Preparing for Milestone C and Systems Compliance (Sample – DLA)

1. Preparing for Milestone C and Systems Compliance (Sample – DLA) Prepared for: Program Implementation Group July 24, 2002 EITK0604

2. Replace legacy systems with commercial-off-the-shelf (COTS) software Reengineer by fielding best practices Improve customer service by collaborating with customers Provide best value solutions Provide the training, experience, and opportunity to succeed BSM Will Enable DLA To … “Agile Sustainment”... “The adoption, within the DoD, of the best practices of the commercial market place, resulting in continuously improving logistics operations, cost savings/avoidance, and process cycle reductions.” --JV 2020 (Concept of Focused Logistics) DLA’s Modernization Vision Our mission-critical legacy systems are replaced with a new enterprise architecture based on COTS software and best commercial practices PM 001 3/19/02

3. Where We Are FOC 2005 Multiple Releases Implement Release 2 Summer 2003 Design , Build, Test Release 2 2003 We are here Implement Release 1 2002 Release 2 Planning 2002 Release 1 Testing and Training 2001-02 On Schedule Within Budget Design/Build Summer/Winter 2001 FOC Requirements/Blueprint Spring 2001 IOC Requirements/Blueprint January 2001

4. BSM … How We Got Here… Aug 00Decision Point: Systems Integration Partner selected Oct 00-Apr 01 Business Process Reengineering … Creation of “Blueprint” Jul 01 Completed Design and Configuration Oct 01-Jun 01 Testing Jul 02 Satisfied all Milestone C requirements Testing Completed ROI re-validated Approved by DoD Comptroller Requirement re-validated by Joint Staff • Not modifying core COTS code • Bought and assembled COTS components

5. Notional Standing based on Quantitative Feedback: Sponsors Concept Demo Supervisors Change Agents Union Leadership Concept Demo Employees 5 2 4 3 6 1 5 Meeting the Challenge of Changes “Sustain Performance” “Prepare for New Work” COMMIT “Clarify the Details” BUY-IN Commitment “Build the Foundation” UNDER- STAND AWARE “Create the Approach” UNAWARE “Go Live” Time 7/31/01 4/02 4th Qtr ‘02 Baseline

6. Keys to Success • Modernization Executive Board • Corporate Champion • PEO/PM manages as Major Acquisition Program • Managing Change as a discipline • Full engagement of Stakeholders • Key Modernization Tenets • We will change, not the COTS • We will rely on commercial software and commercial business practices • We will operate as a single Enterprise • Ensure workforce is “Job-Ready”

7. Milestone C Timeline • 28 Mar 02 Brief IIPT • 30 Apr 02 Clinger-Cohen Act Compliance Report signed • 01 May 02 SAMP submitted to OIPT leader for Milestone • 06 May 02 TEMP approved by DoD • 13 May 02 IA Strategy approved by OASD (C3I) • 14 May 02 Brief Joint Requirements Panel • 17 May 02 Brief Joint Requirements Board • 23 May 02 Brief IIPT • 30 May 02 Brief Joint Requirements Oversight Council (paper only) • 03 Jun 02 Brief FFMIA Compliance to DoD Comptroller • 03 Jun 02 Brief Defense Finance and Accounting Service • 13 Jun 02 Brief FMMP Working Group • 19 Jun 02 Brief Deputy OSD(C) • 24 Jun 02 Brief OSD(C) • 02 Jul 02 Brief OIPT • 23 Jul 02 DOD CIO Review

8. BSM Processes:Reengineer by Fielding Best Practices Order Fulfillment Planning • Time Definite Delivery • Available to Promise • Online Account Visibility • More Price Visibility • Demand by Customer • Collaboration • Time-phased Inventory Plan • Demand Based Budget Improve customer service by collaborating With Customers and Suppliers Provide Best Value Solutions Financial Procurement • FFMIA Compliance • Financials integrated with Business Transactions • Moving Average Cost Inventory Valuation Methodology • Supplier Performance and Management • Capable to Promise • Web-based Procurement • Pay on Receipt PM 043 3/25/02

9. FFMIA (System) Compliance • What it is? • The Federal Financial Management Improvement Act (FFMIA) was enacted by Congress in 1996 • It is a composition of various statutes (i.e., CFO Act), regulations and policies related to financial management improvement • DFAS has encapsulated these requirements into a document called the DFAS bluebook • Why it is important? • Verifies that BSM solution meets applicable federal financial requirements • OSD(C) memo dated 21 Aug 01, requires verification that a system is FFMIA compliant (with a 3rd party verification) prior to providing approval to deploy the new system • PBD 704 called for a BSM risk mitigation strategy in relation to FFMIA compliance

10. System Compliance Milestones • 09 Nov 01 Provide OSD(C) Financial Management Modernization Program (FMMP) a BSM Demonstration • 14 Dec 01 Determine which bluebook requirements apply to BSM • 03 Jan 02 Brief OSD(C) FMMP on BSM compliance process • 11 Jan 02 Complete mapping of within scope bluebook requirements and identify/create/modify test cases, conditions, and scripts • 26 Feb 02 Award independent third party assessment contract to KPMG Consulting Inc. • 22 Mar 02 Independent assessor completes assessment of bluebook requirements applicable to Release 1 • 17 Apr 02 Provided OSD(C) FMMP with an interim status of BSM FFMIA Compliance

11. System Compliance (cont) • 07 May 02 Provided OSD(C) FMMP with an interim status of BSM FFMIA Compliance • 24 May 02 Final Assessment report completed by KPMG Consulting Inc. • 31 May 02 Prepare DLA Director for FFMIA certification of BSM Release 1 • 03 Jun 02 Pre-brief OSD(C) FMMP on System certification • 03 Jun 02 Pre-brief DFAS Executive on FFMIA compliance process • 13 Jun 02 Brief FFMIA Working Group to obtain initial recommendation to OSD( C) to proceed with Milestone C approval • 19 Jun 02 Certification of system by DLA Director • 19 Jun 02 Pre-Brief OSD(C) Deputy Comptroller • 24 Jun 02 Brief OSD( C) for approval to proceed with Milestone C approval OSD(C) Granted Approval to proceed with Milestone C

12. Identify and Validate BSM Bluebook Requirements • Previous Bluebook Requirements Reported 506 • FFMIA In Progress Status Review – 03 Jan 02 • Further refinement in progress by BSM team • Final Bluebook Requirement Assessment 440 • BSM team completed refinement • Task completed 15 Feb 02 • Final Bluebook Requirement Assessment 393 • Feedback between BSM and Ind. Assessor • First Ind. Assessor Deliverable – List of Applicable FFMRs • Defines scope of BSM system review • KPMG Consulting Inc. Compliance Assessment 371 • Additional Feedback between BSM, KPMG, and DFAS • Upon further review reclassified 22 FFMRs to N/A

13. Results of theIndependent 3rd Party Assessment

14. FFMIA Compliance Process Value • Minimizes implementation risk • Drives design toward meeting FFMIA compliancy • Provides robust financial system documentation • Fosters collaborative relationship within DLA, DFAS, and independent assessor • Documents DLA FFMIA compliance process

15. Lessons Learned • Begin FFMIA compliance process after Release requirements are complete • Engage DFAS FFMR interpreter after initial FFMR assessment • Engage independent assessor after initial FFMR assessment complete • FFMIA needs to be synchronized with test planning • Documentation requirements were much harder and extensive than anticipated • Involved OSD(C) FMMP early and often

16. Summary…Bottom Line We are ready to“Go Live” • BSM is a great deal more than an IT project • …BSM is the catalyst to transform DLA by: • Reengineering by fielding best practices • Providing the capability to manage the supply chain … factory to foxhole • Improving service by focusing on customer and supplier relationships • Providing the training, experience, and opportunity to succeed in this new environment • Replacing legacy materiel management systems with COTS

17. Backups

18. Not Validated FFMRs

19. Not Validated FFMR Resolution