Business Planning and Execution

Mr. Don Tison28 March, 2012

Three Over-arching ProcessesThree Over-arching Processes

Challenge is in the Integration of

All Three

REQUIREMENTS

RESOURCESACQUISITION

Events Based Calendar Based

VariableJoint Capabilities

Integration &Development

System (JCIDS)VCJCS/ServiceChief Oversight

1996 - GW-N

Defense Acquisition

SystemMilestone Decision

Authority (MDA)Oversight

1970 - Packard

Planning, Programming, Budgeting & Execution

Process (PPBE)

DEPSECDEF Oversight

1967 - McNamara

2

Two Processes That Get at the ChallengeTwo Processes That Get at the Challenge

Tied to the Three Key Business Processes

RESOURCE AUTHORIZESUSTAIN

NIINLINSSN

PPBE Support

Procurement Funding (EE PEG)

OPTEMPO Funding (TT

PEG)

Sustainment Funding (SS

PEG)

ARRG

SLAMIS

2001 2012

Requirements Resources

2001 2012

ACQ RQMTS Resources

3

• ARRG: Army Working Capital Fund Requirements Review Group

• Purpose: Review and evaluate issues or proposed modifications impacting the Army Working Capital Fund (AWCF) business areas

• What the ARRG Does:

• Provides strategic recommendations and resource authorization for the AWCF

• Evaluates, understand and control costs

• Examines AWCF issues collaboratively during the Program and Budget cycle

• Reviews the AWCF POM and impacts on other Army programs

• Strengthens the AWCF supplier and customer relationship

ARRG is the Executive Leadership Forum for the AWCF $15B per Year Business

ARRG OverviewARRG Overview

ARMY MATERIEL COMMANDG-3 (Operations)G-4 (Logistics)G-8 (Resources)

ARMY SECRETARIATASA(FM&C)ASA(ALT)ASA(MR&A)G-6/CIOABO, Dir Bus OpsABO, Dir Ops SprtDASA-CEArmy Audit Agency

ARMY STAFFG-3/5/7(Operations)G-4 (Logistics)G-8 (PA&E)ACSIMOCAR ARNG

Co-Chairs: HQDA Deputy G-8 & Deputy Director Army Budget Office

Key Players

4

Typically examine over $2.3B in price and credit changes and drive $1B of savings to the customer

Exchange Pricing implemented; eliminating the waiting period of expected credit for unserviceable items and mitigating the loss of ~ $250M cash

Consolidated Depot Maintenance and Operational Readiness

• Growth at ~twice the rate of inflation in OPTEMPO

• Program and Budget disconnected

• Customer/Supplier relationship on cost growth unclear

1. THE ISSUE:

2. THE SOLUTION:

3. THE GOOD NEWS:

* Army Working Capital Fund Requirements Review Group

ARRG Background*ARRG Background*

Controlling costs while providing predictable prices and credits

5

Cost Factors

OutputsDirect OPTEMPO

Latest Acquisition

Costs LAC

Repair Costs

Cost Recovery

Rate (CRR)

Force Structure

G4/ABO Policies

Training Strategy

Modernization

AMC

Price&

Credit

G3 TRM

OPTEMPO Requirements

SAFM-CES

Price & Credit+

Demands+

Activity

ARRG Cost Factor

Review

Equipment Cost FactorsEquipment Cost Factors

6

SAFM-BUR provides

AMC CRR and AMI

Sales Estimates

SAFM-BUR-S reviews/updates

FY13 Price and

Credit Tables

HQDA G-3 HQDA G-3 briefs ARRG briefs ARRG

on BF 3.1 on BF 3.1 SAFM-CE SAFM-CE

briefs ARRG briefs ARRG on impact of on impact of cost factors*cost factors*

Army Program Development 14-18

POM14-18 Lock

G8 Transfers Database toFM&C

HQDA G-3HQDA G-3brief brief TRM TRM

resultsresults to ARRG*to ARRG*

POM 14-18 EXSUM

HQDA G-3 completes

BF 5.0 TRM

AMC G-8 submits FY13

Price and Credit Table

Change Requests

SAFM-CE delivers

cost factors to

HQDA G-3

PAED

SLDA

JAN FEB MAR APR MAY JUN JUL

1

PPBE ConfCNA

Briefs

9

ARRG Price & Credit Timeline

28

HQDA G-3 completes

BF 3.1 TRM

SAFM-CE develops historical

OPTEMPO demand data

base for POM13-17

17 30

24

128

AMC G-8 submits

BF 3.1 APACT to SAFM-BUR-S and SAFM-CE

20

2

AMC briefs AMC briefs ARRG on ARRG on OPTEMPOOPTEMPOLAC/CRR LAC/CRR

price price impact & impact &

repair cost repair cost changeschanges* *

18SAFM-CE develops

cost factors and provides to HQDA G-3

AMC submits BF 5.0 APACT to SAFM-

CE

10

PEG RQMT and Funding DecisionsCommand RQMT, Funding , and Manpower Reviews

15-17

Publish BF3.0Rqmts

CNA Input Due

12

18

SRG #3 Billpayers SA CSA Guidance

POM

Offsite 29 Nov 11

PublishBF5.0

OPTEMPO Rqmt

30

Publish BF3.1Rqmt & Funding Fixes

13 2

* Dates are subject to change

Bill/Bill-Payer Decisions

SRG #2PEG/CMD Updates

5

16-21

PEG Rqmts &Funding Briefs

to PPBC

22

Issue APGM

&TGM

TGM2.0

23 17

PPBC Prioritize Refined1-N List

8

Publish

PF1.0 PF1.1

PublishPF2.0

24

SA/CSA POM

Approval 31295 173

SRG #1 POMGuidance

PublishBF4.0CMD

Sched 8 27 11 183

TGM 4.0

TGM 3.0

SRG #4 Emerging Rqmts/

Billpayers

SRG #5 Billpayers SA CSA Guidance

11

Receive OSD TOA Guidance

SRG POM

Way Ahead

10

1-N List Refinement

POM/BES Submission

to OSD

29

ARRG POM 14-18 Calendar ARRG POM 14-18 Calendar

7

Some ARRG SuccessesSome ARRG Successes

• FY05: Consolidated Depot Maintenance and Ordnance Activity Groups eliminating redundant efforts preparing separate budget submissions

• FY07: Evaluated over $50B of OPTEMPO requirements, examined $2.3B of Price & Credit changes and drove $1B of customer savings

• FY09: MRAP FY11-15 Sustainment. ARRG initiated actions to migrate MRAP into base funding, and actions that led to Army decisions to retain ~19K of the most effective and supportable MRAP variants.

• FY10: ARRG initiated actions resulting in Aviation component reliability improving for 19 of 25 top cost drivers, with a projected $630M return on investment over 10 years.

• FY 10: ARRG guidance on developing cost factors resulted in a $1.2B cost avoidance for POM12-16, with a reduction in FY12 demands of $229.8M

• FY11: For POM13-17, the ARRG evaluated over $10B of annual OPTEMPO requirements and drove savings through demand adjustments and improved cost estimation

• Reduced the AWCF cost recovery rate from 15.9% to $14.1%. This reduced OPTEMPO costs by $55.5M, passing along savings to AWCF customers

• Collective ARRG analysis generated a $1.3B reduction in OPTEMPO requirements

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ARRG Benefits to the Army

• Only forum that balances customer and supplier relationships through the Program, Program Review, and Budget cycles

• Focus is to understand, then control, repair cost growth challenges

• Depot workload and the perception of excess carryover

• Inventory levels

• Assesses impact of programs in the POM

• Collaborative forum for AWCF management

• Leverages the experience of AWCF leadership and functional experts to discuss and resolve financial and logistics related issues

ARRG continues as a model for collaborative financial and logistical management. Now in its eleventh year, the ARRG includes senior

executive membership across the financial and logistics communities

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SLAMIS Overview

Key Players

• SLAMIS: Standard Study Number (SSN), Line Item Number (LIN) Management & Integrating System

• SSN: Budget Control Number

• LIN: Equipment Control Number

• Purpose – A web based system that linked equipment funding to equipment fielding to improve accountability of LIN lifecycle management of standard and non-standard equipment

• What SLAMIS Does -- SLAMIS links processes, data systems, and organizations together to facilitate the coordination of LIN lifecycle management for all equipment

• SLAMIS expanded over time to include other LIN lifecycle issues, and eventually to address all LIN lifecycle issues, including non-standard LINs.

LIN Lifecycle Data Elements

10

Request NSN90 days to IPR

Request SLIN30 days to IPR

DLISAssigns NSN

NSNMDR

ACAT-I&IIIPR

Approve SLIN

AcquisitionDecision Memorandum

Assemble Material Status Record

MSR MSR

New SLAMIS Links

Potential Future Links

KEY:

TRADOCTRADOC

AMC - LOGSA

HQDA

USAFMSA

AMC - IMMCs

PM

UNITS

SAMASBOIP Feeder Data APPROVALDAMO-FD

MARC

CTUFILE

FMSA-RDD

DCSPROGUIDANCE

RequestZLIN(exception)

Approve & Input TAV Data To RDS For TOE Update(RDD)

TOE

SACS

FMSA-HQ

RDS

FB

Certify HQDAApproved BOIP

Force Structure Force Structure

TOEFILE

BOIPFILE

Approve ZLIN

Approve SSN

RequestZLIN

60 days from ZLIN to complete BOIP Input

Process ZLIN Request

#1 #2

Requests SSN

RequestZLIN

TAV

Review or InputBOIP feeder dataInto TAV

BOIPFDBuilt

BOIPFDBuilt

HQDA RequestsBudget SSN

DCSOPS CARD

Approve HQDABudget SSN

HQDA RequestsBudget SSN

Approve HQDABudget SSN

Delete Old LIN

RequestsOld LIN Deletion

Review Old LINDeletion Request

CBS-X

ArmyFlow Model

LIDB

FIELD

FIELDER PBO

Priorities/ DAMPL

ProcurementP & R Reports to ASA(FM)

Fielding Fielding

Requirements Development

Requirements Development

EDSS

The ParticipantsThe Participants

IPRMSR Review

Concept & TechnologyDevelopment

Concept & TechnologyDevelopment

Engineering and Manufacturing Development

Engineering and Manufacturing Development

Production & DevelopmentProduction & Development Operations & SupportOperations & Support

Disposal

FD

AA BB CC

Material Solutions Analysis

Material Solutions Analysis

Decision ReviewIOT&E

FDD FRP

TAADSFMSA-ADD

MTOE

‘Lead’ Responsibility Organization by color

Mission Needs Statement(MNS)

ICT

MRD

Operational Requirements Document(ORD)

Complete & Forward or Directly input BOIP Feeder DataInto TAV

Current SLAMIS Links

=

The Challenge: Manage System Lifecycles

LSSLSS

11

SLAMIS Background *

SLAMIS now centralizes, standardizes and links processes/data elements to provide visibility and accountability of all Army procured equipment:

– the SSN: reflects programmed procurement dollars for Army equipment – the Type Classification process for awarding the standard LIN required for unit’s

authorization document (MTOE) and OPTEMPO funding,– the tools to create relationships between the SSN, LIN and NIIN

• In 1998, an HQDA PPBE IPAT formed to look at how the Army accounts for procurement dollars

• HQDA could “account” for only 7¢ of every HQDA could “account” for only 7¢ of every procurement dollarprocurement dollar spent because of data gaps, conflicting processes, stove piped systems, outdated publications, and the loss of experienced personnel

1. THE ISSUE:

2. THE SOLUTION:

RESOURCE AUTHORIZESUSTAIN

NIINLINSSN

PPBE Support

Procurement Funding (EE PEG)

OPTEMPO Funding (TT

PEG)

Sustainment Funding (SS

PEG)

3. THE GOOD NEWS:

Now, the Army can “account” for more than 80% of every procurement dollar

* Standard Study Number – Line item Number Automated Management & Integrating System

12

• Integrates relational data for managing major items throughout their life cycle

Requiring Funding Procuring Fielding Accounting Sustaining Disposing

•Integrates with key Logistics, Acquisition, and financing requirements systems

•Improves programming and budgeting decisions for procurement and sustainment

•Highlights gaps and friction between major management systems

•Provides framework to resolve emerging life-cycle management issues

•Provides linkage for tracking rapid transition of items from non-standard to standard

SLAMIS – Benefits to the Army

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Three Over-arching ProcessesThree Over-arching ProcessesREQUIREMENTS

RESOURCESACQUISITION

Joint CapabilitiesIntegration &Development

System (JCIDS)

VCJCS/ServiceChief Oversight

1996 - GW-N

Defense Acquisition

System

Milestone DecisionAuthority (MDA)

Oversight1970 - Packard

Planning, Programming, Budgeting & Execution Process

(PPBE)

DEPSECDEF Oversight

1967 - McNamara

• Hard Issues take time• Challenge is synching management of the processes• How do you manage the seams?

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