Alan Thomas, Director, Defense and Intelligence Practice, Compusearch Software Systems Session #: 2110 April 16, 2008

2. DoD’s IGT Initiative: Leading the Way to Improved Business Operations and Accountability Alan Thomas, Director, Defense and Intelligence Practice, Compusearch Software Systems Session #: 2110 April 16, 2008 1:30 – 2:30 PM

3. Panel participants • Danny Werfel (moderator) • Controller, OMB • Shay Assad • Director, Defense Procurement & Acquisition Policy • Radha Sekar • Assistant Deputy Under Secretary of Defense (Comptroller) • Open Q&A

4. Interagency acquisition is big business with over 40% of total Federal obligations spent through interagency contract vehicles • Request for goods or services from a requesting federal agency (“buyer”) to a performing federal agency (“seller”) • Agreements often established using a Military Interdepartmental Purchase Request (MIPR) or Interagency Assistance Agreement (IAA) All Other Obligations ($213B in FY04) Total Obligations Interagency Obligations ($142B in FY04)* *Source: Acquisition Advisory Panel

5. 2001 2002 2003 2004 2005 2006 2007+ IGT identified Intragovernmental Updated OMB IGT Treasury as a material Transactions IGTE OMB IGT OMB / Federal Activity Business Issues weakness Exchange (IGTE) System Business Rules New IGT government System Pilot Pilot Ended Rules Released Instructions wide Launched Released Business Various policy - based Intragovernmental Business Process Enterprise DoD Activity efforts including Transactions IGTS IVAN Reengineering Architecture Standard Document System (IGTS) Pilot Ended Launched (End - to - End) (BEA) 3.1 Number Pilot Launched released OSD(C) OSD(C) & OSD(AT&L) OSD(BT) Defense Finance & DFAS DoD Program Ownership SCST TSO BTA BTA BTA Accounting establishes partner FMTT TP&R DPP DBSAE Service IGTS PMO (DFAS) Office of the Secretary of Defense (OSD) Directorates: Transformation Support Office (TSO) Directorates: Business Transformation Agency (BTA) Directorates: • OSD(C): Comptroller • FMTT: Financial Management Transformation Team • TP&R: Transformation Priorities and Requirements • OSD(AT&L): Acquisition, Technology, and Logistics • DPP: Directorate of Priority Projects • SCST: Supply Chain Systems Transformation • DBSAE: Defense Business Systems Acquisition Executive Solving problems associated with intra-governmental transfers is a long standing acquisition and financial management problem • History of OMB, Federal Civilian, and DoD efforts to address accounting and elimination issues • Series of recent IG audits pointed to a large number of potential Anti-Deficiency Act (ADA) violations • OMB continues to lead a government-wide effort to recommend a process/system solution for IGT • DoD’s efforts are an extension of the foundational work done by OMB and are playing a key role in defining a way forward

6. Yr ADAs Source Status FY05 38 GSA Audit • 8 referred for formal investigation • 30 no violation FY06 69 GSA (12) NASA (14) Treasury (21) DOI (22) • 14 referred for formal investigation • 55 no violation FY07 386 DOI (338) NIH (42) VA (6) • 7 under review by OGC • 5 pending accounting correction • 17 referred for formal investigation • 357 no violation FY07 96 DOI IG identified cases • 3 under review by OGC • 93 no violations FY07 51 Military Services • 2 under review by OGC • 49 no violation Total 640 • 39 referred for formal investigation Recent audits directed by Congress identified potential Anti-deficiency Act (ADA) violations in DoD • Audits directed by the National Defense Authorization Act of FY 2005 to review procurement policies, procedures, and internal controls • NASA - Scientific and Engineering Workstation Procurement (SEWP) • Department of Treasury – FedSource • GSA – FTS (now FAS) • Department of Interior – GovWorks • National Institute of Health (NIH) • Department of Veteran’s Affairs (VA)

7. The issues found on the buying side include a number practices that can be addressed through policy and automation • Buying organizations did not … • Certify funds availability before issuing MIPR • Document signature authority • Cite correct appropriation for type of purchase • Describe the purchase in accurate terms • Specify the required period of performance • De-obligate and retract funding no longer available

8. The issues found on the selling side include a number practices that also can be addressed through policy and automation • Selling organizations … • Used DoD funds beyond expiration or period of availability • Failed to verify the existence of a bona fide need • Delivered goods and services in periods beyond the availability of funds • Made improper advances and expenses in the wrong periods

9. Benefits Problems Capabilities Order information captured electronically & in a consistent manner Lack of visibility into the movement of funds Electronic link between buyers and sellers Detailed order information Anti-Deficiency Act violations (Parking funds, using expired funds) Accountability Accountability Visibility Visibility Visibility into Trading Partner Activity Buyer and Seller information (BPN & LOA) Uncollected funds ($2B+ year) Automated Bookings & LOA Validation Improved Financial Accounting/ Reporting Inability to properly account for, eliminate, and reconcile IGT transactions Buyer/Seller notifications prior to transfer of funds Full LOA to Accounting Systems to liquidate payables/receivables Increased Productivity Reduced Cost Manpower required to process and reconcile IGT transactions Efficiency Efficiency Access to centralized data for reporting Along with sound policy and processes, DoD is developing a system solution to address these issues Intra-governmental Value Added Network (IVAN)

10. The IVAN proof-of-concept results show the opportunity to move away from “pay and chase” and towards “pay and process” • DoD to DoD proof-of-concept in 2007 showed that IVAN solution helps address several issues • Improves acquisition process/documentation • Improves financial process/documentation • Corrects process problems found in audits • The next step in 2008 is to validate transactions from DoD to Civilian Agencies • Begin processing proof-of-concept transactions with GSA and DoI • Incorporate additional Interagency acquisition requirements • Incorporate disbursement/collection requirements