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Business Planning and Execution Mr. Don Tison 28 March, 2012

Business Planning and Execution Mr. Don Tison 28 March, 2012. Three Over-arching Processes. REQUIREMENTS. Variable. Challenge is in the Integration of All Three. Joint Capabilities Integration & Development System (JCIDS). VCJCS/Service Chief Oversight 1996 - GW-N. Defense

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Business Planning and Execution Mr. Don Tison 28 March, 2012

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  1. Business Planning and Execution Mr. Don Tison 28 March, 2012

  2. Three Over-arching Processes REQUIREMENTS Variable Challenge is in the Integration of All Three Joint Capabilities Integration & Development System (JCIDS) VCJCS/Service Chief Oversight 1996 - GW-N Defense Acquisition System Planning, Programming, Budgeting & Execution Process (PPBE) ACQUISITION RESOURCES Milestone Decision Authority (MDA) Oversight 1970 - Packard DEPSECDEF Oversight 1967 - McNamara Events Based Calendar Based 2

  3. RESOURCE AUTHORIZE SUSTAIN Two Processes That Get at the Challenge ARRG 2012 2012 2001 2001 PPBE Support ACQ RQMTS Resources Requirements Resources Procurement Funding (EE PEG) Sustainment Funding (SS PEG) SSN LIN NIIN OPTEMPO Funding (TT PEG) SLAMIS Tied to the Three Key Business Processes 3

  4. ARRG Overview • 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 Key Players Co-Chairs: HQDA Deputy G-8 & Deputy Director Army Budget Office ARMY SECRETARIAT ASA(FM&C) ASA(ALT) ASA(MR&A) G-6/CIO ABO, Dir Bus Ops ABO, Dir Ops Sprt DASA-CE Army Audit Agency ARMY STAFF G-3/5/7(Operations) G-4 (Logistics) G-8 (PA&E) ACSIM OCAR ARNG ARMY MATERIEL COMMAND G-3 (Operations) G-4 (Logistics) G-8 (Resources) ARRG is the Executive Leadership Forum for the AWCF $15B per Year Business 4

  5. ARRG Background* 1. THE ISSUE: • Growth at ~twice the rate of inflation in OPTEMPO • Program and Budget disconnected • Customer/Supplier relationship on cost growth unclear 2. THE SOLUTION: 3. THE GOOD NEWS: • 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 Controlling costs while providing predictable prices and credits * Army Working Capital Fund Requirements Review Group 5

  6. Equipment Cost Factors A R R G E V A L U A T I O N Cost Factors ARRG Cost Factor Review Latest Acquisition Costs LAC Outputs Direct OPTEMPO G3 T R M Price & Credit SAFM-CES Price & Credit + Demands + Activity Repair Costs AMC Cost Recovery Rate (CRR) Training Strategy Modernization Force Structure G4/ABO Policies OPTEMPO Requirements 6

  7. ARRG POM 14-18 Calendar POM Offsite 29 Nov 11 SLDA SRG #3 Billpayers SA CSA Guidance SRG #4 Emerging Rqmts/ Billpayers SRG #5 Billpayers SA CSA Guidance SRG POM Way Ahead SRG #1 POM Guidance SRG #2 PEG/CMD Updates Receive OSD TOA Guidance SA/CSA POM Approval 10 5 29 11 18 3 17 31 Army Program Development 14-18 POM 14-18 EXSUM Command RQMT, Funding , and Manpower Reviews PAED Bill/Bill-Payer Decisions PEG RQMT and Funding Decisions POM14-18 Lock G8 Transfers Database to FM&C 1-N List Refinement PEG Rqmts & Funding Briefs to PPBC Publish BF5.0 OPTEMPO Rqmt POM/BES Submission to OSD Publish BF4.0 CMD Sched 8 Publish BF3.1 Rqmt & Funding Fixes PPBE Conf CNA Briefs Issue APGM & TGM PPBC Prioritize Refined 1-N List CNA Input Due Publish PF1.0 PF1.1 Publish PF2.0 Publish BF3.0 Rqmts TGM 4.0 TGM 3.0 TGM 2.0 12 15-17 22 13 16-21 23 30 17 27 2 3 8 11 18 24 1 29 JAN FEB MAR APR MAY JUN JUL ARRG Price & Credit Timeline AMC briefs ARRG on OPTEMPO LAC/CRR price impact & repair cost changes* HQDA G-3 briefs ARRG on BF 3.1 SAFM-CE briefs ARRG on impact of cost factors* AMC G-8 submits FY13 Price and Credit Table Change Requests SAFM-BUR-S reviews/updates FY13 Price and Credit Tables SAFM-CE develops historical OPTEMPO demand data base for POM13-17 SAFM-BUR provides AMC CRR and AMI Sales Estimates AMC submits BF 5.0 APACT to SAFM-CE HQDA G-3 brief TRM results to ARRG* SAFM-CE delivers cost factors to HQDA G-3 5 10 25 17 9 28 1 30 2 24 18 20 28 HQDA G-3 completes BF 3.1 TRM SAFM-CE develops cost factors and provides to HQDA G-3 AMC G-8 submits BF 3.1 APACT to SAFM-BUR-S and SAFM-CE HQDA G-3 completes BF 5.0 TRM 7 * Dates are subject to change

  8. Some 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 8

  9. 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 9

  10. SLAMIS Overview • 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. Key Players LIN Lifecycle Data Elements 10

  11. Mission Needs Statement (MNS) Approve & Input TAV Data To RDS For TOE Update (RDD) BOIP Feeder Data APPROVAL DAMO-FD The Challenge: Manage System Lifecycles FD FDD FRP Material Solutions Analysis Concept & Technology Development Production & Development Engineering and Manufacturing Development Operations & Support B C Disposal A IOT&E Decision Review The Participants DCSPRO GUIDANCE Army Flow Model DCSOPS CARD Procurement P & R Reports to ASA(FM) HQDA Requests Budget SSN HQDA HQDA Requests Budget SSN SAMAS Force Structure Priorities/ DAMPL Operational Requirements Document (ORD) ICT TRADOC Certify HQDA Approved BOIP RDS SACS MARC TOE FILE MRD FMSA-HQ FB Requirements Development CTU FILE EDSS MTOE BOIP FILE = Request ZLIN (exception) USAFMSA TAADS FMSA-RDD FMSA-ADD TOE TAV #1 MSR Review Delete Old LIN Approve HQDA Budget SSN #2 Approve HQDA Budget SSN IPR LIDB AMC - LOGSA ACAT-I&II IPR Approve ZLIN Approve SSN Acquisition Decision Memorandum Approve SLIN Review Old LIN Deletion Request Review or Input BOIP feeder data Into TAV Assemble Material Status Record CBS-X Process ZLIN Request Requests SSN AMC - IMMCs MSR BOIPFD Built Fielding KEY: Complete & Forward or Directly input BOIP Feeder Data Into TAV FIELD Request SLIN 30 days to IPR Request NSN 90 days to IPR Request ZLIN Request ZLIN PM Current SLAMIS Links Requests Old LIN Deletion LSS New SLAMIS Links Potential Future Links NSNMDR DLIS Assigns NSN FIELDER PBO 60 days from ZLIN to complete BOIP Input UNITS ‘Lead’ Responsibility Organization by color 11

  12. RESOURCE AUTHORIZE SUSTAIN SLAMIS Background * 1. THE ISSUE: • 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 procurement dollar spent because of data gaps, conflicting processes, stove piped systems, outdated publications, and the loss of experienced personnel 2. THE SOLUTION: PPBE Support Procurement Funding (EE PEG) Sustainment Funding (SS PEG) SSN LIN NIIN OPTEMPO Funding (TT PEG) 3. THE GOOD NEWS: • 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 Now, the Army can “account” for more than 80% of every procurement dollar * Standard Study Number – Line item Number Automated Management & Integrating System 12

  13. SLAMIS – Benefits to the Army • 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 13

  14. Three Over-arching Processes REQUIREMENTS Joint Capabilities Integration & Development System (JCIDS) VCJCS/Service Chief Oversight 1996 - GW-N Defense Acquisition System Planning, Programming, Budgeting & Execution Process (PPBE) ACQUISITION RESOURCES Milestone Decision Authority (MDA) Oversight 1970 - Packard DEPSECDEF Oversight 1967 - McNamara • Hard Issues take time • Challenge is synching management of the processes • How do you manage the seams? 14

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