $ 165,000.00 $ 446,784.46 $ 611,784.46 $ 21,406.64 $ 13,486.18 $ 117,827.10 $ 764,504.38 $ 99,000.00 $ 461,072.00 $ 560,072.00 $ 11,230.00 $ 7,074.90 $ 578,376.90 $ 1,342,881.28

9. Guild Associates, LLC is a minority woman-owned, SBA 8a certified small disadvantaged business founded in 2001 by Carolyn & Michael Watkins. Mrs. Watkins is a Federal Financial veteran with 15 years at IBM Federal Systems and Lockheed Martin. Mr. Watkins a Federal Systems Integration veteran with 17 years of Program Management. Guild Associates specializes in organizational performance, systems integration and training design/ development. Orion Microsystems, Inc. is a small business founded in 1980 by Norm Kanefsky and is known for its creation of high quality, solid, and reliable financial software products. The GLOWS products have been a proven success in both the Federal Government and Commercial financial environments. Small Business

10. GLOWS is a low cost modern technology financial management system. GLOWS is a proven Federal Government financial management system with installations in several Government Agencies. GLOWS is a Client Server System with web based capabilities. GLOWS integrates financial results for grants with performance metrics to provide a complete performance management system. GLOWS can be rapidly installed, implemented, and interfaced with the Department of the Defense current core accounting systems or planned Army GFEBS SAP America, Air Force DEEMS Oracle and Navy SAP America, core accounting systems of record. GLOWS can provide a standard platform for other small Department of Defense agencies that require integration with the Business Transformation Agency future consolidation and Standard Financial Information Structure (SFIS) requirements. Acquisition Results and Added Value