The Defense Finance and Accounting Service Story ASMC April 13, 2005

1. The Defense Finance and Accounting Service StoryASMC April 13, 2005 Zack E. Gaddy Director, Defense Finance and Accounting Service Integrity - Service - Innovation

2. Topics • DFAS… • Where we are • Where we’re going • My closing thoughts Integrity - Service - Innovation

3. DFAS at a Glance -- Our Mission, Vision & Values • Mission: Provide responsive, professional finance & accounting services for the people who defend America. • Vision: Best value to our customers • World-class provider of finance & accounting services • Trusted, innovative financial partner • One organization, one identity • Employer of choice, providing a progressive & professional work environment • Values: Integrity, Service, Innovation Integrity - Service - Innovation

4. DFAS at a Glance - Magnitude of Annual Operations • Process 104M pay transactions to 5.9M military, civilians, retirees and annuitants • Make 6.9M travel payments • Pay 12.6M commercial invoices • Process 127.3M general ledger postings • Manage military and health benefits funds ($234B) • Make an average of $455B in disbursements to pay recipients • Manage $13.5B in foreign military sales (reimbursed by foreign governments) • Account for 282 active DoD appropriations World’s Largest Finance and Accounting Operation Integrity - Service - Innovation

5. DFAS at a Glance - The State of DFAS Today Total Work Force 324 87 Integrity - Service - Innovation

6. Our Strategic Challenge • Our customers expect: • Accurate and timely payment of personnel • Accurate and timely payment of vendors and contractors • Auditable financial statements • Business intelligence that enables better decision-making • Lower costs of products and services • Customers deserve a financial service partner who enhances their readiness & mission capability Integrity - Service - Innovation

7. Our Strategic Challenge • Challenges • Stressed military pay systems • Manual processes used to pay vendors • Numerous barriers to achieving unqualified audit opinion • Disparate systems continuing static financial data • Demographics and skill sets of DFAS work force • BRAC and NSPS will affect DFAS • Strategic targets to meet the challenges • Pay service members what they are entitled to on the scheduled pay date • Expand e-commerce for Commercial Pay • Support DoD’s objective of auditable financial statements • Develop a corporate capability to deliver unique business intelligence • Recruit, train and retain a work force needed to develop & implement the DFAS strategy Integrity - Service - Innovation

8. Transformation Approaches • Business Case Analyses • Competitive Sourcing • Lean6 • Portfolio Management • Business Management Modernization Program • DoD Financial Management Work Force Development Working Group Integrity - Service - Innovation

9. Transformation Results Integrity - Service - Innovation

10. Future State Future State • Leverage operational excellence • Develop client partnerships • Deliver business solutions • Become customer of system capabilities (DEAMS, DIMHRS, etc.) Customer Focused • Leverage Implement collaborative process that leverages transformation efforts across DFAS Value Driven • Integrate Efficient • Generate results based on best value to the customer Transact Transact Analyze Process Process Partner Current State Current State 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 DFAS Transformation Objective Integrity - Service - Innovation

11. Closing Thoughts • External forces push us forward • President’s Management Agenda • BRAC • Systems modernization • NSPS • Operational mission needs • Internal drive to excel • Accountable & agile • Dedicated & professional work ethic • Transformation is about finding the “big leap” forward that allows you to accomplish what you can’t even imagine today. Integrity - Service - Innovation