DFAS Transformation Update March 2003

1. Defense Finance and Accounting Service DFAS Transformation Update March 2003

2. Outcomes • Provide overview of DFAS Transformation • Explain the process • Outline the next steps

3. Why Transformation? • Transformation supports DFAS Mission and Vision • Continue to drive best value for the customer through • Greater effectiveness • Increased efficiency • Continued productivity gains • President’s Management Agenda calls for improved financial management, improved budget and performance integration, and better competition in commercial activities • Quadrennial Defense Review (QDR) concludes DoD must transform to meet future challenges • Defense Planning Guidance (DPG) required Transformation Roadmaps

4. Transformation Principles • Leadership - Key vision and Transformation Goals provided by senior DFAS leadership • Inclusion - Transformation is a team effort • Openness - The process is clear and published • Integration - Incorporate current and future initiatives from Business Lines, Support Services, and HQ Elements into one plan

5. Leverage Integrate Current State Current State Transformation Moving Forward Future State Future State • Leverage operational excellence • Develop client partnerships • Deliver business solutions Customer Focused • Implement collaborative process that leverages BCA activities to integrate transformation efforts across DFAS Value Driven • Efficient • Generate results based on best value to the customer Transact Transact Analyze Analyze Partner Process Process Advise Establish transformation outcomes and business strategy Current State Current State Build & Operate System Build & Operate System • • Build Build Process Transactions Process Transactions • • Respond to Customers Respond to Customers • • Own Own

6. Transformation - Our Strategy • DFAS transformation decisions will be based on Business Case Analysis (BCA) studies of Business/Product Lines • Theme - Business Process Improvement • Key evaluation criteria is “best value”

7. BCA Process

8. Business Case Analysis Results • BCA is an analysis tool used to present alternatives and supporting information to DFAS leadership for a decision • BCAs include: • Clearly defined organization with manpower, cost, and resources • Options for consideration with an analysis of the benefits and drawbacks, costs, personnel impact and risk assessment • Recommended course of action

9. Conduct BCAs Implement Transformation Actions • A-76 • MEO Plus • Competitive Procurement (FAR Part 15) • Public-Private Venture PL PL PL PL Dec 03 Draft Site Selection Criteria Feb 04 Final Site Selection Criteria May 05 SECDEF Site Selection Jan 06 Implement BRAC Transformation Schedule - Long Term • Conduct 20 BCAs from FY 2003-2006 • Start with Marine Corps Accounting & Vendor Pay

10. Transformation - Accomplishments • Submitted Transformation Roadmap to SECDEF on June 30, 2002 • Publicized DFAS Transformation Strategy on Nov. 27, 2002 • Commenced analysis of Product Lines to identify transformation options • Established Executive Steering Group (ESG) and Corporate Transformation Team to integrate DFAS long-term transformation actions

11. Corporate Transformation Team Corporate Transformation Team • Corporate Planning, Chair • Accounting Services • Military & Civilian Pay Services • Commercial Pay Services • Site Directors (2) • Technology Services • General Counsel • Corporate Resources • Resource Management • Human Resources • Acquisition Services • Administrative Services • Corporate Communications • Union Representative

12. Next Steps • Continued communication and updates: • ePortal • Currently on Competitive Sourcing page • Developing new “Transformation Central” • Periodic briefings • “Ask the Expert” • Appoint Transformation ESG and Corporate Transformation Team representatives • Kick-off Transformation Team