Systems Engineering Forum Oct 15, 2004

1. DEFENSE LOGISTICS AGENCYTransformation -- Supporting The Warfighter Systems Engineering Forum Oct 15, 2004 Ver 1.16

2. The DLA Enterprise as of Oct 1, 04 FY 02 Sales/Services: $21.5B FY 03 Sales/Services: $25B FY 04 Projection: $28.9B Scope of Business • 45,000 Requisitions/Day • 8,200 Contracts/Day • #54 Fortune 500 – Above Northrop Grumman • #2 in Top 50 Distribution Warehouses • 25 Distribution Depots • 5.2 Million Items • 24.7M Annual Receipts and Issues • 1411 Weapon Systems Supported • 147.7M Barrels Fuel Sold (FY 03) • $12.5B Annual Reutilizations/Disposals • Land/Maritime/Missiles: $ 2.7B • Aviation: $ 3.3B • Troop Support: $10.2B • Energy: $ 5.2B • Distribution: $ 2.2B • Other: $ 1.4B • ~95% of services repair parts • 100% of services subsistence, fuels, medical, clothing & textile, construction & barrier materiel People Foreign Military Sales • 21,490 Civilians • 524 Active Duty Military • 637 Reserve Military • Located in 48 States/28 Countries • Sales: $719M • Shipments: 580K • Supporting 124 Nations

3. Defense Logistics Agency CORPORATE STAFF DLA Director Vice Admiral Keith W. Lippert Supply Corps, United States Navy Vice Director Major General Mary Saunders United States Air Force DIRECTOR VICE DIRECTOR SPECIAL STAFF DLA SUPPORT SERVICES J-1 HUMAN RESOURCES J-3 LOGISTICS OPERATIONS J-4 CUSTOMER OPERATIONS& READINESS J-6 INFORMATION OPERATIONS J-8 FINANCIAL OPERATIONS J-9 JOINT RESERVE FORCES BUSINESS UNITS DSCC DSCR DSCP DESC DDC DRMS SERVICE ACTIVITIES DLA-C DLIS DAPS DLA-P DLA-E DNSC

4. DLA’s Transformation Strategy • 10 Major IT modernization programs … 2 ACAT 1A • $1.8+ billion net savings committed for return to the Services • Agency’s core business model changing … • Support to Services – driven by future requirements • Suppliers – manager and integrator • Supply Chains – effective, efficient and seamless Partner • End-to-end internal business process re-engineering … based on COTS integration • Collaborating with Services, Agencies and Combatant Commanders

5. Why DLA Needs To ModernizeIts Business Systems … • Legacy systems do not meet current and future operational needs • Does not support Joint Vision 2020, DoD Force-Centric Logistics and DLA Strategic Plan • Does not support changing business rules • Obsolete code and outdated/inflexible technology • No real-time access to logistics data • High maintenance costs, increasing unreliability Legacy environment does not support DLA’s Vision for Warfighter Customer Support

6. DLA’s Business SystemsModernization (BSM)… • Major Transformation Effort--Massive Change for our Workforce, Creation of an Enterprise • Incorporating Best Practices via Commercial-Off-The-Shelf (COTS) Based Tools • BSM Replaces 30-year old Materiel Management Systems … and our processes were embedded in those systems • The Core of DLA’s Enterprise Architecture • Using best business systems engineering practices Managed as ACAT 1A program

7. BSM Program Summary • Expected Benefits: • Improved demand forecasting accuracy • Better stock positioning • Improved financial accountability • Achieve auditable financial statements • Retire 15 legacy systems • Reduce risk of catastrophic failure • Economic Analysis Summary: • Investment $ 506.7 M • Return $ 772.1 M • Return on Investment 1.52 • Payback FY 09 • July 03 Economic Analysis. EA is being updated for Full-Rate Production Deployment Review • Program Timeline: • Analysis of Alternatives Jan 99 • Scripted Demonstration of COTS Aug 99 • Mission Need validated/approved by JROC/Milestone 0 Nov 99 • Approval to begin “Concept Development” by ASD(NII)/Milestone 1/2 Aug 00 • Blueprint/Design/Build/Test Jan01-Jun02 • Approval to being “Concept Demonstration” by ASD(NII)/Milestone C Jul 02 • Initial Operating Capability FY 05 • Full Operating Capability FY 06 • Program Attributes: • Major Acquisition Program • Within Program Objective and Threshold • Core of DLA Transformation strategy • Reengineered business process and best practices • Enterprise Resource Planning (ERP)/COTS • Commercial Data Center

8. Business Systems Modernization (BSM) TRR SRR IBR ITR PDR Design CDR ORR OTRR Business Systems Engineering Approach • Documented in SEP/TEMP Requirements • Responsibility of the Program SE Lead • Process Validation by the SE Chief • In Coordination with the SE Technical Authority Technical Blue Print Review Independent Build OA IOT&E RICE Object Validation Test • Design Deliverables • Functional Designs • Scenarios & Scripts • Data Migration/Conversion Approach • Training Execution Plan • Training Gap Analysis • Competency Profiles • BSM Roles & Responsibilities • Build Deliverables • Technical Specifications • Source Code • Training Material • Unit Test Plan & Results • System/Product Test Plan • Conversion/Mock Conversion Test Plan • Performance/Stress Test Plan • Regression Test Plan • Configuration Rationale • Assembly Test Plans • Test Deliverables • Functionality Test Cases/Test Scripts/Data Sheets • Integrated Test Cases/Test Scripts/Data Sheets • System/Product Test Execution Plan/Log • Security Test (Application) Plan & Results • User Acceptance Test Plan & Results • System Product Test Results • Conversion/Mock Conversion Test Results • Performance/Stress Test Results • Regression Test Results • SIR Report with Completion Status Independent Validation and Verification (IV&V)

9. J-6 Organizational Relationships Enterprise Architecture Chief Information Officer Chief Architect Program Management Business Systems Engineering Enterprise Solutions Program Executive Officer Portfolio Management Enterprise Portfolio Manager

10. DLA Portfolio Management Process

11. Strategic Planning(Cyclical-Annual) Mission Analysis(Event Driven) Portfolio Management(POM Driven) Systems Acquisition (Phased Milestone-Driven) Enterprise Architecture Process for change J-1 / J-3 / J4/ J-6 / J-8/ J9/ DSS Functional Proponents Portfolio Manager TEB Process Owners Functional Proponents PEO and MDAs PMs Gaps/Overlaps InvestmentPhasing Operational Models FunctionalRqm’ts Architecture compliance System and Infrastructure Models Enterprise Models Architecture Information Repository Architecture Baselines TEB Process Information Repository PortfolioInformation Repository Transition Plan ( Master Schedule)

12. Plan Materiel Provisioning Plan Materiel Plan Acquistion Strategy Plan Fielding and Allocation Provisioning ELIMINATE/DEMOTE Source Make Deliver Sustain Logistics Chain OV2.1 Program Structuring, ENABLE LOGISTICS Planning & Scheduling Validate and Install Verify Modification Modification Kit Kit This is outside of Logistics and is in the role of Acquisition Program Structuring, Integrate PLAN LOGISTICS Packaging Delivery Project Execution Planning & Scheduling Plan TLCSM Asset Conduct Test & EXECUTE LOGISTICS Evaluation Contract Contract Award Administration Scrap (TLCSM) Sales (TLCSM) Gains & Losses (TLCSM) Surplus (TLCSM) Planning Collect Analyze Monitor Monitor Monitor Monitor Asset Visibility Historical Maintenance Data From Intransit Asset Maintenance Cost Data CBM+ Visibility Location History Publications Bills of Materials Alignment with DOD Architectures BEA Activity Overview Manage Operations Perform Strategic Planning & Budgeting Perform General / Cost Accounting Process Collection/ Acct Rec & Manage Cash Financial Management & Reporting Human ResourceManagement Manage Procurement / Payable / Acq / Disbursing PerformLogistics DoD Enterprise View Establish Perform BEA Design/Maintain Code Identify Financial Analyze Customer/ Perform Enable Strategic Organizational Compliance Report Structure/Chart of Accounts/ Vendor Information/ Procurement Logistics Requirements Credit Requirements Management and Acquisition Accounting Methodology Map/Post/ Establish Future Identify Perform Billing/ Manage Manage Plan Accumulate Year Defense Plan/ Management Establish Benefits Payables Logistics Report Requirements Program and Budget Information Receivables Conduct Manage Manage Allocate and Prepare Closing and Disburse Execute Receivable/ Payroll and Information Funds Logistics Control Funding Review Debt Product Travel Pay Execute Perform Accounting Disseminate Manage Current Year Manage Information Purchase Card Analysis and Review Cash Business Plan Product Program Improve Strategic Liquidate Planning and Receivable/ Budgeting Processes Debt DoD Domain Views BEA-Log DLA Supply Chain View BSM Order Fulfillment Procurement Finance

13. Sponsorship/Leadership Reporting Process MDA Overarching IPT (OIPT) DLA Oversight • Program Milestones • Exit Criteria Reviews • For Each Phase • System Readiness • Preliminary Design • Critical Design • Test Readiness • Operational Readiness Director CIO CAE Integrating IPT (IIPT) PEO TEB Corp. Board CIO Partners PM Working IPTs (WIPTs) Acquisition Information Assurance Earned Value/Resource Monitoring Technical PMO Testing • Program Integration • Monthly Corporate Board • Bi-Monthly TEB • Enterprise Architecture Reviews • IPT Reporting • Weekly WIPT Meetings • Bi-Weekly WIPT Leadership Reviews SI Program IPTs • Program Oversight • Weekly Solution Integration Status • Weekly Change Control Board • Monthly Program Manager Assessment • Quarterly Program Implementation Group • Quarterly Defense Acquisition Executive Summary Report • Program Reporting • OMB Circular A-11 (Budget cycle) • Clinger Cohen Act Certification • Federal Information Security Management Act (FISMA) • Domain Reporting • Business Enterprise Architecture • FFMIA Comptroller Certification • Logistics Program Review Change Management Solution Sustainment Knowledge Transfer Solution Integration Risk & Issue Management Contracts & Acquisition Site Transition

14. Delivering Transformation through Disciplined Business Systems Program Management Practices DLA Policy and Guidance PM’s Monthly Assessment-Sample-

15. DLA Business Systems Engineering Governance DLA Chief Information Officer J-6 Chief Technology Officer CAE Acquisition Oversight • IT Solutions Document • Enterprise Architecture • LCM for Emerging Systems -One Book • AIS Program Management -One Book • IT Acquisitions-One Book • CMMI PEO MDA MDA Program Oversight ACAT IA Programs ACAT III Programs • Overarching IPT (OIPT) • Integrating IPT (IIPT) • PEO Review Board • Program Alignment, Engineering Authority • PEO Review Board • Program Alignment, Integration and Engineering Oversight SEP TEMP CMMI Reviews “System Integrator Best Practices” DLIS - Data Integrity Data Quality Technical Reviews Technical Reviews Design ---------- Build ---------- Test System Solution Integrator

16. Software Acquisition/Business Systems Engineering Process Improvement Approach Functional Requirements Analysis and Allocation Capability Analysis Business Systems Engineering Characteristics Enclosure 10 Software Acquisition (SA) Process Improvements Section 804 Business Systems Engineering Process • Acquisition Planning • Requirements Mgmt • Configuration Mgmt • Risk Mgmt • Project Mgmt • Test and Evaluation • Integrated Teams • Solicitation and Source Selection • SE Partnerships • SEP • Policy/ Procedures • Technical Authority • Best Practices • Lessons Learned • Education/ Training • Tools • Contract Incentives • SE Partnerships Needed Capabilities Build Requirements Loop Test Test Loop Design Loop Verification Design Business Systems Capabilities

17. DLA Business Systems Engineering Governance DLA Chief Information Officer J-6 Chief Technology Officer • IT Solutions Document • IT Acquisition – One Book • Enterprise Architecture • LCM for Contemporary Systems– One Book Director, Enterprise Solutions System Oversight Contemporary Systems Configuration Control Board (CCB) Project Management Plan Testing Process Management CM/TM Tools SPI CMMI IEEE/EIA 12207.1 DLIS - Data Integrity Technical Reviews Data Quality Technical Reviews Design ---------- Build ---------- Test DLA Sustainment Organization (J-6)

18. DLA’s Sustainment Workforce DLA’s Business Systems Engineering Workforce ‘How do we close the Gap’ • Ensure transition plan in place • Reduce legacy demand • Ensure quality hand-off from BSM program office • Set realistic expectations with the business • Use contractor support for legacy and move organic to BSM • Ensure people are ‘Job Ready’ • Requires Supervisor focus and accountability to affect workforce change • Measure and hold employees accountable • Drive skill development with continued focus on training and job assignments • Establish meaningful IDPs Steady State Projected Demand = 177 employees Steady State Target Budget Staffing = 119 Employees 10/2003 12/2003 R1.1 03/2004 R1.2 5/2004 R1.3 8/2004 R2.0 9/2006 FOC * Based on extrapolation of Employee estimates of skill progress As of: July 2004

19. Apply robust Systems Engineering (SE) approach to balance total system performance and total ownership costs within FOS/ SOS context Develop a SEP for MDA approval for each Milestone Review and integrated with the Acquisition Strategy Describe program’s overall technical approach in SEP Technical Approach Technical Reviews DLA’s IT business systems programs are implemented using COTS solution integration best practices consistent with systems engineering best practices In DLA, business SE is applied to both Emerging and Contemporary IT Business Systems DLA is updating and developing One Book Topics to address business SE and SEP requirements DLA is revising the MS Exit Criteria to include business SE for ACAT III Programs Oversight is accomplished through the Alignment, Integration, and Engineering Organization Wynne Systems Engineering PlanDirection and DLA Response Wynne Direction: All Programs DLA Response Moving to a COTS Business Systems Engineering Focus as an Enterprise

20. DLA Collaboration Efforts EI Toolkit • DUSD(L&MR) Program Implementation Group • Defense Acquisition System (5000) Streamlining with AT&L • Logistics Cross-Domain Integration • Data Integration • Data Interoperability • Logistics COE Data Strategy consistent with Net-Centric Enterprise Services • Business Enterprise Architecture • Defense Acquisition University (CEBS) • Streamline, Leverage and Collaborate • Awareness, Change Readiness, Training and Education • Enhance Portfolio Management • Active Engagement/Effect Process Change FOCUS Tailored COTS business systems engineering approach across Logistics Domain

21. COTS Lifecycle Overview

22. Business Systems Engineering Concerns • Coordination of multiple organizations for ACAT IA programs (SE/Test, BEA, IA, etc.) • Evolving Net-Centric context • Agency resources stretched where some PMOs consist of only 2-3 personnel. Must rely on industry for business SE processes • Program impact when applied to post-Milestone B ACAT IA programs • Tailoring for COTS integration business systems implementation

23. ConclusionDLA Implementation Approach • Implement business SE within each program, using BSM practices as the Model • Provide oversight through PEO Program Alignment, Integration, and Engineering Office • Business SE a part of Milestone Reviews and CMMI reviews • Leverage Industry COTS business systems engineering practices • Updating Policies in the DLA One Book Delivering Transformation through disciplined business systems engineering, portfolio management, and program management practices

24. Backup Slides

25. Enclosure 10, DODI 5000.2 Requirement DRAFT Business Systems Engineering Compliance Structure Enterprise Solutions PEO Office J-64 J-62 SE Technical Authority PEO Alignment, Integration, and Engineering J-621 SE Chief PROGRAM PROGRAM PROGRAM Technical Review Board Technical Review Board Technical Review Board SEP TEMP SEP TEMP SEP TEMP SE Lead SE Lead SE Lead

26. Concept Refinement Technical Reviews Approach MS A Technical Review Boards Requirements ITR – Initial Technical Review SRR – System Requirements Review MS B Technical Development Design PDR – Preliminary Design Review CDR – Critical Design Review MS C System Development & Demonstration Build IBR – Integrated Baseline Review TRR – Test Readiness Review Test ORR – Operational Readiness Review OTRR – Operational Test Readiness Review IOC Production & Deployment IBR – Integrated Baseline Review PCA – Physical Configuration Audit FOC Operations & Support In-Service Review

27. IT Acquisition ProgramResponsibilities CAE Responsibilities • Jointly sets IT systems acquisition policy and procedures through the One Book Process • Provides acquisition program oversight and support to the PEO • Reviews and concurs with ACAT IA Acquisition Program Baselines • Delegates MDA to PEO for ACAT III Programs • Delegates MDA to CIO for Special Interest Programs • Assigns PEO responsibilities through the One Book Process • Approves service acquisitions to include IT • Provides CAE comments to DAES Reports • Participates as a member of the TEB • Identifies PM reporting directly to the CAE • Jointly Identifies Special Interest IT Programs Director DLA TEB CIO CAE PEO Responsibilities PEO • Acts as the MDA for ACAT III programs • Chairs the PEO Review Board • Provides Program Assessment and Status Reporting • Implements LCM Policy and Procedures • Provides Comments to the DAES Reports • Oversees PM Training and Certification • Provides oversight to Program Funding • Provides oversight for systems integration • Provides guidance and direction to the PMs • Informs CIO/CAE of program critical issues • Implements the IT systems acquisition policy and procedures • Reports directly to the CIO • Reviews and/or approves appropriate LCM program products CIO Responsibilities • Jointly sets IT systems acquisition policy and procedures through the One Book Process • Provides IT investment and programmatic oversight and support to the PEO • Reviews and concurs with IT ACAT IA Acquisition Program Baselines • Provides IT capabilities through IT program implementation and performance through the PEO • ReviewsIT program EA/BCAs for quality and ROI • Certifies CCA Compliance • Selects and Assigns PMs for IT ACAT IA and ACAT III Programs • Oversees IT PM training and certification • Participates as a member of the TEB • Jointly identifies IT special interest programs

28. R2.0 Pass 2 Status DT&E Status DT&E Earned Value • As of 6/11/04, Pass 2 is 99% complete with 4 remaining functional test cases • The 4 functional Pass 2 test cases are as follows: • OF: BW reports – ECD of 6/18/04 • FI: APVM – ECD of 6/18/04 • PL: DFU Hierarchy – ECD 6/18/04 • PR: Awards in DPACS – ECD of 6/15/04 • Regression Testing is underway without being impacted by these 4 test cases

29. R2.1.1 Suffix Code Redesign Schedule May 04 Jun 04 Jul 04 Aug 04 Sep 04 Oct 04 Nov 04 Dec 04 Kick off CDR Design • Detailed Functional Design documentation for suffix code re-design, and partial cancellations • Technical Design documentation • Internal and External Communications TRR Build • Build RICE objects as outlined in Technical Designs • Unit testing • Interface assembly testing with DAASC • Develop test cases • Finalize cutover schedule • Design and develop and relevant training materials • Internal and External Communications Test Design start 10 May Design end 16 Jul CDR 19 Jul Build start 19 Jul Build end 1 Oct TRR 4 Oct Test start 4 Oct Test end 26 Nov ORR 29 Nov Go Live 1 Dec • System test • Regression Test • Training • Internal and External Communications ORR Cutover

30. Current BSM Timeline 1 1 1 1 1 2 2 2 2 2 3 3 3 3 3 4 4 4 4 4 FY 2001 FY 2002 FY 2003 FY 2004 FY 2005 FY 2006 Activity 1 2 3 4 MILESTONE C FRPDR FOC IIPT OIPT BSM MajorMilestones System Demo (R 1.0) System Demo (R 1.1) BDU/DISMS System (R 2.2) Design/Build/Test Design/Build/Test Design/Build/Test System Demo (R 1.2/R 1.0 DPACS RETROFIT) P3I System (R 2.1) Design/Build/Test Design/Build/Test System Demo (R 2.0) Design/Build/Test Business Process Setting BPR Revised BPR IOC R 1.0 R 1.1 DESIGN BUILD TEST DESIGN BUILD TEST Sys Configuration ID-Baselines R 1.2/R 1.0 DPACS RETROFIT R 2.1 DESIGN BUILD TEST DESIGN BUILD TEST R 2.0 R 2.2 DESIGN BUILD TEST TEST DESIGN BUILD R 1.1 ROLLOUTS R 2.1 – R 2.2 ROLLOUTS Sys Deployment Sustainment LIFE CYCLE SUPPORT R 1.0 Reviews/Test Cycle R 1.1 Reviews CDR ORR TRR SRR R 2.1 Reviews DT/OA OA DT OA CDR TRR ORR R 1.1 Test Cycle IPR DT/OA R 2.1 Test Cycle Audits/Tests/Verification TRR TRR R 1.2/DPACs Reviews CDR ORR SRR R 2.2 Reviews OA DT R 1.2/DPACs Test Cycle CDR ORR TRR Critical Design Review SRR DT/OA FOTE R 2.0 Reviews SRR CDR TRR ORR R 2.2 Test Cycle DT IOT&E R 2.0 Test Cycle As of: August 2004

31. BSM Master Schedule Oct 03 Apr 05 Jul 05 Oct 05 Jan 06 Apr 06 Sep 06 Apr 03 Jul 03 Jan 04 Apr 04 Jul 04 Oct 04 Jan 05 BSM Release 2 Manu 7.1 Upgrade ORR Go Live CDR TRR PDR Evaluation Compl. Comptroller Approval R2 FFMIA Certification Development Delivery Training Org Analysis/Job Redesign Org Structure/Job Build Org Alignment Implementation Agency Staffing Model Rollout Staffing Models Mock Conversions/Cutover Data Conversion EMALL Version 5.6 Requirements Design Build Test PPS Full Rate Deployment Decision Business Warehouse IOT&E BW 1.1 Go Live BW 1.2 BW 2.0 BW 2.1 BW 2.2 CDR TRR Go Live Release 2.1.1 (Suffix/Status Code) CDR TRR Go Live Release 2.1.2 (Collaboration) Release 1.1 (BDU/DISMS) CDR TRR ORR Go Live Release 2.1.3 (Stratification) Production Support Period ORR FDR/PDR CDR/TRR SRR CDR TRR ORR Go Live Go Live BSM Release 2.2 Preliminary Design Test OA/Job Redesign OA Implementation Rollouts Org Align Final PO Signoff KT&T Dev Development Delivery Delivery Training 2 3 4 5 Rollouts DSCC 1 2 3 4 5 Data Conversion Rollouts DSCP Monthly Sustainment Releases Rollouts 2 3 4 5 ISPS Patch Brown-Out Rollouts DSCR PPS 1.0 Retrofit Go Live Procurement Solution (DPACS) 1.1 DO & Post Post Go Live ORR 1.1 CP Go Live 2.0 Go Live 2.1 Go Live 2.2 Go Live Release 1.2 (C&T) SRR CDR TRR ORR PPS SAP eProcurement eP 1 Software Delivery eP Release 2 Software Delivery eP Release 1 Software Acceptance eP Release 2 Software Acceptance