Business Enterprise Priorities

Six Business Enterprise Priorities (BEPs) define the capabilities needed to integrate business operations across the Defense Business Enterprise. These priorities guide decisions on business system investments and on establishing standards and policies for aligning common business processes. These six priorities are:

• Personnel Visibility
• Acquisition Visibility
• Common Supplier Engagement
• Materiel Visibility
• Real Property Accountability
• Financial Management

Business Enterprise Architecture

The Business Enterprise Architecture (BEA) is the cornerstone architecture for implementing the Business Enterprise Priorities. Because these six priorities define the scope of the BEA, the architecture can evolve in a controlled and consistent fashion. The BEA consists of a set of integrated architecture framework products that facilitate the interoperability and integration of the operational activities, processes, data, information exchanges, business rules, system functions, system data exchanges, terms and linkages to laws, regulations and policies associated with the Department’s business operations.

In May 2008, the Department issued additional BEA guidance for use by program managers and others responsible for certifying the compliance of a business information system with the BEA. The guidance describes with greater fidelity how to assess and document whether a system is compliant with the BEA, and includes procedures on developing and implementing a corrective action plan for programs that are not fully compliant.

The BEA guidance maps processes for:

• Compliance requirements
• Roles and responsibilities of those involved in demonstrating and certifying compliance for defense business systems
• Artifacts, processes and tools that may facilitate the assertion and certification of compliance
• Requirements and structure of an architecture compliance plan, which must be prepared for any program or system that is not fully compliant with the BEA

BEA version 6.0 provides a number of enhancements over previous releases. Enhancements include:

• Acquisition Visibility—Earned Value Management requirements in support of the service-oriented architecture and data transparency initiative
• Financial Visibility—Standard Financial Information Structure (SFIS) updates and Federal Financial Management Improvement Act (FFMIA) business guidance
• Personnel Visibility—Core Human Resource Information Standards and architecture federation planning
• Real Property Accountability—Environmental liabilities, geospatial standards and real property networks
• Common Supplier Engagement—Procurement data standards and standards supporting contract data, payment requests, business partner networks and representatives and certifications
• Materiel Visibility—Item Unique Identification (IUID) master data

Other BEA version 6.0 enhancements include:

• Information Assurance approaches for selected Enterprise-level business data
• System View improvements, including introduction of functional “Families of Systems” to better group and identify interface requirements from Component-level feeder systems to Enterprise-level systems

Investment Review Boards

The Department must actively manage against BEA standards if the BEA is to influence the future direction of the Department’s business operations. Four Investment Review Boards (IRBs) have been chartered to monitor planning, processes, policies and investments in the five lines of business that cut across all functional areas in the Defense enterprise. These lines of business are:

• Human Resources Management
• Weapon System Lifecycle Management
• Materiel Supply and Service Management
• Real Property and Installations Lifecycle Management
• Financial Management

Each IRB is chaired by a senior executive who represents the Principal Staff Assistant (PSA) to the Secretary of Defense who is the Departmental senior leader responsible for establishing policy in that IRB line of business. The IRB chair ensures that business system investments and processes provide end-to-end business improvements and that system modernization investments over $1M comply with the BEA.

Table 2-1 lists the management framework for the Defense Business Enterprise. Table 2-2 lists the system modernizations and initiatives associated with each Business Enterprise Priority.

Table 2-1: Management Framework for the Defense Business Enterprise

Table 2-2: System Modernizations and Initiatives by Business Enterprise Priority*

PERSONNEL VISIBILITY

The Under Secretary of Defense for Personnel and Readiness is the Department’s senior leader for Human Resources Management, and is responsible for achieving Personnel Visibility (PV) across the Defense Enterprise. The PV strategic goal is to provide accurate, timely and readily available personnel information to decision makers. Eight supporting performance objectives define the capabilities that must be acquired or enhanced to achieve the PV strategic goal:

• Provide access to more reliable and accurate personnel information for warfighter mission planning
• Enable a cross-Service support capability by providing a single personnel function that will ensure accurate and timely access to data on personnel and their skill sets for Combatant Commanders
• Decrease operational cost and cycle times, enabled by increased consistency of data, reduced rework and data calls
• Improve accuracy, completeness, and timeliness of personnel strength reports
• Reduce or eliminate duplicative data capture and system access activities
• Ensure accurate and timely access to and delivery of compensation, quality of life and other benefits for DoD personnel and their families
• Improve occupational safety through analysis of environmental and safety information and related personnel exposures
• Improve military healthcare delivery through implementation of an electronic record

Section 6 summarizes the status of key milestones for PV systems and initiatives against the targets set in the September 2007 Enterprise Transition Plan (ETP). The paragraphs below give examples of progress made by the Department during FY08 on the path to achieving its long-term strategic goal for Personnel Visibility.

Manage Human Resources Security

The Under Secretary of Defense for Intelligence, working with all relevant stakeholders within DoD and across the federal government and industry, is reforming the personnel security clearance process. In 2005, it took an average of 228 days to process a security clearance request. This severely hampered the ability of government agencies and private industry to recruit and retain qualified personnel. The backlog was created primarily by the lack of reciprocity in review processes among federal agencies. In the Intelligence Reform and Terrorism Prevention Act of 2004 (IRTPA), Congress directed that, by December 2009, Federal agencies complete 90% of security clearance determinations in 60 days (investigations in 40 days and adjudications in 20 days), to the extent practicable.

Today average cycle time is 76 days — still short of the Congressional target, but significant progress. These performance gains are due primarily to increased investigative and adjudicative capacity and greateraccountability for performance. The Initial Report on Security and Suitability Process Reform, released in April 2008, outlined a transformed process for making hiring and clearing determinations to improve timeliness and achieve the IRTPA goal of < 60 days. This process includes:

• Foundational policy changes to ensure reform takes root and is sustained. This includes Executive Order 13467, signed June 30, 2008, and a December 2008 revision to Federal Investigative Standards that changes the ground rules for performing background investigations.
• Establishing a governance structure—the Performance Accountability Council (PAC)—ensures federal agencies implement these reforms as planned. The PAC will hold agencies accountable for the timeliness of their determinations, and keep all stakeholders informed as to the progress of the reform effort.
• Deploying an information technology (IT) strategy to modify and adapt existing federal systems and applications to create a framework for the phased implementation of future reforms. This approach will enable near-term implementation, align IT modernization plans with the transformed process and enable the use of components to reduce duplication and enhance reciprocity while focusing on quality, service and cost.

The IRTPA established objectives for personnel security goals and metrics for investigations and adjudications, but did not provide government-wide common definitions or metrics for suitability or other key supporting activities. Under the direction of the PAC, the Performance Measurement and Management Subcommittee (Performance Subcommittee) is leading an interagency effort to standardize how metrics are defined, collected and reported. The Performance Subcommittee added metrics for security clearance and suitability investigations and determinations:

• End-to-End Time: the time from the date of submission by the applicant to the date of adjudicative decision
• Initiate Time: the time from the date of submission by the applicant to the receipt date of all information/forms (Personnel Security Investigation (PSI) forms, releases, fingerprint cards, etc.) required to conduct an investigation by the investigative service provider
• Investigative Time: the time from the receipt date of the completed personnel security package (PSI forms, releases, fingerprint cards, etc.) to the date the adjudicative unit receives the complete investigative product
• Adjudicative Time: the time from receipt date of the final report of investigation to the date of the adjudicative decision

To assist the agencies in projecting workload and resource requirements to be compliant with IRTPA, the Office of Management and Budget (OMB) issued interim government-wide processing goals for security clearances. The Office of Personnel Management (OPM) and the Director of National Intelligence (DNI) monitored the investigation and adjudication timeliness of the government through an extensive data collection effort. Table 2-3 lists OMB’s 2008 goals. Figures 2-1 and 2-2 show the significant progress made since 2006.

Table 2-3: Goals for 2008 Initial and Reinvestigations

As shown in Table 2-4, the Performance Subcommittee has developed an end-to-end definition of the clearance function from an applicant’s perspective, and set associated improvement goals on a path to achieving the less than 60-day Congressional target.

Table 2-4: Goals for FY09 Initial Investigations

The Performance Subcommittee will continue to review the quality of the metrics and pursue opportunities to better measure performance, quality and reciprocity. These initiatives include evaluating current data metrics collection methodologies, determining whether different metrics need to be defined and collected, defining federal metrics and communicating closely with the Joint Reform Team to ensure alignment with the transformed process.

The Joint Reform Team has undertaken reforms to concentrate on increased capacity and accountability to achieve 90% of the cycle-time improvement mandated by Congress. However, to reach and potentially exceed IRTPA guidelines, the transformed process must be operational. This means making fundamental institutional changes to better align security clearance and suitability activities across the government. Most notably, these changes include establishing a federal-level governing body to oversee reform and drive its implementation, and revising internal agency policies to reflect revised Federal Investigative Standards. These indispensable building blocks—and the leadership commitment to implement them—are imperative if the federal government is to realize the benefits of security clearance reform.

Most of the reforms planned for the next two years focus on delivering near-term capability while laying the basis for broad, long-term implementation. Successful implementation will require agencies to act with discipline and accountability, ensuring execution against the plan and follow up through established performance measures.

The transformed process for making hiring and clearing determinations in <60 days was developed through partnerships with many DoD Components—and especially by the Department of the Army’s participation in a reformed process demonstration and electronic adjudication pilots. Continued research studies, pilots and process/system implementations will continue to validate and refine improvements.

Manage Travel

The Defense Travel Enterprise is a $9.4B business. It touches the entire Defense Department workforce. Defense travelers file more than seven million travel vouchers annually, for both Temporary Duty (TDY) and Permanent Change of Station travel. There are approximately 1.3 million Government Travel Charge Card holders producing almost $5B in annual transactions. The Department manages Commercial Travel Office (CTO) contracts valued at approximately $250M.

The Under Secretary of Defense for Personnel and Readiness established the Defense Travel Management Office to manage the Defense Travel Enterprise, determine strategic direction, set policy and centrally manage commercial travel programs. The Department made significant progress during FY08 in transforming this $9.4B enterprise and in providing the warfighter with travel services that enable mission accomplishment, including:

• Centralizing commercial travel programs
• Consolidating CTO services contracts to gain efficiencies
• Establishing a Travel Assistance Center to provide comprehensive support
• Increasing functionality and reviewing usability of the Defense Travel System (DTS)
• Establishing a Customer Satisfaction Program to gather and act on user feedback

The Department made particular progress in increasing customer satisfaction with the services provided, thus increasing their usage.

Usage

DTS serves as the technology enabler in the Defense Travel Enterprise. TDY Voucher Processing is the percentage of total Department TDY travel claims processed using DTS. Processing vouchers through DTS saves travelers’ time, expedites payment and consolidates travel data. DoD travelers submitted over 5 million TDY travel vouchers in FY08. DTS processed more than 3.2 million of these vouchers—a rate of 64.8%, as shown in Figure 2-3.

This result reflects the Department’s progress in improving DTS functionality, training and customer support. DTS increases visibility into the Department’s travel expenditures, and usage will continue to increase as functionality expands to include all travel types. Greater usage of DTS results in better fidelity of travel data that creates the business intelligence to drive the efficiency and effectiveness of the Defense Travel Enterprise.

Figure 2-3: DTS TDY Voucher Processing

Average Reservation Module usage measures the percentage of DTS users who book their travel using the system’s front-end, the Reservation Module. This module provides travelers with a convenient, centralized method for making their travel arrangements. Reservation module usage is analogous to private industry’s “online adoption rate.” In 2007, corporate travel managers reported an average online adoption rate of 71%; this was 85% for DTS in FY08, as shown in Figure 2-4. Booking travel reservations online with DTS reduces CTO fees to the Department. This high Reservation Module usage rate is the result of the Department implementing a major enhancement of the DTS front-end in February 2007. The results of this metric validate its success.

Customer Satisfaction

The Department tracks DTS Voucher Payment Time (VPT) as a measure of customer satisfaction. It tracks the time from when a traveler signs a travel claim to the time the traveler is paid. To further measure and assess the quality of travel services, and as a component of a broader Customer Satisfaction Program, the Department began collecting additional customer feedback through QuickCompass surveys. QuickCompass is a simpler, new polling methodology that provides faster turnaround times in providing customer satisfaction data. It includes DTS users’ feedback in arranging airline and rental car reservations.

Average DTS Voucher Payment Time was 7.8 days in FY08

Timely reimbursement, coupled with the capability to provide split disbursement to the traveler and the traveler’s Government Travel Charge Card (GTCC), also enables the Department to maintain compliance with OMB mandates for GTCC delinquency rates. While monitoring voucher payments ensures compliance, it is also a proxy measure of traveler satisfaction. Confidence that a traveler will receive a reliable and timely reimbursement supports the warfighter in remaining mission-focused. The average DTS voucher payment time in FY08 was 7.8 days, which is much quicker than the statutory requirement for reimbursement. The Travel and Transportation Reform Act of 1998 (Public Law 105-264) and the DoD Financial Management Regulation require that travelers are reimbursed for their travel expenses within 30 days of submission of a proper and complete travel claim.

As shown in Figure 2-5, initial survey results show that 69% of DTS users find the system easy to use when making airline reservations. Seventy-nine percent of DTS users find it easy to use when making rental car reservations. This is early evidence that the Department’s efforts to increase the usability and functionality of DTS are resonating with travelers.

Figure 2-5: Survey Results

ACQUISITION VISIBILITY

The Under Secretary of Defense for Acquisition, Technology and Logistics is the Department’s senior leader for Weapon System Lifecycle Management and Materiel Supply and Services Management, and is responsible for achieving Acquisition Visibility (AV) across the Defense Enterprise. The AV strategic goal is to achieve timely access to information supporting decisions for acquisition oversight. Three supporting performance objectives define the capabilities that must be acquired or enhanced to achieve the AV strategic goal:

• Provide governance and accountability for acquisition decision-making data
• Provide the framework for access to authoritative data for acquisition decision making
• Provide definitions and business rules to define authoritative data for acquisition decision making

Section 6 summarizes the status of key milestones for AV systems and initiatives against the targets set in the September 2007 ETP. The paragraphs below give examples of progress made by the Department during FY08 on the path to achieving its long-term AV strategic goal.

Oversight Integration

The Department’s portfolio of Major Defense Acquisition Programs (MDAPs) totals approximately $1.6T within the six years of the Future Years Defense Program (FYDP). The ability to manage and oversee such a vast portfolio depends on timely access to authoritative decision-making information. As described in the September 2007 ETP, the Department’s strategy is to use a data governance structure and a service-oriented architecture (SOA) to improve both the timeliness and authoritative nature of critical program oversight data. This strategy permits DoD communities to continue operating their own heterogeneous business systems, while standardizing and regulating the available data and the systems’ external interfaces. The foundation for implementation of the strategy is the Weapon System Lifecycle Management (WSLM) governance structure. Using the authority of the WSLM governance structure, the Department is defining critical Defense acquisition decision-making data elements, identifying authoritative sources for the data and establishing real-time access to data in those authoritative sources. The AV SOA demonstration, completed in March 2008, provided an opportunity to prove the concept. The ongoing AV SOA pilot is solidifying the governance and technology approaches.

Currently, the focus is on improving acquisition information associated with statutory reporting and oversight requirements. The SOA pilot, therefore, focused on authoritative data elements that provided this information, dividing them into six services: earned value management (EVM), unit cost, milestones, budget, science and technology (S&T)/key performance parameters, and general administration. The governance approach is extensible and serves as a model for governing all information associated with the Office of the Under Secretary of Defense (Acquisition Technology and Logistics) statutory reporting and oversight requirements.

In parallel with the AV SOA effort, Defense Acquisition Management Information Retrieval (DAMIR) — DoD’s authoritative Defense acquisition management system, continued working to achieve its goal of making acquisition data available via web services. Achievement of this goal by April 2008 enabled the Department to retire the legacy Consolidated Acquisition Reporting System (CARS) two months ahead of schedule. In addition, the new functionality allows DAMIR to serve as both a source and a display for the AV SOA web services.

The AV SOA Pilot achieved all of its goals, tripling the number of MDAPs available via SOA for Acquisition oversight. This makes 140 data elements available for 37 programs totaling $1.2T, which is about 75% of the MDAP FYDP. Sixty-seven programs remain to be implemented by September 2009.

A SOA demonstration made 61 authoritative data elements visible for 12 programs, totaling approximately $103B, or about 6% of the MDAP FYDP. The next step, the SOA pilot, achieved all its goals, making 140 data elements available for 37 programs, totaling approximately $1.2T, or about 75% of the MDAP FYDP. The services are available on demand (to a limited user group) to support program management and oversight. By September 2009, planned near-term improvements will provide decision makers with insight into MDAP status in terms of cost, schedule and performance for all MDAPs.

The success of the FY08 demonstration and pilot improved the Department’s ability to Manage Acquisition Oversight Integration in three areas:

• Department-wide definition of selected critical data elements for the pilot
• Assignment of authority and responsibility for maintenance of the data in the authoritative source for each of those data elements for every MDAP participating in the pilot
• Access to that authoritative data via SOA

In FY09, the Department will focus on expanding the capability to all MDAPs, providing visibility for programs totaling approximately $1.6T. Next steps include: expanding to all MDAPs, increasing the user base and adding additional data in other segments of the Defense acquisition lifecycle. The end state provides early warning of Nunn-McCurdy breaches, better management of contractor performance, and support to decision making across the WSLM framework.

Given the success of the pilot and the scalability of both the governance process and SOA, the Department is preparing a recommendation that the participants in WSLM governance both solidify the SOA infrastructure and extend the capability to address the information needs of additional acquisition functional business areas.

COMMON SUPPLIER ENGAGEMENT

The Under Secretary of Defense for Acquisition, Technology and Logistics is the Department’s senior leader for Weapon System Lifecycle Management and Materiel Supply and Services Management, and is responsible for achieving Common Supplier Engagement (CSE) across the Defense Enterprise. The CSE strategic goal is to align and integrate the policies, processes, data, technology and people to ensure reliable and accurate delivery of acceptable goods and services. The procurement functional area establishes requirements for a single face to industry and provides the foundation of supply chain data that is exchanged across several business functions, often serving multiple purposes to each function. For this reason, Defense Procurement and the Defense Business Transformation Agency (BTA) have focused their shared efforts on developing a Procurement Data Strategy (PDS) to support the following two objectives which must be acquired or enhanced to achieve the CSE strategic goal:

• Streamline and reduce complexities of the process touch points between DoD and suppliers
• Adopt standard business processes, rules, data and interoperable systems across DoD to ensure reliable and accurate delivery of acceptable goods and services

The Department must ensure to its warfighters that it can reliably and accurately deliver goods and services, while promoting the highest level of accountability. To ensure this is accomplished, Defense Procurement has established three focus areas within the data strategy:

• Improving data transparency and reliability within supply chain systems
• Establishing a Procurement Data Standard (PDS) for contract writing
• Establishing a centralized capability for contract data to measure business process efficiencies and levels of compliance, based upon the current business mission, laws, regulations and policies.

Manage Sourcing

The Manage Sourcing business capability creates an enterprise solution, which seeks to establish sourcing vehicles, conduct solicitations, execute and administer contracts through closeout, while continuously improving and monitoring processes.

Currently, the Department has the ability to manually review any unclassified Federal Acquisition Regulation (FAR)-based contract through online access to contract portable document files (PDFs); however, the Department is in the process of converting the paper and PDFs stored on its database to raw serialized eXtensible Markup Language (XML) format. This format facilitates the sharing of structured data among information systems, and allows document encoding and data serialization. These, in turn, allow the dynamic tracking of detailed standard contract data, which can be transmitted, shared and queried in a more efficient and automatic fashion, thus promoting greater data visibility throughout the end-to-end procurement process. Increased visibility leads to greater data accuracy, traceability of contract data and matched disbursements – not to mention a higher likelihood that the goods and services originally requisitioned are indeed those that are received and accepted in accordance with the contract.

The percentage of contract data available in Procurement Data Standard (PDS) XML format is expected to increase significantly. Data standard requirements, focused on award contract data, were published in July 2008. The Concept of Operations document provides detailed guidance on the use and application of the data standard.

The procurement data standard will establish standard contract and modification data transmission and aggregation by extending contract visibility through integrating enterprise business processes, reducing system redundancies and continuously improving financial transparency.

In FY08, the Department successfully aggregated more than 200,000 contracts as raw data. As Figure 2-6 shows, the Department is making steady progress toward its long-term goal to have 95% of contract data available in the raw data format by FY12.

Figure 2-6: Percentage of Contract Modification Data Available for Aggregation

Receipt and Acceptance

The Department can improve efficiencies by standardizing processes for receiving and accepting goods and services. Contract terms contain interest penalties for untimely or inaccurate payments. An automated source for performing receipt and acceptance improves the timeliness and accuracy of vendor payments.

A recent update to the Defense Federal Acquisition Regulation Supplement (DFARS) reduced the list of acceptable electronic methods for submission of payment requests and receiving reports, and named a sole enterprise solution for the Department, Wide Area Workflow. This enterprise solution provides direct electronic feeds to payment, logistics and Enterprise Resource Planning (ERP) systems in real time, which increases traceability and helps to ensure the timely delivery of goods and services.

The increased deployment of a standard electronic invoicing system reduces inefficiencies in the cycle time needed to process payment requests and receiving reports. This has led to a decrease in interest penalties paid to vendors, measured by comparing the proportion of interest penalties paid on payment requests processed electronically vice those processed manually.

As Figure 2-7 shows, in FY08 the Department was able to achieve a significant cost avoidance of $87M in interest penalties paid to vendors.

The decrease in cost avoidance of interest paid during the fourth quarter of FY08 was due to:

• Changes in procedures used to close out the budget at the end of the fiscal year
• Initiatives implemented by DoD Components to improve the timeliness of vendor payments. One of these initiatives has been to improve coordination from Component-to-Component in order to process payment requests at a faster rate. Additionally, the Components are improving their own contracting systems’ usability, interoperability and reliability. These improvements are creating a seamless payment cycle, and streamlining other associated processes necessary to pay the vendor

Even with the decrease in cost avoidance exhibited during the fourth quarter of FY08, the Department was able to realize significant improvements to the Manage Receipt and Acceptance business capability through the standardization of payment requests. As the amount of electronic payments continues to increase, the Department can expect an increased amount of cost avoidance for FY09.

Figure 2-7: Demonstrated Cost Avoidance

The increase in the availability of payment requests and receiving reports to the Department and its suppliers through web access allows for real-time transaction processing, which has resulted in a timelier and more efficient vendor payment process

As the Military Services and Defense Agencies continue to deploy the enterprise solution for electronic invoicing, the Department should continue to realize increases in both visibility and cost avoidance.

MATERIEL VISIBILITY

The Under Secretary of Defense for Acquisition, Technology and Logistics is the Department’s senior leader for Weapon System Lifecycle Management and Materiel Supply and Services Management, and is responsible for achieving Materiel Visibility (MV) across the Defense Enterprise. The MV strategic goal is to locate and account for materiel assets throughout their lifecycle and provide transaction visibility across logistics systems in support of the joint warfighting mission. Four supporting performance objectives define the capabilities that must be acquired or enhanced to achieve the MV strategic goal:

• Transform the Department's supply chain information environment by improving data integrity and visibility
• Improve the Department’s ability to move supply chain data across the Enterprise by reducing complexity and minimizing variability of business transactions
• Improve process efficiency of ordering, shipping, receiving and inventory management by enabling hands-off processing of materiel transactions
• Uniquely identify property and materiel to improve the timely and seamless flow of materiel in support of deployed forces, improve asset visibility across the Department, and improve inventory management

Section 6 summarizes the status of key milestones for MV systems and initiatives against the targets set in the September 2007 ETP. The paragraphs below give examples of progress made by the Department during FY08 on the path to achieving its long-term MV strategic goal.

Deliver Property and Forces (Global)

The delivery of property and forces is a critical capability that is undergoing transformation at multiple levels within Defense. The logistics community is striving to improve the process efficiency of ordering, shipping, receiving and inventory management by enabling hands-off processing of materiel transactions. The supply chain continues to encounter wartime demands for materiel that have historically been stocked at limited levels or were not stocked at all. Normally, this materiel is requested on short order and there is limited time for delivery inthe quantities demanded. However, the Components are finding ways to meet the demands of the warfighter priorities

The logistics community is minimizing material handling, redesigning the Department’s support structure, and pursuing business practice reforms. Additionally, the Components have improved their customer wait time and are establishing local joint storage capabilities with a level of inventory to be more responsive to the Military Services’ unit level demands and facilitate more timely delivery to the end-users.

Although the overall customer wait time goal of 15 days was not met in FY08, significant progress toward this goal was made for the deployed warfighter in Southwest Asia, also known as the Hard Lift Area. Much of this success is attributable to strategic distribution initiatives, which placed the materiel closer to the customer. The resulting environment will facilitate application of continuous process improvement measures, based on realistic data, to evaluate and identify additional areas for DoD supply chain performance improvements to the Deliver Property and Forces business capability.

As shown in Table 2-5, during FY08 the Department made impressive progress reducing customer wait time worldwide and significantly in Hard Lift Areas. The Deputy Under Secretary of Defense for Logistics and Materiel Readiness centrally monitors customer wait time on a monthly basis.

These reductions are impressive given the complexity of the Defense Enterprise. For example, a typical day in Iraq includes the delivery of 900 large cargo and container trucks, 1.6 million gallons of fuel consumed, 510,000 hot meals served, and the production of 11 million gallons of water, 139 tons of ice, and the handling of 790,000 pieces of laundry. In Afghanistan, the situation is complicated by the country’s land-locked nature, terrorist attacks, improvised explosive devices, pilferage of supplies, rocky and mountainous roads and an austere environment that includes harsh winters. Conversely, when combat forces redeploy from Iraq, the warfighter will require visibility of supplies and equipment moving back through the supply chain. This will involve the redeployment of 53 brigade-size units, 60,000 aircraft and vehicles, 120,000 containers, and 34,000 short tons of ammunition. This equates to 106,000 truckloads, 3,530 convoys and 135 shiploads.

Table 2-5: Customer Wait Time Days by Area

The Department’s target is to have a customer wait time of no more than 15 mean days from the time the lowest echelon placed the order to the time the order is filled. In FY08, the Defense-wide result was 16.7 mean days. As shown in Table 2-5, FY08 improvements over FY05 results are significant for all geographic areas.

Figure 2-8 shows the improvements achieved in the Hard Lift Areas. Given the large volume of retail requisitions delivered to the warfighter, these results are particularly noteworthy.

Figure 2-8: FY05-08 Customer Wait Time in Hard Lift Areas

Figure 2-9: FY08 Customer Wait Time Volume (by count)

Figure 2-9 displays the customer wait time volume by count in all geographic areas. The Department has experienced an overall improvement in customer wait time. The largest improvement occurred in the Pacific, which represents 4% of the customer wait time volume count in the Department. The Pacific region beat the Department’s overall customer wait time goal of 15 days when it decreased wait time by 8.5 days to achieve a 14-day customer wait period. The highest priority for the Department is supporting the warfighter in Hard Lift Areas, which represent 30% of volume. Customer wait time in Hard Lift Areas decreased by eight days for an overall improvement of 33.9%.

Deliver Property and Forces (In Theater)

The Army’s impressive improvements related to in-theater customer wait times in the U.S. Central Command Area of Responsibility are examples of how enterprise-wide improvements directly affect the quality of business operations supporting the warfighter. The Defense Distribution Depot in Kuwait, which performs warehousing operations for Army managed items, found that stocking items in the warehouse reduces the cost to procure, store and handle items.

This depot is also the containerization consolidation point, to include pallet operations, for supplies coming out of Kuwait. This operation provides prompt pallet preparation and a balanced pallet hold strategy to ensure a smooth and nearly unimpeded pallet movement from source of fill to the point of delivery. Army commanders can meet the Combatant Commander's requirements with the same or better response time from the Kuwait depot than they can by shipping items from CONUS. Where sufficient inventory exists, because of improved supply availability, the Army can calculate stock levels and move quantities faster to allow for surface resupply. Figure 2-10 shows significant improvements in the availability of Army aviation repair parts in Southwest Asia. Stock availability improvements were significant in Aviation Systems. Aviation repair parts are vital to the success of Army Central Command (ARCENT) tactical operations, making them a primary issue for the warfighter.

Table 2-6: ARCENT Aviation Parts In-stock Improvement

Figure 2-10: ARCENT Aviation Repair Parts In-stock Improvements

In FY08, the Army made a system change allowing tactical supply support activities to send retrograde serviceable materiel to the theater distribution points, such as the Kuwait Defense Distribution Depot. This removed touch points between numerous units, fewer requisitions routed stateside, thus allowing the item to reach its final destination. Stocking critical repair parts as far forward as possible provides more efficient and effective support to the warfighter.

REAL PROPERTY ACCOUNTABILITY

The Under Secretary of Defense for Acquisition, Technology and Logistics is the Department’s senior leader for Real Property and Installations Lifecycle Management, and is responsible for achieving Real Property Accountability (RPA) across the Defense Enterprise. The RPA strategic goal is to provide the warfighter and Core Business Missions access to near real-time, secure, accurate, and reliable information on real property assets, and environment, safety, and occupational health sustainability. Eight supporting performance objectives define the capabilities that must be acquired or enhanced to achieve the RPA strategic goal:

• Deliver consistent real property, environmental liabilities, and hazardous materials (Hazmat) information, supported by standard processes and data
• Integrate financial, real property, and environmental business practices
• Reduce real property inventory management burdens and inefficiencies
• Provide net-centric data environment that can enable delivery of accurate, real-time integrated data
• Provide a complete inventory of environmental liabilities reconciled with property, plant, and equipment records, adequate environmental liabilities (EL) management controls, audit trails, cost estimates, and documentation
• Increase Hazmat operational support, protection, and control
• Reduce Hazmat related environmental violations, lost-time incidents, and exposure
• Enable geospatial location information

Section 6 summarizes the status of key milestones for RPA systems and initiatives against the targets set in the September 2007 ETP. The paragraphs below give examples of progress made by the Department during FY08 on the path to achieving its long-term RPA strategic goal.

Real Property Inventory

The Department’s real estate portfolio is one of the largest and most diverse in the world, with properties such as airports, training ranges, rail links, restaurants, and recreation facilities spread throughout the United States and 40 other countries. After conducting a comprehensive assessment in 2001, the Department found that its real property inventory contained inaccurate information supported by redundant technology systems and inefficient processes. Real property information was inaccessible to key users and incompatible across the Components. Business process reengineering efforts identified the most practical solution to be maintenance of authoritative real property systems, with reliance on tiered accountability and net-centric methodologies. Representatives of the Military Services and Defense Agencies collaborated to develop Real Property Inventory Requirements (RPIR), the foundation for achievement of real property efficiencies by standardizing data, systems and processes across the Department. Additional collaborative work led to the Real Property Acceptance Requirements (RPAR) and the Real Property Construction-In-Progress Requirements (RPCIPR), which address accounting and financial aspects of bringing new assets into the Services’ real property inventories.

The Department identified implementation of RPIR data elements in authoritative real property systems as an indicator of the progress of the Military Departments and Defense Agencies toward implementing the RPIR concepts and principles, using the data structure and business rules in the BEA.

Figure 2-11: Real Property Inventory by Military Department

Each of the Military Departments met or exceeded their FY08 targets, as shown in Figure 2-11. Achievement of 100% RPIR data population will mean that the Military Departments have a common business language for real property inventory, which will enable interoperability across the Defense Enterprise and the federal government. Implementation of RPIR has streamlined the process of compliance with Executive Order 13327, which requires certain real property data for the Federal Real Property Profile (FRPP). RPIR is consistent with the FRPP requirements, which significantly reduces the Components’ reporting burden.

Portfolio Visibility

The Department’s real property portfolio includes linear structures, such as, runways, power lines and pipes. Real Property Facility Networks are compound assets comprising linear structures, buildings, and structures that must work together seamlessly to perform a function. This management concept enhances business decisions, and provides a more complete picture regarding operations and maintenance. Representatives of multiple specialties across the Department developed the requirements, definitions, types and a guide for the lifecycle management of facility networks. These standards were incorporated into BEA version 6.0.

Industry best practices for the proper inventory of linear structures include segmentation into distinct lengths or modules. Working groups of subject matter experts from across the Military Departments and Defense Agencies leveraged existing tools and practices from the maintenance community to develop standard segmentation practices for each type of linear structure within the Department’s inventory. These standards allow system solutions that best fit the real property family of systems. This integration of standards across systems and across Services enables a total asset picture. Furthermore, these standards were used to develop the latest release of the Department’s geospatial data standard for facilities, infrastructure, environment and civil works.

Real Property Inventory Completeness

RPIR establishes unique identifiers as the foundation for building a standardized net-centric data environment that can enable delivery of accurate, real-time, integrated real property data. The Real Property Unique Identifier Registry (RPUIR) is the centralized, service-oriented architecture based system that assigns and tracks real property unique identifiers for all of the Department’s real property assets and sites worldwide, consistent with RPIR. Since attaining Full Operational Capability (FOC) for sites (in Q3 FY07) and assets (in Q1 FY08) the number of asset records in RPUIR, as shown in Figure 2-12, has increased as the Components submit records for assignment of Real Property Unique Identifiers. The number of site records decreased slightly, as shown in Figure 2-13, due to adjustments for technical issues.

Geospatial and Legal Information for Real Property Inventory

The Department owns or controls nearly 30 million acres of land, ranging from unimproved wilderness areas to central urban developments. Installations change in size over time, as tracts of land are added or subtracted to meet the mission. Those tracts may have specific deed restrictions and reversionary clauses that must be visible in the inventory. Thus, RPIR specifies that land assets should be recorded by individual parcel, which is a significant business process change since at many installations land is inventoried at the aggregate level. Recreating the legal descriptions of each land parcel can be difficult. The Installation Boundary Mapping Pilot established geospatial data for each land parcel at 70 installations, including visual representations of each parcel’s legal status. By creating parcel boundaries from deed and legal descriptions and viewing parcel boundaries geospatially, surveying and Geographic Information System technicians easily identified unreconciled discrepancies, such as parcel overlaps, not evident when viewing tabular real property data alone. After the pilot, real estate experts and real property inventory leads from each of the Components met to develop solutions for correcting disparities in definitions, terms and processes.

Installation Boundary Mapping Pilot Results for Joint Base Pearl Harbor-Hickam

Component Progress

• The Department of the Army issued a draft real property audit readiness handbook to be used by installation real property personnel. The Army also is conducting site-training visits.
• The Department of the Navy published and implemented new real property business processes to enable accurate reporting of acquisition, existence and completeness, capital improvement, depreciation, capital leases, construction in progress, preponderant use, heritage assets and stewardship land and disposal. The DON also updated its Real Property Inventory Procedures Manual to incorporate RPIR.
• The Department of the Air Force issued Air Force Instruction 32-9005, which incorporates the RPIR and directs all aspects of real property accountability and reporting.
• The Defense Logistics Agency is expanding the capabilities of its current ERP system to manage installation assets, services and environmental liabilities necessary to support the Military Services. For example, the agency has embarked on a $6.4M modernization of its real property inventory and asset management systems that will allow for improved demand forecasting, operational effectiveness and efficiencies. This effort will provide complete RPIR compliance and full net-centricity with the Military Services, with whom real property information must be reconciled. The agency plans to achieve this capability by October 2009, in time to complete the FY09 submission to the FRPP. DLA also completed a worldwide inventory of 552 fuel sites and identified 4,226 aboveground and underground fuel tanks. This inventory included quantity, condition and location of assets worldwide and will lead to better financial information.

FINANCIAL VISIBILITY

The Under Secretary of Defense (Comptroller)/Chief Financial Officer is the Department’s senior leader for Financial Management, and is responsible for achieving Financial Visibility (FV) across the Defense Enterprise. The FV strategic goal is to have immediate access to accurate and reliable financial information (planning, programming, budgeting, accounting, and cost information) to improve financial accountability and efficient and effective decision making. Four supporting performance objectives define the capabilities that must be acquired or enhanced to achieve the FV strategic goal:

• Produce and interpret relevant, accurate and timely financial information that is readily available for analyses and decision making
• Link resource allocation to planned and actual business outcomes and warfighter missions
• Produce comparable financial information across organizations
• Achieve audit readiness and prepare auditable financial statements

Section 6 summarizes the status of key milestones for FV systems and initiatives against the targets set in the September 2007 ETP. The paragraphs below give examples of progress made by the Department during FY08 on the path to achieving its long-term FV strategic goal.

Managerial Accounting

The September 2007 ETP committed the Department to enhance this business capability by improving the consistency, accuracy, measurement and availability of cost information. FY08 efforts focused on improving the availability of cost information. This improvement was realized by:

• Delivering daily updates on budget authority, spend plans and obligations to the Under Secretary of Defense (Comptroller) (USD(C)) within 48 hours of execution in the source systems
• Reducing the time to deliver budget execution metrics to the USD(C) from an average of 45 to 15 workdays; for example, report 100% of the Military Services monthly budget metrics within 15 workdays of month end

The Comptroller manages the finances for one of the world’s largest enterprises via the Comptroller Executive Dashboard. Designed specifically to deliver timely enterprise financial visibility of budget execution, financial improvement and Comptroller focus areas by means of a single integrated website, the Dashboard provides visibility into the execution of the Department’s funds in consolidated, cross-service views that are available near real-time. Information includes budget authority, planned reprogramming of funds and supplemental appropriation data, previously reported on spreadsheets.

A joint effort among the Defense Business Transformation Agency, the Defense Finance and Accounting Service and the Comptroller established interfaces between the Comptroller Executive Dashboard and other DoD official financial reporting systems. Automating many of the processes achieved the managerial accounting improvement goal and saved the time spent to manually extract information. Additional interfaces integrate current month budget authority, spend plans and obligation updates.

The Dashboard is helping the Department reduce the time lag between the end of a financial reporting period (month-end) and the availability of that financial information to fund managers and executive decision makers. In the past, monthly budget metrics were manually collected 45 workdays after the end of the reporting month. For example, June financial data was presented mid-August. Financial information that was 45 workdays “after the fact” was inadequate for making sound executive decisions. Near real-time obligation information was needed to manage funds proactively.

The results shown in Figure 2-14 reflect the improvements to enhance the success of the Comptroller Executive Dashboard in FY08, further improving DoD’s ability to access timely managerial financial information — giving executive decision makers “smart tools” that provide a degree of insight into the Department’s cost and financial information that was not possible before. At the beginning of FY08, budget execution data was delivered in 45 workdays with no visibility of current month activity. Now, month-end data is available through fully automated processes after the last day of the month to both the Comptroller and the Military Services. The online views and analytical capabilities provide the Military Services with their individual content and a common base for decision making.

Figure 2-14: Timely Delivery of Managerial Accounting Information

In FY09, completion of plans will increase the degree to which managers can “measure” cost information across organizations. DoD will continue to expand the financial information content and metrics, for example civilian pay and test range management centers, to current Comptroller Executive Dashboard users and to make the dashboard available to additional managers. Enhanced metrics will tell more about what is being done with budgets. The Department will be better able to compare one organization’s metrics to another organization’s to help identify best business practices. For instance, metrics can help identify which organizations meet objectives at the lowest cost, have the best execution rates and assess these practices for applicability to other organizations. Moreover, it will be clear where funds are over- or under-utilized and how to reprogram them to critical missions.

Financial Reporting

Visibility to DoD’s finances is provided to stakeholders such as U.S Treasury, Congress, the warfighter and the American public through financial reporting. Financial reporting produces the Audited Financial Statements (AFS) — that is, the Balance Sheet, Statement of Net Cost, Statement of Net Position, Statement of Budgetary Resources and Statement of Custodial Activity. It also produces the budgetary reports such as the Statement of Operations, Report on Appropriation Status, Cash Flow, Financial Position, Changes in Net Position and Cost of Goods Sold. In FY08, these reports provided accountability for $1.7T of assets and liabilities owned or managed by the Department of Defense.

Standardized financial reporting enables decision makers to compare similar programs and activities across the Department and provides the level of detail they require for information retrieval. In addition, it provides a basis for common valuation of programs, assets and liabilities. Continued improvement in the volume of assets that can be reported in a consistent and verifiable manner will almost double for the FY09 financial reports to 87%, as compared to 46% for FY08.

The Department identified the percentage of total assets reported using standardized financial reporting and the number of compliant business systems as the incremental progress measures for this improvement. These measures are important as they provide an overall indication of the success of financial statement compliance.

Progress in financial reporting is measured by the percentage of Defense assets reported using standardized financial reporting. The goal for this measure is 100%. Financial statements were quantified according to reporting entity. The measure is derived by taking the sum of all the assets and dividing it by the sum of the assets that used the Standard Financial Information Structure (SFIS)-compliant budgetary reporting process. The percentage of accounting assets that are reporting using standard codes provides a clear indicator of progress toward Enterprise standardization.

SFIS provides an Enterprise-wide standard for categorizing financial information along several dimensions to support financial management and reporting functions. SFIS advances financial reporting by reducing the number of customized target general ledger accounting systems, eliminating account value translation and conversion, improving comparability of data across target general ledger accounting systems, standardizing report maps across the Defense Enterprise and standardizing the year end closing process. This results in streamlined processing time for monthly and quarterly reporting, and standardization of reconciliations within and between reports, footnotes and standard general ledger accounts.

The results shown in Figure 2-15 demonstrate that the Department has made tremendous progress in FY08 toward standardized financial reporting. The measurement utilized to determine these figures is important as it provides an overall indicator of the success for financial statement compliance. At the start of FY08, compliant financial reporting was available for just 46% of assets. In FY08, the Department implemented standardized financial reporting for Army and Navy General Fund reports.

Several systems that come through the IRB are required eventually to become SFIS compliant to facilitate the transmission of financial information across the Department. Switching from a legacy line of accounting to an SFIS compliant accounting classification is a complex process. The transition requires several changes to system configurations and a legacy to SFIS data conversion strategy. An additional dynamic to the process is that different systems are at different points in their lifecycle. Specifically, it will be easier for systems, which have not already implemented an accounting classification to implement SFIS than one that has already implemented an alternative accounting classification structure. All of this leads to systems becoming SFIS compliant at different times. As a result, the IRB tracks the planned SFIS Full Operating Capability (FOC) compliance date for each system that is required to become SFIS compliant. Further, the IRB tracks changes to the scheduled date of SFIS FOC compliance. Specifically, if a system slips or accelerates its SFIS FOC compliance date, then both the original and the follow-on date are maintained. This allows the IRB to assess scheduled changes and impacts.

Figure 2-16 illustrates the comparison of planned SFIS FOC compliance dates with actual SFIS FOC dates. The goal for this measure is 100%. The metric goal is based on the inventory of systems that meet three criteria:

1. (1) Have a modernization budget of more than $1M across the FYDP
2. (2) Contains financial management information
3. (3) Plan to operate in the target

Figure 2-16 identifies 58 business systems will assert compliance by FY16 and in FY08 asserted SFIS compliance for 13 business systems, as planned.

Implementing compliant financial reporting is a major step toward the Department achieving auditability. It provides a standard methodology to begin the analysis of the field level data. It allows the Department to determine where the posting logic of the many field level systems is flawed, where adjustments to the field level systems are inaccurate and will provide the support required to make the corrections at the source in the field level systems.

Historically, the Department has used a myriad of non-standard ledgers to report its data. This made auditing financial statements costly and extremely challenging. The implementation of compliant financial reporting meets the Department’s goal of producing comparable financial information across organizations. Auditing agencies expended numerous hours applying various accounting codes to map cost figures from financial reports, which were many times confusing and untraceable back to the original detailed transaction. The implementation of compliant financial reporting also meets the FY08 goal to achieve audit readiness and prepare auditable financial statements.

Using compliant financial reporting, Navy General Fund organizations have eliminated numerous manual processes including manual reports for Military Construction, manual processes for Naval Air Systems Command and manual processes for Navy command undistributed funding adjustments. These organizations have also gained the ability to complete Federal Agencies Centralized Trial-Balance System II (FACTS II) systemically and increased the visibility of funding for command level reports. Although the capability has improved to provide compliant reporting for 87% of DoD assets, there is still some way to go. Future improvements will include the provision of compliant financial reporting for Army Working Capital Funds and the remaining Defense Agencies.

As required by the FY05 NDAA, officially implemented as Title 10 U.S. Code, section 2222, as amended by section 332 of the Ronald W. Reagan National Defense Authorization Act for Fiscal Year 2005 (Public Law 108-375).

Customer wait time is the time to fill an order placed at the lowest echelon of supply by the supply system (the time to fill a retail demand) for repair spare parts needed for organizational maintenance. Hard Lift Areas are those in other countries, primarily in the Middle East, Central Asia, and Southeast Asia. The largest volume of supply requisitions for Hard Lift Areas is in Southwest Asia—U.S. Central Command. Operations in Iraq, Afghanistan, Africa and elsewhere have placed considerable demand on the Defense supply chai