rebecca beck director of finance - dfas columbus procure to pay winning the procure-to-pay battle
TRANSCRIPT
Rebecca Beck
Director of Finance - DFAS Columbus
Procure to PayWinning the Procure-to-Pay Battle
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DFAS Today
Supports more people than any other financial agency
Pays more vouchers, accounts, and appropriations and funds
Supports DoD in decreasing Overseas Contingency Costs in a complex environment of cost containment
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DFAS Mission: Lead the Department of Defense in finance and accounting by ensuring the delivery of efficient, exceptional quality pay and financial information.
Sales & Service - $1.6B Scope of Business• Military Pay $160.6M• Civilian Pay $ 82.8M• Retiree Pay $ 68.9M• Travel Pay $ 46.9M• Commercial Pay $182.1M• Accounting Services $473.5M• Support to Others $201.7M• Others $355.2M
• Processed 181 Million Pay Transactions (6 million people)
• Made 7.8 Million Travel Payments• Paid 12.8 Million Commercial Invoices• Maintained 178.8 Million General
Ledger Accounts• Managed $426.7 Billion in Military
Retirement and Health Benefits Funds• Made $553 Billion in Disbursements
to Pay Recipients• Made $37.7 Billion in Foreign
Military Sales (reimbursed byforeign governments)
• Account for 956 Active DoD Appropriations
*Source: HR Flash Report 04/30/10
People• 13,329 employees * (Civilian and Military)• Located in:
• 12 sites• 8 states• 3 countries
DFAS – What We Do (2009 Data)
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MECHANIZATION
OF
CONTRACT
ADMINISTRATION
SERVICES
Major Acquisition - MOCAS
Integrated system supporting post award contract administration
Used by: DCMA Contract Administration Offices DFAS Procurement Offices / Resource Managers Funding Stations (Prevalidation Business Partners)
Pays More Complex Contracts High Dollar Multiyear Contracts Multiple Deliverables
Makes Financing Payments Progress payments Performance-based payments Commercial item financing Interim cost payments
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MOCAS – FYTD 10*(through April) 346,010 Active Contracts 18,970 Active Contractors 615,431 Invoices Processed $132.1 Billion Disbursed
MOCAS – FY 09 336,819 Active Contracts 18,792 Active Contractors 1,324,577 Invoices Processed $195.4 Billion Disbursed
Need for the P2P Initiative: MOCAS Magnitude
*As of 04/30/10
66
0
200,000
400,000
600,000
800,000
1,000,000
1,200,000
1,400,000
2007 2008 2009 2010 2011 2012
Increased Manual Transactions After ERP Implementation
P2P - Supports ERP Implementations
P2P Mission: Decrease Manual
Workload in ERP Environment
Navy ERP P2P
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Program Managers
Finance
Acquisition
Logistics
Disconnects in the level of data between contractual
and accounting requirementsleads to manual process
in entitlement, prevalidation,and disbursement posting.
The failure to alignrequirements across the P2Pprocess leads to inefficient
material management.
Failure of the alignment leads to delays and
mismatches in expendituresthat delays critical
information needed tomanage the Program.
The mismatch of information delays impacts paymentsto vendors, inhibits the
government from meetingcontractual obligations,
creates rework, and impacts the ability to close contracts.
Purpose
To provide a more cost-effective procure-to-pay process in support of equipping and supplying the Services.
Goals Standardization and consistency Identify areas that require
manual touch points Identify areas that require Policy
and Procedure changes
Scope Manual process or touch points Initial scope Navy with the ability
to export to other components Main P2P entitlement system
analyzed is MOCAS
The Procure to Pay (P2P) Initiative
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P2P Projects Targeting Identified Gaps
Purchase Requisition
9 Gaps
Purchase Order11 Gaps
Goods Receipt10 Gaps
Invoice Receipt15 Gaps
Expenditure13 Gaps
Core Processes:
P2P Projects to Improve Core Gaps in Process :
Requirements Alignment
Data Driven Contracting
Contract QualityPreponderance of
Funds
Procure Pay
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Proposed Solutions
Problem:
Non standard and manual data in P2P front end (e.g., ELIN) is driving rework throughout the P2P process.
Solution:
Focused Improvement Pilot Isolate the minimum data requirements necessary for P2P processes across functional areas
Using Lean6 methods, establish a pilot with a specific customer and contract type
Status:
Team has 30 days to identify resource requirements
Requirements Alignment
1010
• Problem: ELINs not sent as part of Contract Data
ELIN text is provided through contractual attachments
ELINs require manual input
DFARS 204.7105
Exhibit Line Item Number (ELINs)Requirements
Alignment
1111
ELIN Alignment
Accounting
ELIN
Entitlement Inventory Disbursement
CLIN 0001
Contract
Requirements Alignment
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DoD policy change requiring these contract line item numbers to be passed as
data fields in lieu of images
• Automates the process
• Eliminates significant delays, reduces rework, and lowers costs previously rising
from manual contract input, prevalidation, and disbursement posting
Since September 2009, the Navy, as the first Military Department to use this
solution, successfully began transmitting electronically contracts containing
ELINS to the entitlement and accounting systems
• Overall baseline figures indicate the ELIN solution will impact approximately 17,000
contracts and 400,000 ELINs
Rework from the manual contract load, obligation validation and disbursement
posting is steadily declining
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P2P Success with ELINs
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Problem:
Special payment instructions required manual intervention. During fiscal year 2009, more than 20,000 contracts were manually entered. Delay in contract closeout notices are increasing administrative costs, reconciliation and delaying recovery of excess funds to obligate for other procurement, etc.
Solution:
DFARS PGI 204.7108 case added clause driven payment instructions and eliminated manual text.
Published clauses and instructions in DFARS – Oct 15, 2009
Begin updating Entitlement systems at
contract level –August, 2010
MOCAS accept special pay
instructions at CLIN level -July, 2011
DFARS case linked numeric IDs to payment
instructions
Required contracting
system tables to be updated – April 1, 2010
(processedas text)
(not intables)
Special Payment Instructions
Special Payment Instructions Timeline
Data Driven Contracting
Status:
Benefits:Facilitate end-to-end electronic processing (API rate)Reduce interest paymentsAccurate payment of the contract
FY 2006 FY 2007 FY 2008 FY 2009 FY 2010 FY 2011
Initial set of instructions as text published in
DFARS PGI 204.7108
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Problem:
In the current business environment, there is limited visibility on contract closeout. Accounting systems are not notified that contract closeout has occurred.
Solution:
Contract Closeout ECP to electronically post notifications to EDA in FY11.
Benefits: Preparation for system conversion Improved communication Reconciliation and audit ability Visibility of funds remaining and financial status New obligation existing funding
Status:
MOCAS system changes being prepared to be submitted to the Operational Requirements Committee.
Contract CloseoutData Driven Contracting
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Contract Writing System
EDA
WAWFMOCAS
Contract as IndexedPostcript
GEX Indexed PDF
GEX850 UDF
850 UDF
Pre-populateData
Human ReadableAccounting and
Finance Systems(including
entitlement)
850 UDF
EDA XML
Existing 850 UDF translated to EDA XML extract for non SPS
contract writing systems
Problem:Availability of contracts and contract data in Electronic Document Access (EDA) system.
Solutions:
1. EDA Scorecard.
2. Transition to Procurement Data Standard. (PDS)
3. Policy for Procuring Contracting Officers to be registered in the Electronic Document Access (EDA) system:
Over an 11.5% increase!
Status:EDA Scorecard in pilot production expected June, 2010.
PDS Phase I in test.
Electronic Document Access
Interim StepGreen lines are new or modified parts
Data Driven Contracting
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90.6% EDA PDF Match to FPDS
50.0% EDA XML Match to FPDS
Excluding DLA
75.3% EDA PDF Match to FPDS
36.9% EDA XML Match to FPDS
DoD TotalGoal: High 90%
EDA Scorecard Q1 FY10Data Driven Contracting
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Overview
Problem:
Problems in contract structure and distribution can cause significant manual intervention and rework to process the contract and actions resulting from the contract, i.e. receipt and acceptance, invoice processing, expenditure and disbursement processing.
Solution:
1. Implement SPS for all customers
2. Complete SPS/MOCAS interface for modifications
3. Implement SCRs to improve data mapping
4. Introduce data validation within SPS
Contract Quality
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Success with Standard Procurement System (SPS)
SPS to MOCAS Interface for Contracts: Navy – all sites Air Force – 55 sites
EDA (Electronic Document
Access System)
(Contract Writing System)
Past State:PDF File
(Manually Reviewedand Input into System MOCAS
(EntitlementSystem)
Contracts Now
Transfer Systemically!
MODs in FY 10!
Contract Quality
Testing SPS Solution with Contract Modifications - Go “live”~ Summer 2010
Next Steps:
USMC WHS MDA
DTRA Army
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MOCAS System Enhancements
To further improve the MOCAS acceptance rate,the P2P team developed 4 System Change Requests (SCRs)
Mandatory Review Code – Eliminate manual effort by DFAS to have to manually review simple contracts without financing
Accept Alphanumeric Units of Measure – Allow for more contracts to be submitted and accepted
Issue by DoDAAC & Ship-to-Code – Eliminate the failed contracts that did not pass a valid ship-to DoDAAC
Automatically Recycle Processed Electronic Contracts – Allows for more electronic contracts to process
Contract Quality
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Initiatives to Continue Improving EC Rate Implementing Army SPS – MOCAS interface to 12 sites
Developing procurement trends and analysis
Reduce or eliminate improper use of informational SLINs
Roll-out ELIN solution
Continue cross-agency lean6 certifications
Contracts FY08 FY09 FY10
Navy 18.1% 16.8% 40.2%
Air Force 31.7% 29.8% 32.9%
Army 35.8% 36.9% 38.4%
DLA 93.5% 88.9% 92.8%
All 47.1% 49.2% 61.9%
* Reflects all contract writing systems
* FY10 data as of March 2010
ResultsContract Quality
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Enterprise-level initiatives
Problem:
Reduced systemic processing of contracts and invoices are due to cascading errors within the P2P process, such as missing Ship-to-Code and Not Separately Priced (NSP) Exhibit Line Item.
Current business practices do not reflect the increase in system assurance, for instance, manually reviewing simple contracts under $100k.
Solution:
Enterprise level initiatives:
Standard Procurement System Improvements Validate Ship-to-DoDAAC during Contract Construction. Reprogram informational Sub-CLIN to be in compliance with the DFARS
Electronic Document Access – Contract Deficiency Report (2 SCRs)
Status: Developing Business cases. Estimated Closing Date – June 10
Contract Quality
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Procurement Data Standards
Problem:
Financial Managers have limited capability to see their own funding on outside entity documents.
Solution:
Procurement Data Standards Implementation:Funding notification sent to Financial Managers at the time the contract is posted to EDA which provides visibility for Financial Managers to see notifications when funding is provided by other services on the contract. (See diagram below).
Status:PDS solution currently being tested.
BenefitAdds Visibility!
EDA (Electronic Document
Access System)(Contract Writing System) (Management)
FundingNotification
Procurement Data Standards
Preponderance of Funds
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Problem:
In today’s current environment, the ERP systems have demonstrated limited readiness to process multi-service funded contracts.
Solution:
PoF memorandum: Use MOCAS as interim solution.
Objective:
Need Components to configure and implement ERP capability to process transactions for others (TFOs) and transactions by others (TBOs).
Status:
Memo in coordination.
Action: Require all stakeholders to reach concurrence.
MemorandumPreponderance of
Funds
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• Increased Electronic Acceptance Rate Standard Procurement System (SPS) to MOCAS Interface
Contracts (Navy and Air Force)
Contract Modifications
Improvements to Entitlement System (System Change Requests (SCRs) to MOCAS)
• Enhanced Special Payment Instructions
• Procurement Data Standard Implementation
• Increased Electronic Document Access (EDA) / Contract Deficiency Report (CDR) Registration Rates by over 11.5%
• Navy ELIN Solution
P2P Accomplishments
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Implement additional MOCAS Improvements
Increase electronic rates
Apply SPS solution to all Services
Roll out contract interface to the Army/DTRA
Implement SPS/MOCAS interface for modifications
Continue to reach goals: Standardization and consistency
Identify areas that require
manual touch points
Identify areas that require Policy and Procedure changes
Develop informational Sub CLIN Solution
The P2P Initiative Moving Forward
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BACK UP
2727
Interest $ Per Million
Prompt Pay Act $ Disbursed
Interest Paid
$52 $51
In Billions
$148
$180$158
Overage Invoice Percentage
0.00%
0.50%
1.00%
1.50%
2.00%
2.50%
3.00%
FY 06 FY 07 FY 08 FY 09 FYTD 10
.98%
2.01%
1.19%
$0
$3
$6
$9
$12
$15
FY 06 FY 07 FY 08 FY 09 FYTD 10
$7.64$9.17
$7.99
In Millions
$74
$56
$14.5
$195
1.56%
$59 $116
$6.81.71%
MOCAS Operations at a Glance
FY10 Goal$55
Goal2%
FYTD as of 04/30/10