Mr. Richard Gus Gustafson Principal Deputy Director March, 2010

1. Mr. Richard �Gus� Gustafson Principal Deputy Director March, 2010 State of DFAS

3. DFAS Structure - Director�s Office

4. Operations

5. Strategic Business Management

6. DFAS BRAC Accomplishments Closed 17 sites and realigned 1 site Migrated and consolidated over 200 workloads To date, approximately 5500 positions have been impacted Will achieve approximately $435M in net savings through FY 2011

7. DFAS Footprint � Then and Now Sites 1991 � 300 2009 � 13 2011 � 10 People 1991 � 28K 2009 � 12K 2011 � TBD Systems 1991 � 300+ 2009 � 119 2011 - 111

8. DFAS � What We Do 2009 Data

9. DFAS Vision and Mission Statements Prior Vision Statement Transforming with the Warfighter to remain the trusted financial partner for the Department of Defense Updated Vision Statement To be the recognized leader in DoD�s financial management by consistently delivering first-class service and products. Prior Mission Statement Direct, approve, and perform finance and accounting activities for Department of Defense Updated Mission Statement Lead the Department of Defense in finance and accounting by ensuring the delivery of efficient, exceptional quality pay and financial information.

10. DFAS Strategy Map

11. Customer Collaboration Goal: Provide value-added customer solutions Intent: Partner with customers and other enablers to clearly define negotiated expectations by balancing requirements, enterprise-wide standards and cost realities. Example--

12. Continuous Improvement Goal: Smart changes for better, faster results Intent: Be more effective and efficient by both applying new capabilities and improving existing operations. Examples--

13. Operational Excellence Goal: Deliver first-class products and customer service Intent: Achieve superior results through a high-performing workforce, analytical capabilities, and standardized procedures. Example--

15. The �Critical Four� DFAS Strategic Initiatives for FY 2010 Audit Readiness Customer Service Improvement Customer-Centric Financial Management Solutions Human Capital Development

16. Audit Readiness Support DoD�s effort to get clean audit opinion Develop a dedicated infrastructure for customer audits Develop roles and responsibilities with our customers Implement an organizational structure staffed by a workforce with the necessary skills and experience Ensure processes are documented and the necessary controls are in place and are working Determine risk and develop plans to mitigate Identify and correct process deficiencies Ensure supporting documentation is sufficient and accessible Ensure DFAS-owned systems have sufficient controls, are adequately documented, and are able to readily produce the universe of transactions

17. Customer Service Improvement Call Centers Agency POC Tool Expeditionary Support Organization

18. GFEBS: Completed the mini-release for the MEDCOM Pilot at Ft. Benning Jan 2010. GFEBS will deploy to 11 sites Apr 2010 (Wave 2). Apr 19, 2010, GFEBS will deploy Release 1.4.2 to add foreign military sales (FMS) functionality. Wave 2 sites are: Bragg, Campbell, Monroe, Gordon, Polk, McPherson, Knox, Rucker, Drum, ARNG KY, and MEPS Chicago. GCSS � Army: Deployment site for Release 1.1 is the 11th ACR at the National Training Center (NTC)/Ft. Irwin. Deployment site for Release 1.2 is undetermined. DAI: Deployed the 2nd major release Oct 2009 to DTIC. Scheduled to release version 1.1.2, and 1.2 Oct 2010 to support Missile Defense Agency (MDA), Uniformed Services University (USU), and DISA WCF for CSD. OUSD and DMA have limited deployments for Oracle time and labor during Summer 2010. The schedule for October 2011 has been released; DAI will deploy to TMA, DISA GF, and DTRA. WHS has stated they will implement October 2012. Planning still underway to schedule the additional deployments for the remaining Defense Agencies. Agencies have been identified, but schedule for FY2013 and out is still tentative. Navy ERP: Release to NAVSUP slipped slightly to perform more testing. Navy ERP will deploy supply functionality to NAVSUP in Mar 2010. Deployment to NAVSEA for General Fund is planned for Oct 2010. NAVSEA receives Navy ERP Working Capital Fund Oct 2011. LMP: Completed 2nd deployment May 2009 (1st deployment was in Jul 2003). LMP now stabilized. LMP upgraded SAP to version 6.0 in Oct 2009 enabling LMP conformity with SFIS requirements. LMP 3rd and final deployment is scheduled for Oct 2010 which will complete the Army WCF organizations. DEAMS: Scheduled slipped to May 2010 deployment to Scott AFB ( transactional conversions to begin 1 May) . Spiral 1 of Increment 1 of DEAMS was deployed on 27 July 2007; it is operating successfully. DEAMS Spiral 2 expands functionality and includes USTRANSCOM at Scott AFB, and the Guard units in Springfield, IL and St. Louis, Mo. Increment 2 scheduled for blue printing to start late FY 2011 with FOC planned for FY 2017. Increment 2 will be rolled out to remaining AFB�s and will close gaps existing from previous deployments. Increment 2 RFP is due for release during Summer 2010.GFEBS: Completed the mini-release for the MEDCOM Pilot at Ft. Benning Jan 2010. GFEBS will deploy to 11 sites Apr 2010 (Wave 2). Apr 19, 2010, GFEBS will deploy Release 1.4.2 to add foreign military sales (FMS) functionality. Wave 2 sites are: Bragg, Campbell, Monroe, Gordon, Polk, McPherson, Knox, Rucker, Drum, ARNG KY, and MEPS Chicago. GCSS � Army: Deployment site for Release 1.1 is the 11th ACR at the National Training Center (NTC)/Ft. Irwin. Deployment site for Release 1.2 is undetermined. DAI: Deployed the 2nd major release Oct 2009 to DTIC. Scheduled to release version 1.1.2, and 1.2 Oct 2010 to support Missile Defense Agency (MDA), Uniformed Services University (USU), and DISA WCF for CSD. OUSD and DMA have limited deployments for Oracle time and labor during Summer 2010. The schedule for October 2011 has been released; DAI will deploy to TMA, DISA GF, and DTRA. WHS has stated they will implement October 2012. Planning still underway to schedule the additional deployments for the remaining Defense Agencies. Agencies have been identified, but schedule for FY2013 and out is still tentative. Navy ERP: Release to NAVSUP slipped slightly to perform more testing. Navy ERP will deploy supply functionality to NAVSUP in Mar 2010. Deployment to NAVSEA for General Fund is planned for Oct 2010. NAVSEA receives Navy ERP Working Capital Fund Oct 2011. LMP: Completed 2nd deployment May 2009 (1st deployment was in Jul 2003). LMP now stabilized. LMP upgraded SAP to version 6.0 in Oct 2009 enabling LMP conformity with SFIS requirements. LMP 3rd and final deployment is scheduled for Oct 2010 which will complete the Army WCF organizations. DEAMS: Scheduled slipped to May 2010 deployment to Scott AFB ( transactional conversions to begin 1 May) . Spiral 1 of Increment 1 of DEAMS was deployed on 27 July 2007; it is operating successfully. DEAMS Spiral 2 expands functionality and includes USTRANSCOM at Scott AFB, and the Guard units in Springfield, IL and St. Louis, Mo. Increment 2 scheduled for blue printing to start late FY 2011 with FOC planned for FY 2017. Increment 2 will be rolled out to remaining AFB�s and will close gaps existing from previous deployments. Increment 2 RFP is due for release during Summer 2010.

19. Human Capital Development Under construction Plan to address all necessary human capital development requirements in order to execute the updated strategy

20. Changing Focus To be the leading first-class provider, DFAS is changing a management focus Change in RM Management Focus To be the leading first-class provider, DFAS will change its focus on managing by workyears or FTEs and the Lean structure (past) to a focus on managing by cost efficiencies (present) Management by FTEs formerly included plans to reach a targeted number of GS employees by FY2012 This has historically provided an artificial view of actual resources needed to conduct our mission � it provides a deflated perspective because a significant portion of DFAS effort is provided through contracts and contractors that are not reported via GS employee workyears Now, instead of focusing on reaching a specific workforce size, DFAS will focus on having the right number of employees to accomplish our work as the requirements grow and evolve As a result of in-sourcing (Section 324), DFAS will increase FTEs with equal or lower costs as more civilian are brought onboard to replace previously contracted work For example, nearly 600 GS employees were hired to support the Retired & Annuitant Pay mission formerly performed by contractors Managing by costs leads to best-value for our customers Best-Value Financial Management Services for our Customers DFAS uses various programs, initiatives, tools, and legislative actions to develop a best-value approach to the delivery of FM services Management by costs incorporates expanded tools such as unit-cost management (cost per output) and productivity management Continuous improvement and efficiency efforts, such as Lean6, Business Activity Monitoring (BAM) and the Enterprise Risk Management Program (ERMP), supplement the cost visibility tools Meeting New Customer Requirements at Best-Value Using a new focus and best-value tools, we can expand our services to support changing customer requirements such as audit preparation, SIPPS (Service Integrated Personnel & Pay System), and ERP support & implementation, etc. The Message With the supervisors� help, we can make the workforce aware of the change in focus and our efforts as they relate to providing the best value to our customers as their requirements change and evolveChange in RM Management Focus To be the leading first-class provider, DFAS will change its focus on managing by workyears or FTEs and the Lean structure (past) to a focus on managing by cost efficiencies (present) Management by FTEs formerly included plans to reach a targeted number of GS employees by FY2012 This has historically provided an artificial view of actual resources needed to conduct our mission � it provides a deflated perspective because a significant portion of DFAS effort is provided through contracts and contractors that are not reported via GS employee workyears Now, instead of focusing on reaching a specific workforce size, DFAS will focus on having the right number of employees to accomplish our work as the requirements grow and evolve As a result of in-sourcing (Section 324), DFAS will increase FTEs with equal or lower costs as more civilian are brought onboard to replace previously contracted work For example, nearly 600 GS employees were hired to support the Retired & Annuitant Pay mission formerly performed by contractors Managing by costs leads to best-value for our customers Best-Value Financial Management Services for our Customers DFAS uses various programs, initiatives, tools, and legislative actions to develop a best-value approach to the delivery of FM services Management by costs incorporates expanded tools such as unit-cost management (cost per output) and productivity management Continuous improvement and efficiency efforts, such as Lean6, Business Activity Monitoring (BAM) and the Enterprise Risk Management Program (ERMP), supplement the cost visibility tools Meeting New Customer Requirements at Best-Value Using a new focus and best-value tools, we can expand our services to support changing customer requirements such as audit preparation, SIPPS (Service Integrated Personnel & Pay System), and ERP support & implementation, etc. The Message With the supervisors� help, we can make the workforce aware of the change in focus and our efforts as they relate to providing the best value to our customers as their requirements change and evolve

21. Integrity - Service - Innovation Investment in DFAS and employees Training provided throughout all levels of the Agency: Provided at Cleveland, Columbus, Indianapolis, Limestone, Rome, Arlington, Europe, Japan and Texarkana Executive Team: �Leading at the Speed of Trust�: 29 completed Supervisors: �Leading at the Speed of Trust�: 710 completed Employees: Inspiring Trust training: over 5000 completed�and counting! Speed of Trust is not a Value Proposition: It is a Value Realized

22. Questions?