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• U. S. Army Reinvention Center, Headquarters, Training and Doctrine Command (TRADOC).. In FY 1996, TRADOC awarded a total of $3.93M in base operations (BASOPS) Opportunity Leveraging and Development (BOLD) Grants spread over 10 installations for projects that demonstrated the highest potential return on investment and exportability to other installations. The intent of the BOLD Grants fund is to provide venture capital for promising BASOPS investment opportunities. Installations, as well as TRADOC headquarters staff, can nominate reinvention initiatives for consideration and competition for BOLD Grant funding. The program's aim is to encourage installation garrison commanders to actively identify and pursue reinvention initiatives without adversely affecting scarce installation resources. This year, Army processed 112 BOLD Grant initiative nominations and approved 30 for funding. Anticipated in this year's investments of $3.93M is an annual return on investment of $12.5M and a projected 5-year return on investment of $62.9M

• Research, Development & Engineering Center, U. S. Army Missile Command. This Reinvention Laboratory has focused on initiatives that have required primarily legislative changes in order to experiment with simplified and streamlined processes. These initiatives do not generate the "low hanging fruit", but are long term initiatives whose payoffs may not be measurable for many years. The lesson learned is that it is possible to get significant legislative change that is in the spirit and intent of the National Performance Review. Legislative change has been effected in four distinct areas, and new authorities are in place to realize significant improvements in DoD laboratory operations in these areas:

- Quickly obtaining laboratory experimental supplies and equipment needed to satisfy its customers needs for information on advanced technology and risks associated with various acquisition strategies.

- Obtaining and retaining highly qualified engineers and scientists to develop lead-ahead

weaponry.

- Quickly and cost effectively upgrading laboratory facilities in order to react to contingencies such as technological breakthroughs and customer-unforeseen priorities.

- Quickly and efficiently establishing Cooperative Agreements with industry, academia, and international partners in order to leverage diminished DoD funding, designed to generate significant technological advancements and competitive economic advantage as a nation.

• U. S. Army Research Institute for the Behavioral and Social Sciences. The Army Research Institute (ARI) is changing how it does business. The most visible change is its downsized workforce and streamlined organizational structure. ARI has reduced middle management and administration and has re-engineered business processes to conform to the new organizational structure. First, line supervisors now have increased control over their units' activities and performance. Additionally, ARI has established performance metrics and goals with a renewed emphasis on quality, customer satisfaction and performance accountability. ARI's first annual performance plan, under the guidance of the Government Performance and Results Act (GPRA) of 1993, sets goals on a wide range of metrics that help objectively measure, for example, technical output, personnel quality, customer satisfaction, resource leverage, and the impact of our research efforts. Performance on these metrics is being assessed and tied to manager's performance appraisals.

• U. S. Army Concepts Analysis Agency (CAA). Like most Army organizations, CAA has been mandated to do more with less. Consistent with the concepts of the National Performance Review , the agency has restructured to provide less management and more analysis. But to respond to a growing demand for analyses with fewer resources, CAA must rely on its people. By encouraging and implementing their ideas for improving quality and productivity, CAA is leveraging its capabilities.

Initiatives to use information technology include installation of a 50 gigabyte Superserver for the workstation network, acquisition of portable notebook processors for conducting analysis in the field of operations, CD-ROM technology in publishing data volumes, successful application of graphic used interface to visually assess potential global trouble spots and the introduction of state-of-the-Army ISSN telephone system for data/voice communications.

The historical trend indicates a 78 percent productivity increase over the past five years.

• U. S. Army Missile Command, Department of the Army Reinvention Laboratory. This reinvention lab is executing its reinvention campaign. The campaign consists of three phases: the Preparation of the Workforce (Phase I), Design of Implementation Processes for Individual Initiative (Phase II), and Full-Scale Implementation of Reinvention (Phase III).

The Missile Command (MICOM) has completed Phase I. A total of 5,387 MICOM employees attended the thirteen two-hour mandatory training sessions. The training consisted of presentations of reinvention certificates to organizations and reinvention licenses to employees by the Command Group, union perspective by AFGE, Local 1858 at Redstone Arsenal, videos on Ethical Decision Making, and Making the Difference, briefing on reinvention, MICOM Reinvention Laboratory Waiver Program, and administering of the Employee Opinion Survey. Training videos have been viewed by 202 employees located worldwide.

Part II of Phase I, the customized organization training is an ongoing effort. The intent of this training is to assist managers in the critical task of building into all employees a clear understanding of the consequences and importance of being accountable for actions in a public service arena.

Part III consists of the Redstone 2000 Institute's High-Performance Skills Course. This course was established to help acquire the skills and competencies needed in the workplace now and into the 21st century. The course includes: Team dynamics and team work, world class customer service, interpersonal skills, ethics and accountability, individual assessment, etc. Phase II is the Generation and Prioritization of Initiatives. The Command utilizes several reinvention tools consisting of re-engineering, benchmarking, and obtaining waiver authorities to develop, understand, analyze and implement initiatives. Some initiatives are being tested as pilot programs. The MICOM Acquisition Center has submitted 34 waiver requests with 14 approved under the OSD/DA Waiver Program and by their acquisition chain of command at higher headquarters.

Phase III is the Full Scale Implementation of initiatives scheduled to begin when the first initiative pilot program is completed and approved by the Missile Command Executive Steering Committee. This implementation phase is expected to begin within the next six months to a year.

• U. S. Army Research Laboratory (ARL), Special Projects Office. The laboratory has had three years experience in producing strategic plans, annual performance plans, and annual performance reports. A breakthrough last year in strategic planning was the inclusion of technical strategic vectors for the laboratory in addition to the more traditional managerial one. In the peer review pillar of our Performance Evaluation Construct the lab has established the ARL Technical Assessment Board under the auspices of the National Research Council. In the customer feedback pillar, we are entering our third year of performing 100% surveys of all customers to whom a specific item was delivered. In the metrics pillar, we are also in the third year of using metrics in the performance our senior (SES-level) managers as a tool for the Director to "move" the laboratory in certain directions that he believes appropriate.

The lab is in the process of evaluating over fifty internal processes in the functional areas of human resources, fiscal management, logistics, and procurement. Computer modeling has been applied to these processes to identify areas where efficiencies can be gained. For example, whereas formerly a SF-52, Request for Personnel Action took 36 steps to process, BPR efforts have identified 21 of those steps that can be eliminated.

The lab has already obtained 18 waivers in a variety of areas and more than twice that number are in process. ARL is participating with other DoD Science and Technology Reinvention Laboratories in designing a new personnel system that will be much more flexible and which will allow government laboratories to be operated in a manner more like those labs in the private sector.

• United States Army Management Engineering College (AMEC). The arduous process of establishing a Reinvention Lab Training Center in accordance with the established process has begun. However, AMEC's successes with the work-at-home program have caused AMEC to conclude that "brick and mortar" training centers may be an unnecessary cost when AMEC can rent classroom space on an as needed basis in Denver and Washington, DC.

AMEC has achieved recognition as a pioneer in the technology of concepts involving multimedia and distance learning and is a recognized leader even by the private sector. With funds provided by a sponsor, AMEC opened its own multimedia production lab in FY 1995. The first major product ("Interactive Customer Assistance CD ROM on the Responsible Use of the Government Wide Purchase Card") has been delivered to GSA. The second major product ("Simplified Acquisition and Federal Acquisition Computer Network") will soon be delivered to DOD's Reform Communications Center.

• Army National Guard Logistics Directorate. Army National Guard (ARNG) Retrograde Euope (RETROEUR) Repair Program is the ARNG's innovative solution for providing the Active Component with a cost effective means for redistributing class VII (rolling stock) equipment from Europe, as part of the drawdown, to units in the United States. This program has improved readiness in over 400 Active Army, Army National Guard and Army Reserve units. The ARNG sites have been repairing equipment for less than $36/hr versus Army depot rates of $70-$120/hr. Vehicles valued at over $1B have been repaired and redistributed to units for $226M.

ARNG Truck Refurbishment Program demonstrated a completely new way for the ARNG to refurbish its tactical wheeled vehicles. The Texas ARNG established a pilot site to demonstrate the ARNG's capability to perform general support (GS) level refurbishment of trucks in FY 94. The demonstration was continued into FY 1995/1996 Demonstration results established a baseline cost of $35K per truck, a savings of $6-$30K over what the ARNG had been paying depots.

• U. S. Army Forces Command. Forces Command (FORSCOM), which is a reinvention laboratory, is pursuing multiple initiatives. They include:

- Reengineering Travel. Forces Command established a Process Action Team (PAT) in

April 1994 to look for ways to improve temporary duty (TDY) travel administration. The PAT has tested two software programs and is preparing to purchase a program for implementation. The program will save in excess of $300,000 for the Headquarters over two years and provide faster reimbursement to the traveler and the government charge card vendor. Plans are to offer the program to all FORSCOM activities.

- The Total Inventory Management Program (TIMP). The program focuses on the

reduction of authorized and unauthorized inventory investment and the redistribution of secondary and major-end items. The TIMP implementation plan published in 1993 dramatically changed the way inventories were managed in Forces Command. First year savings were $130M. On-hand inventory was reduced from $1.1B to $727M. Savings for FY 1994 were $1.3M with projected savings of $5M in FY 95 and $3M in FY 1996. TIMP directly led to significant cost reductions in on-hand inventories and to the implementation of other FORSCOM initiatives, such as the FORSCOM Redistribution Center (FRC) and the FORSCOM Excess Prevention Program (FEPP).

- The White Hat Program. The White Hat Initiative focuses on identifying installation

management inhibitors to effective business operations that could result in changes to the regulations, policies and procedures at FORSCOM or higher headquarters. This initiative is also an integral part of the FORSCOM quality effort to involve the work force and gain greater productivity while improving installation management. Based on input from the workforce at FORSCOM installation, over 500 White Hat issues have been developed and are being staffed. Over 200 of these initiatives have been approved; of those sent to Department of the Army, the Command has a 75 percent approval rate. The White Hat program has been tremendously successful, both in the empowerment of the workforce and in demonstrating the Command's desire to use the good ideas of its employees.

• U. S. Army Tank-Automotive Research, Development and Engineering Center (TARDEC). The big three automakers gathered on November 8, 1995, to jointly sign a government research agreement that will shift the next generation of automobile research and development to the fast lane.

Just six weeks after they announced their intentions at the White House, leaders from Ford, General Motors, and Chrysler co-signed a cooperative research and development agreement, or CRADA, with the U. S. Army. But unlike most CRADAs, this blanket-CRADA sets a historic precedent by fast-tracking all future R&D between the auto makers and the Army. The next time any of the Big Three wishes to enter into an agreement, all it needs to do is write a 3 to 4 page "statement of work."

This change in CRADA criteria will allow the Big Three to speed past the labor-intensive CRADA applications process and cut the approval rate forum several months to just a few days. This change to allow the auto makers to be more competitive globally.

As a result of these and other major initiatives, TARDEC is the proud recipient of the 1994 Federal Quality Improvement Prototype Award. TARDEC is the first Army organization to earn this honor and is one of only 22 government organizations to have won the award since its inception in 1989.

Vice President Al Gore presented TARDEC with the prestigious 1995 Presidential Award for Quality on August 2, 1995 in Washington, DC. TARDEC is the first department of the army organization to win this award and is only the fourth federal organization to win since the inception of the President's Quality Award Program in 1989.

• Lodging Success Program. The Lodging Success Program continues to save significant temporary duty (TDY) dollars by providing contract hotel rooms at per day rates that average 26 percent below the government per diem rate in the National Capital Region. Since it began in 1992, the Lodging-Success Program has simplified the process of obtaining TDY lodging and has saved money for all Army commands. Annual lodging savings exceed $4 million and more than $1 million are estimated as saved in rental car cost avoidance. The Lodging-Success Program is a proven money saver that is effectively serving the needs of Army travelers while saving significant Army resources. Currently, the Army is expanding the Lodging Success Program to other high volume travel areas such as Atlanta and the Virginia tidewater area. The program is also being considered for expansion DoD-wide as part of a bigger travel reengineering effort.

• The Resource Recovery And Recycling Program (RRRP). Army commanders continue to act as environmental stewards through the RRRP. Installations collect, sell, and receive direct reimbursement for their recyclable materials through the Defense Reutilization and Marketing Office. These proceeds are used to fund pollution abatement, energy conservation, and morale, welfare and recreation activities. Installations received gross proceeds of $10.8 million in FY 1994, and $9.2 million in FY 1995. In addition to receiving a direct return of current year dollars, installations participating in RRRP are realizing additional savings by reducing current year landfill costs and avoiding or deferring future year landfill costs.

• The Sale and Outlease Program. Legislative authority allows installations to retain the proceeds from the sale of non-BRAC excess real property and outlease of non-excess real and personal property. Examples include leases of land to utility companies, transportation offices, or private firms; leases of underutilized warehouses, or offices (classroom space, conference rooms, etc.) to private companies; and sales of parcels of land to adjacent farmers. Proceeds from the sale and outlease program are used to fund environmental restoration projects and repair and maintenance projects. Proceeds from the Sale and Outlease Program were $17.4 million in FY 1994, and $19 million in FY 1995.

• ASA(FM&C) Regulatory Waiver Program. Since it began, the Army waiver program has provided installation commanders relief from prohibitive regulations that hindered more efficient operations. Additionally, commanders have been allowed to try innovative procedures that were prohibited by Army or DoD regulations or policy directives. This program has been quite successful at "cutting red tape" and has facilitated the on-going effort to improve Army business practices.

• The Office of the Deputy Assistant Secretary of the Army for Resource Analysis and Business Practices (SAFM-RBA) is the action office for all financial management related waiver requests. To date, 42 separate requests for regulatory waiver have been processed. Some of the more significant success stories include:

- A change to DoD Morale, Welfare and Recreation (MWR) advertising policy now allows

installation MWR activities to generate revenue from the sale of advertising space in their publications. This is expected to earn Army installations approximately $2M annually, and is applicable across DoD.

- A change to Army Regulation 71-13 to allow US Army, Japan to lease eleven non-

tactical vehicles, which will allow the conversion of a buildings and grounds maintenance contract to an in-house operation. This will result in an annual cost savings of $1M.

- DoD Manual 7600.7-M is being changed to remove the requirement to create and

maintain an "auditable entity file" in internal review offices with three or fewer auditors. This will allow the smaller internal review offices to be more efficient in support of their customers.

- Waiver of DoD Directive 7000.14-4 to allow mandatory payroll deduction from soldiers

to pay monthly personal telephone bills. This will result in more efficient finance and accounting operations, and improve quality service to soldiers.

- A waiver of DoD Regulation 4160.21M to allow Fort Hood to donate abandoned

bicycles to a local charity. This initiative saves time and money that would be expended to store and process abandoned bicycles for sale in the normal DRMS process.

- A change to a 1985 OSD Comptroller policy letter outlining the procedures for

accounting of multi-year appropriations. The change saves personnel resources that were used to write down unobligated balances at year end, and re-establish the balances in the next fiscal year.

- A waiver to AR 690-300.355 that will streamline the procedures for making non-

competitive career promotions within an organization. This has improved efficiency of the internal process and save supervisors' time and effort.

- A waiver to the FAR, section 15.803(b) to eliminate the submission of an Independent

Government Estimate (IGE) as part of the contract negotiation and award process. Elimination of the IGE will streamline the process and save time and effort that is expended preparing this non-value added report.

• Legislative Initiatives. The Resource Analysis and Business Practices Office is continually looking for ways to reduce legislative red tape and improve business-like operations, generate revenue, streamline processes, and decrease costs in the Army.

For FY 1995, the office gained enactment of six out of nine legislative proposals. These included increasing the expense investment threshold from $25K to $50K, allowing military museums greater flexibility in trading excess historical artifacts, and removing extensive review requirements on residual value agreements. The office submitted legislative proposals for Congressional consideration for FY 1996. The following provides the status of those proposals that were approved.

- Kuwaiti Reimbursement. Provides authority for DoD to incur obligations up to $350M

in anticipation of contributions from the Kuwaiti Government..

- Permanent Sale and Outlease Authority. Simplifies distribution of funds generated from

the sale of excess real property and outlease of underutilized real and personal property. Funds would be deposited directly to installations rather than to a special Treasury account. Received one-year extension of appropriation authority, but not for simplified process -- resubmitted for FY 1997.

- Expense Investment Threshold. Provides authority for purchases of non-centrally

managed items under $100K with Operations and Maintenance appropriations.

- Acceptance of Non-Government Cash Awards. Allows retention of cash awards from

non-governmental sources. Impetus for this proposal was the "Innovations in Government" award competition. Funds are to be used for MWR (§377 P.L. 104-106).

- Retention of Proceeds from the Sale of Abandoned Personal Property. Allows

installations to sell abandoned personal property and retain the proceeds.

- Printing Services. Provides for greater use of commercial vendors for printing services.

As submitted, installations would use commercial vendors for services under $2500. Partially approved -- allows DPS to use commercial vendors (Section 351 P.L. 104-106).

- Unified Resource Demonstration Project. Provides authority to test a concept for

merging appropriated fund support to MWR with nonappropriated funds (NAF). MWR programs would then operate on a total NAF basis.

- Excess Historical Artifacts. Further expands ability to exchange excess items for

services and equipment.

• Military Training Open Allotment. The military training open allotment is used to fund TDY and per diem costs for training in conjunction with Permanent Change of Station (PCS) and for Army-directed training. Currently, the funding for the military training open allotment is held by Operating Agency 22 (OA 22). Installations and units throughout the Army are authorized to cite the open allotment. OA22 has fund control responsibility; the installations and units use the funds and retain all supporting documentation. Therefore, by its very nature, the military training open allotment is difficult to manage and control. A recent Army Audit Agency report stated that about 15 percent of the expenditures made against the training open allotment were not used for authorized purposes.

The Resource Analysis and Business Practices Office (SAFM-RB) is working jointly with the Deputy Chief of Staff for Operations (DCSOPS), the Deputy Chief of Staff for Personnel (DCSPER) and the Personnel Command (PERSCOM), to review the military training open allotment and identify more efficient and less costly alternatives. Three alternatives to the open allotment were identified. The alternatives, all of which decentralize the funds and eliminate the open allotment, are: (1) directly fund the schoolhouse, (2) directly fund the unit, and (3) provide a specific allotment to PERSCOM.

A test of the "schoolhouse" alternative is being conducted at Fort Benning beginning in June 1996, and is scheduled to run for one year. Fort Benning will issue orders for soldiers scheduled to attend Infantry School courses. A Fort Benning fund cite will be included on the orders. During the test, the training open allotment will no longer be used to fund per diem or TDY travel for soldiers attending the Infantry School courses at Fort Benning.

A test of the "unit" alternative is being conducted at Fort Drum beginning in April 1996, and will run concurrent with the "schoolhouse" test. This "unit test" will only impact Fort Drum soldiers attending DA directed training or attending training in conjunction with a PCS from Fort Drum.

A concept paper is being developed by PERSCOM for the PERSCOM alternative. This alternative will not be tested, because much of the automation and related procedures being developed for the "schoolhouse test" will be applicable to the PERSCOM alternative.

The three alternatives will be evaluated against established criteria after completion of the tests. The criteria include cost, show rates, impact on soldiers, impact on readiness, fund control, and impact on training. The Army leadership will be involved in reviewing the test results and determining the best alternative.

• Reduction of Out-of-Service Debt. In FY 1995, one out of every four soldiers separated from active duty owing a debt to the Army. These debts were caused by overpayment of pay, allowances, entitlements, leave, bonuses, transportation costs, and travel advances; and liability for lost or damaged government property. Most often, these debts are not identified at outprocessing and are more difficult to collect after soldiers leave active duty. The costs to collect are significant (about $38M Operation and Maintenance, Army in FY 1995) and collections may be too late to be used by the Army appropriations to which the funds are owed. Army's 325,605 new debt cases in FY 1995 totaled $88M.

To bring this problem under control, the Resource Analysis and Business Practices Directorate, OASA(FM&C) and ODCSPER, with assistance from PERSCOM, worked to identify policy or procedural changes that could make a difference. The primary focus is on debt avoidance by using a comprehensive separation checklist and more rigorous outprocessing procedures. The checklist and new procedures will become standardized across the Army and will require soldiers and their commanders to take a more responsible role in eliminating out-of-service debt problems.

The new separation checklist (DA Form 137-R [Test]) was distributed to the field for testing from November 1995 to May 1996. The new checklist requires a standardized installation clearance process that makes the soldier more responsible for proper clearing and requires unit commanders to validate soldiers' leave records prior to separation. Failure to complete the checklist will result in soldiers receiving 55% of final pay at separation, pending Defense Finance and Accounting Service (DFAS) verification of any outstanding debts. Final payment to the soldier will be made by DFAS within 30 days following separation.

The trend during the test period has shown steady improvement. The percent of soldiers separating in debt dropped from 28.3% in December 1995 to 23.2% in February 1996. During the same period, the dollar amount of debt decreased from $3.1M to $2.3M. Comparing the test period average to the FY 1995 baseline reflects a decrease of .4% of soldiers separating in debt and a decrease of $805K from the FY 1995 average.

The new installation clearance process is good for the Army and good for the soldier. It is expected to dramatically reduce out-of-service debt with no adverse impact on workload or on the soldier. The emphasis on debt avoidance actually benefits the soldier. In the past, many soldiers were surprised to learn months after separation that they owed money to the Army. Alerting them to this situation during outprocessing helps soldiers understand and pay debts prior to separation, thus avoiding credit problems as they transition to civilian life. In addition, this initiative helps us exercise good financial stewardship of the limited dollars available to accomplish the Army mission.

• Army-wide Partnerships. As the Army actively reviews its basic roles and missions, installation commanders are effectively pursuing many new and innovative ways to improve business practices and get even more utility from every dollar entrusted to our use. Resource managers around the Army are using many different ways to stretch resources and streamline operations to better accomplish their missions. At many installations, partnerships are being formed with parties within and outside the Department of Defense. The result is a win-win situation - improved relationships, opportunities to reduce cost and generate revenue, and enhanced quality of life for soldiers and their families. Examples include:

- At Fort Hood, Dental Command partners with the American Red Cross to train

volunteers to be dental assistants. The installation receives free labor and expanded care for soldiers and family members; the volunteer gains skills and experience.

- Fort Riley partners with Kansas State University to obtain journalist interns for the

installation newspaper. The installation receives free labor; the students receive real-world experience and college credit.

- Fort Leavenworth partners with the Kansas State Department of Social and Rehabilitation Services and receives free labor in exchange for work experience.

- The Commonwealth of Kentucky provides spouse abuse victims shelter in the local

community facility without charge. In return, Fort Knox provides training to personnel operating the shelter.

- Installations partner with local Chambers of Commerce and State Employment Offices to

sponsor joint job fairs for transitioning military and civilian personnel and family members.

- Installations enter mutual support agreements with federal and state forestry personnel to

respond to forest fires on the installation and in the local surrounding area.

- Installations developed reciprocal use agreements with schools and universities for

libraries, classroom and auditorium space, audiovisual equipment, and instructors.

- Fort Leavenworth partnered with the local school district to provide a joint sport facility.

The installation provided the land and the school district built the facility. Maintenance is shared.

- Fort Gillem leases unused/underused railroad tracks to Norfolk Southern in exchange for

repair of the rail system and railroad cars.

- Fort Belvoir partnered with the local transportation system to obtain bus service on post.

Travel to work is more convenient and the number of vehicles on-post is reduced.

• Outsourcing Initiatives. As Army budgets have dropped, the pressures to minimize the impacts of reduced funding have risen proportionately. The senior Army leadership strongly endorses major outsourcing and privatization initiatives to save dollars in the business, or non-core functional areas, and to attract private capital for renovation of aging infrastructure.

The Resource Analysis and Business Practices Office is a very active participant in this area. Over the past two years, the office has been involved in a major effort to identify potential Army outsourcing and privatization candidates, and to identify and propose legislative changes to laws and regulations that restrict progress and prevent the DoD from taking full advantage of private sector opportunities.

Significant progress has already been made in changing laws that govern real property. The Housing Revitalization Act of 1996 significantly expanded the flexibility and opportunity for privatization of housing. It enables the establishment of public-private partnerships, creates a Defense Housing Improvement Fund into which funds from housing appropriations can be transferred, and allows the government to enter into various types of guarantees to increase the attractiveness of private investment. An Army team is working to utilize these authorities and improve Army family housing.

Privatization of utilities is another area in which the office has been involved. Currently, about 10 percent of the 465 systems serving Army installations are privatized. The Army is working toward a goal of privatizing 75 percent of the Army owned and operated utility systems by the year 2000.

The Resource Analysis and Business Practices Office is also very involved in identifying for outsourcing administrative functions that are not core tasks. Current law contains many restrictions that preclude outsourcing and are counter to good government and managerial principles. This office listed the restrictions and the required enabling legislation for use by the Army and DoD leadership when discussing outsourcing with the Congress.

The Congress is taking a keen interest in reducing the cost of government through outsourcing and privatization. A DoD legislative package, which requests relief from many of these restrictions, is being prepared for submission to the Congress.

• Unified Resource Demonstration Project. Military Morale, Welfare, and Recreation (MWR) services are made possible through a mix of appropriated fund (APF) and nonappropriated fund (NAF) support. This dual funding creates inefficiencies and restricts visibility of the cost of providing individual services. Dual funding dictates the use of two financial systems, two procurement systems, and two personnel systems. In addition, because two kinds of funds and accounting systems are used, managers are not always aware of the true cost of their programs.

As a result of an Army developed legislative proposal, the FY 1996 Defense Authorization Act directs the DoD to conduct a two-year demonstration project that will test merging MWR APF with NAF. This will effectively allow test sites to conduct all MWR operations under NAF rules. This will provide managers with simplified procurement rules, one type of personnel, and one overall financial system and statement that will give infinite detail on the sources and uses of funds.

Although the concept is designed to operate with a totally NAF workforce, since the concept is being tested rather than implemented, the Services have decided that there will be no conversions of personnel from APF to NAF for this test. Managers will have, however, the opportunity to hire NAF personnel to replace vacant APF positions during the test.

Expected results from the test include reduced costs, greater management flexibility, ability to provide more services, better services for customers, and greater financial visibility for all levels of management. Cost savings should not be limited to direct costs of the programs. Indirect support provided by non-MWR installation activities for personnel, contracting, and finances services should also benefit from this test.

• Problem Disbursements and the Joint Reconciliation Program. The Army Joint Reconciliation Program is a great success story and a prime initiative of cutting back to basics. The Program combines the financial skills of accounting and budget personnel with the expertise of acquisition specialists, logisticians, auditors, and legal staffs in creating horizontal teams to analyze problem disbursements -- payments that do not match the obligations on the books. These are of major concern within the Defense Department because if they are not resolved in a timely manner, current year dollars must be used to pay bills from previous years. This "getting back to the basics" effort has had tremendous results. During FY 95, the joint reconciliation program resulted in:

- Reduced "absolute value" unmatched disbursements (UMDs) from $750 million on 30

June 1994 to $368 million in September 1995 -- a reduction of 51 percent.

- Reduced "absolute value" negative unliquidated obligations (NULOs) from $500 million

on 30 June 1994 to $148 million in September 1995 -- a reduction of 70 percent.

- Reduced contingent liabilities associated with the canceling year appropriations from

$539 million in October 1994 to $23 million in September 1995 - a reduction of 96 percent.

Army's major commands report that their experience with the Joint Reconciliation Program has led to improvements in their execution of current year obligation authority. Most important, it has precluded current year funds being diverted from essential expenditures in support of military readiness.

• Standard Army Retail Supply System - Objective (SARSS-O) Business Process Review (BPR). SARSS-O BPR is a "putting customers first" initiative. SARSS-O is the Army's standard system for requisitioning and issuing supplies in the Army. When SARSS-O was developed, it was conceptualized within the logistics community and very little thought was put into financial controls. The system is a very effective logistics system, but weaknesses on the financial side became apparent as fielding of the system progressed.

As a result of a FORSCOM Process Action Team's findings and to insure the success of SARSS-O, the Deputy Chief of Staff for Logistics directed that an Independent Verification and Validation (IV&V) team be organized to review SARSS-O and make appropriate recommendations to maximize the efficiency and effectiveness of SARSS-O. The IV&V team was supplemented with a BPR team. There was a perception that different activities were using different business processes to run SARSS-O.

The BPR team was chartered to determine the current processes and procedures and to recommend standard financial information, processes and procedures for use by all SARSS-O users throughout the Army. During the BPR process, team members interviewed users and customers of SARSS-O to ensure customer needs were identified, considered, and appropriately reflected in the recommendations.

As a result of the BPR the financial information needs of the customers are being addressed with the development of the Logistics/Financial (LOGFIN) module of the PC-based program known as the Integrated Logistics Analysis Program (ILAP). The Deputy Assistant Secretary of the Army for Financial Operations secured funding during FY 95 for development of this program. LOGFIN will allow users to access SARSS-O and appropriate financial systems and produce needed reports on a PC. This capability will allow research that is currently being performed by time-consuming manual processes to be performed in a fraction of the time on a PC. As required funding is obtained, it is planned that ILAP and LOGFIN will be fielded at appropriate levels throughout the Army.

• Service Based Costing (SBC). The Army recognizes the need for continual improvement in the efficiency and productivity of its operations of Army bases and installations. The Army, consequently, has implemented an improved cost management tool. The US Army Cost and Economic Analysis Center (USACEAC) is developing a Service Based Costing (SBC) model to capture the cost of base operations at the service level. SBC measures the full cost to provide a service (such as day care) and the associated output produced for that service (number of child care hours provided). SBC provides a simple, quick and meaningful customer-oriented approach to providing Army decision makers with relevant cost information.

Since August 1994, 122 different installation services and their associated output measures have been identified, costed and associated outputs defined at nine Forces Command Installations and 24 Army Materiel Command installations. Based on these results, senior Army leadership has decided to implement SBC Army-wide. Command resource managers now have the necessary information for these services to quickly assess both the cost and related benefits to support alternative levels of services for funding consideration. USACEAC is continuing to refine the definition and number of services covered and support increasing the number of installations using SBC.

SBC supports the objectives of the National Performance Review by providing the local managers with customer oriented decision making cost tools. With established benchmarks for specific services, Army installations managers are better able to establish best business practices, benefit from shared learning, and identify areas requiring greater management attention. Adoption of best business practices will eliminate redundant services or activities, remove non-essential functions, and improve overall productivity.

With a better understanding of SBC, decision makers are able to focus on customer needs. Objective output measures for each service provide Army resource managers with the tools to manage the process output versus the current method of managing the process inputs. Managing the process output empowers all employees to be customer oriented and focused on value.

SBC's greatest benefit is providing decision makers, Army-wide, with the necessary information to effectively and efficiently manage resources, adapt to change, and encourage innovative business practices.

• Army's Operating and Support Management Information System (OSMIS). The Army's Operating and Support Management Information System (OSMIS) data base is the historical record in cost per mile or cost per hour of all major Army weapon systems. OSMIS supports three classes of customers -- Budgeting/Programming, Logistics, and the Acquisition communities.

For the Budgeting/Programming Community, OSMIS provides unique input to the Army's Training Resource Model and Flying Hour Program which in turn develops the Major Commands (MACOM) operating tempo (optempo) training budgets.

For the Logistics community, OSMIS provides key historic performance information at the end item perspective to support logistics models such as, the Integrated Logistics Analysis Program (ILAP) and the Revolving Funds Model (REVOLVER). OSMIS supports the building validation of logistics budget documents, measures historic rebuild and washout rates for parts, and supports many special study requests to improve Army logistics management.

One use of OSMIS by the Acquisition community is to identify weapon system Operations and Support Cost Reduction (OSCR) Initiatives. OSMIS identifies the high operating and support cost parts and components of major weapon systems for potential cost reduction programs. After an initiative is implemented, OSMIS can track the actual savings. In the development of new systems, OSMIS data provides the identification of major cost driver components of the prior systems to provide PM focus in the new design.

The US Army Cost and Economic Analysis Center has initiated new OSMIS initiatives supporting the National Performance Review objectives including revising the annual reports to a customer-friendly format with more available information, and broader, cheaper and more timely distribution of the annual report employing the World Wide Web home page of the Assistant Secretary of the Army (Financial Management & Comptroller). A CD-ROM version is also available at customer request. Since 1992, the number of systems tracked has increased from 347 to 414. Customer tailored reports are available. Our customer base expanded from 150 to over 400 clients (Army, DoD and DoD contractors), reflecting continual improvements in the number of systems, the data utility and the quick distribution of products. These OSMIS products and services permit resource managers at all levels to estimate budget demands at all optempo levels.

• Standard Cost Analysis Tools. The US Army Cost and Economic Analysis Center (USACEAC) is a leader in the development of standard cost and economic analysis tools. To reduce redundancy, USACEAC has worked jointly with the Air Force to develop, field, and support the Automated Cost Estimator Integrated Tools (ACEIT) and Automated Cost Data Base (ACDB). USACEAC adopted ACEIT as the defacto Army standard in 1992. ACEIT, developed under an early In Process Team approach, provides powerful and flexible estimating and documentation tools designed to improve quality and standardization without limiting analyst creativity.

Some important unique ACEIT features:

- Automatic standard cost estimating structure

- Reduction in errors/omissions

- Facilitation of electronic interchange of in process estimates

- Built in common learning curve equations

- Quick linkage to major cost data bases

ACEIT provides significant savings over traditional cost estimating methods. In a time of team estimating, ACEIT's unique features provide easy integration of the work of a team of independent analysts to effectively develop a single life cycle cost estimate. This capability is particularly useful in the development of complex cost estimates for joint service programs.

ACDB links to ACEIT and will be the most complete, readily available source/repository of Army, Air Force and Navy historic cost and technical data. Currently, the Army, Air Force and Navy are working jointly on the development and fielding of 16 weapon system commodity cost databases.

To further the objectives of the National Performance Review, the joint development of ACEIT has reduced development duplication between the services, improved cost analysis productivity DoD-wide, accommodated for future expansion of ACDB employing direct Electronic Data Interchanges (EDI), and benefited from commonality in training programs (400 analysts trained Army-wide and 1400 government-wide.)

ACEIT has significantly enhanced the Army's ability to meet decision makers needs for quality life cycle cost estimates while experiencing a loss of over 30 percent of its cost analysts workforce.

• Economic Analysis Manual Update. In July 1995, the US Army Cost and Economic Analysis Center (USACEAC) published the Department of the Army Economic Analysis Manual. It has greatly reduced the efforts needed to complete economic analyses (EA) throughout the Army. The new manual provides a user-friendly, clear, easy to follow format for displaying the annualized dollars and the associated descriptive information that is needed for an acceptable EA. It also provides a comprehensive, well documented example of an acceptable EA. This example provides answers to many questions with significant savings in time and effort for preparers, advisers and validators.

The guidance in the new manual decreases the total effort required to produce an EA through reductions in the required level of documentation. Required documentation formats were redesigned to capture all appropriate costs and benefits using less time and resources. A typical EA was reduced in size between 25 to 50 percent, saving an estimated 15 to 20 percent man-year effort. The reinvented process provides the pertinent information in an easier to follow, more condensed format.

To further aid the reader, the new manual is structured to facilitate finding information and guidance on a particular area or subject matter. The layout is supported by more effective and more informative graphics that display valuable and well organized information on specific subject areas pertaining to the EA process.

The new manual provides detailed guidance and clarification on specific Army EA requirements. It addresses Capital Budget investment projects which were not addressed in the previous version of the manual, and gives detailed information on preparing these specific EAs. For Defense Business Operating Fund (DBOF) Capitol Budget Investment Projects below a certain threshold, the new manual allows the submission of less rigorous cost comparisons, thereby reducing the time and effort required to prepare for lower value investment decisions. This specific information and guidance gives organizations a head start in preparing justifications for their projects thus adding efficiency to the overall approval process as the projects are reviewed by HQ Army and Office of the Secretary of Defense.

One final feature of the new manual provides the Army Program Managers with a Cost Element Structure (CES) for Automated Information Systems (AIS) reflecting the new standard DoD AIS CES format. This enables Army AIS program managers/proponents to prepare their EAs in a format which will be acceptable to DoD without the extensive reformatting which was often required in the past. This streamlined approach shortens by ten to fifteen days one of the most significant time windows in the process of preparing for a Major AIS Milestone Decision Review.

This new manual supports the objectives of the National Performance Review in a number of important ways -- it was written with the user in mind, it has significantly reduced the volume of paper required while improving the readability of the product, and it has improved analyst productivity Army-wide while maintaining the quality of the analysis.

• Installation Status Report (ISR). The Installation Status Report (ISR) is a decision support system designed to determine the status, condition, and resource requirements of all Army facilities and installations, using the same standards, criteria, and methodology Army-wide. In the ISR Infrastructure reporting, identified infrastructure requirements are matched against assets on hand at the installations. Detailed qualitative and quantitative aspects of each facility's sustainment, renovation and new construction are reported using the color rating scale (Red, Amber or Green).

The ISR provides a consistent estimate of the resource requirements to sustain and improve Army facilities and installations. HQDA uses these estimates to compare resource plans during the Program Operating Memorandum (POM) building process. Later in the process, the ISR supports the Army's defense of resource requirements for its installations before the Defense Department and Congress.

The ISR process is in keeping with the guidelines of the National Performance Review and the Government Performance Review Act. The ISR gives the Commander's overview of the status of facility conditions on an installation, and provides an assessment of conditions measured against a common set of standards. ISR can be used to highlight key, systemic problem areas so Army leadership can focus resources to the areas of most need.

The Resource Analysis Office designed, developed, and implemented the ISR Army-wide, and the US Army Cost and Economic Analysis Center (USACEAC) contributed to this effort by providing valid cost factors for over 200 facility category groups.

• Outsourcing of Cost and Economic Analysis. The U.S. Army Cost and Economic Analysis Center (USACEAC) has expanded the Department of Defense and the Army's cost and economic analysis capability by executing special studies for selected requirements using contracted resources. Using its available source of support contracts, USACEAC has frequently operated as the integrator/facilitator for many cost and economic analysis projects across the DoD and provided specific, short term cost estimating expertise not readily available elsewhere.

In Fiscal Year 1995, over $11 million of analyses were provided with customer funding using USACEAC contract instruments with an estimated workload equivalent of nearly 90 man-years. Outsourcing has permitted work force stability during periods of unpredictable demands. Recent customers include the Office of the Assistant Secretary of Defense for Health Affairs, the Joint Logistics Systems Center, and the Office of the Program Manager for Chemical Demilitarization.

When approached by a government agency requesting assistance, a USACEAC staff analyst reviews the requirement, advises on the selection of the appropriate available contractor, consults on the development of the task order's statement of work, and confers with the customer during the performance of the contract.

In support of the objectives of the National Performance Review, USACEAC uses outsourcing as an effective management tool to address quickly and economically unusual or short-suspense cost and economic analysis requirements while maintaining management control of the product quality. Within its fixed personnel ceiling, USACEAC management can provide, through outsourcing, additional cost and economic analysis support providing quality products tailored to the customer's needs within tight time constraints.

• Cost Review Board (CRB). The Assistant Secretary of the Army (Financial Management and Comptroller) formed the Army Cost Review Board (CRB) to provide comprehensive Army Cost Positions (ACPs) acceptable to both the acquisition and financial management communities and to support the Planning, Programming, Budgeting and Execution System (PPBES). The CRB reviews cost estimates for major weapon and information systems.

The CRB has conducted over thirty program reviews, totaling over $150 Billion, with remarkable success. Since creation of the CRB about three years ago, acquisition cost estimates in the ACP have differed from OSD Cost Analysis Improvement Group estimates by less than 1%, and life cycle cost estimates by less than 4%. The CRB process has essentially eliminated the time consuming, labor intensive process of finding bill payers and re-prioritizing Army programs to fix shortfalls.

The Cost Review Board takes an Integrated Product Team (IPT) approach to cost analysis by bringing together functional experts from the acquisition, combat developments, and financial management communities. Its review of major weapon and information systems at critical acquisition decision points has raised, and assisted in resolving, a number of very critical issues. For example the CRB recommended a change in the maintenance concept for the Joint Tactical Information Distribution System that resulted in a cost avoidance of $400 million. It also recommended the use of common hardware and software for Combat Service Support Control System training, and standardization of policy toward computer technology replacement for tactical and non-tactical applications. These will result in a substantial additional cost avoidance for the Army.

The USACEAC, the CRB executive agent, is continuously improving the CRB process. Current process improvement initiatives have shortened the time required for the CRB to do its work, saving an estimated 1500 manhours for each Major Program Review, perform cost risk and uncertainty analyses, and support affordability excursions. CEAC recently assembled an Army-wide team to reengineer the cost analysis process. The Army is experimenting with one of its recommendations in the development of an ACP for the Comanche helicopter program. USACEAC and the Comanche Program Office are co-chairing a cost IPT to develop a single cost estimate for the demonstration and validation phases. This has the potential to reduce resource requirements by eliminating duplicate cost estimates, while at the same time increasing the quality of the estimate.

The Cost Review Board has dramatically improved cost analysis support to the materiel acquisition and the PPBES processes. It achieved this success by reducing the variance between Army and OSD cost estimates for materiel and information systems and by providing timely, high quality cost estimates to support the acquisition and PPBES processes.

• Purchase and Requisition Forms Preparation Tool. The P and R Forms Preparation Tool has streamlined processes and reduced administrative requirements on budget analysts at all levels of the Army resource management structure. The tool integrates commercial-off-the-shelf (COTS) software products, adding intelligence and functionality to the COTS products to reduce the formatting and data entry requirements on budget analysts. Data that previously had to be entered into manual forms several times by the budget analysts is now automatically retrieved from a database or from previously prepared forms and placed in the proper places on the current forms. The tool enforces formatting procedures so that users are not burdened with format development. In this way, the analysts can concentrate more on the analysis of the data and program justification/explanation instead of on the more menial tasks of data entry and formatting. The tool has reduced preparation times for the PForms and the RForms, made the process of preparing and submitting the forms much more efficient, and reduced frustrations on the professional budget analysts. In short, this tool has reinvented how the process is done and made it much more efficient.

• Funding Letter and Funding Distribution Systems. Two of the applications that are part of a larger system called the Integrated Resource Management Information System (IRMIS), the Funding Letter System (FLS) and the Funding Distribution System (FDS) have together reduced a large amount of red tape and paper generation routines. The FLS provides automated tracking of Congressional modifications of appropriation requests submitted by the Army and gives budget analysts on the Army staff an automated application for distributing those modification to the sub-elements affected by the modifications. The system then provides an electronic means for coordinating and approving the distribution of those changes, producing a document describing those changes that is provided to the Army commands as guidance for their execution of the approved Army appropriations. The data generated in the FLS is automatically provided to the FDS for preparation of funding authorization documents (FAD) that are electronically coordinated and approved. The approved FAD will, within the next year, be electronically fed into the Army's Program Budget Accounting System (PBAS), which is the official finance and accounting system for control of obligation and disbursement of Government funds. These two systems in concert have reduced the amount of data entry required of budget analysts, organized the information into more meaningful portions, and provided a means for managing the impacts of Congressional actions on Army budget requests. The systems have also provided for more accurate recording and storage of the critical appropriations actions and reduced the amount of paper documents that must be generated to document the control and distribution of the public's monetary resources. The systems have also streamlined the coordination and approval processes of the funding guidance and documentation so that senior managers and budget analysts can devote more time to analysis and decision-making because they are required to spend less time on data entry, document formatting, and paper generation.

• PBD Coordination System. The Program Budget Decision Coordination System is an example of integration of commercial-off-the-shelf (COTS) products into an intelligent, easy to use tool that reduces the workload on budget analysts and the production of voluminous paper products. The PBD Coordination System provides a tool for the entry of PBD guidance at one initial point and the automatic replication of that data/information throughout the process of analyzing and responding to program budget decision issues generated by the Office of the Secretary of Defense (OSD) impacting Army programs and budget items. The data and information entered at the receipt of a PBD is stored in a common database and is automatically inserted into numerous electronic documents throughout the process of deciding the appropriate Army response to the OSD PBD. Management information in the form of various reports is generated automatically from the database and is continuously available to the senior Army decision makers, relieving action officers of tedious report development work. The system also provides for electronic coordination of responses developed by the responsible budget analyst and eliminates the requirement for the manual distribution and coordination of the response by the preparing analyst. The capabilities of the system have greatly reduced the manual entry of data over the highly intensive process, eliminated the physical need for face to face delivery of documents, and made the entire process much more efficient.

• Executive Information System. The Resource Management Executive Information System (EIS) provides the senior Army leaders with executive level information on a wide range of resource management topics. The EIS accesses the latest information from the Integrated Resource Management Information System (IRMIS) database and presents that information in limited detail or at summary level and in graphical or tabular form on the senior manager's desktop computer. The system provides an easily navigable menu to present the information in a variety of views in terms of total Army, specific appropriation, specific command, or a combination of these and other views. Incorporated into the EIS are capabilities for electronic mailing to the Army Secretary, other Assistant Secretaries or their subordinates the information being reviewed by the senior leader in order to provide vital information on resource management issues, get clarification of information, issue direction on actions that should be taken in response to the information, or for other management reasons. The graphic or tabular representations being viewed by the senior leader can also be saved or printed for insertion into documents or briefings being developed for management actions. The resource management EIS has been provided to senior leaders throughout the Army staff for their use in reviewing and making executive decisions relating to the Army's critical resources. The EIS provides current information directly to the Army senior leadership, giving them more readily accessible information and reducing requirements for subordinates to produce documents and briefings for presentation of that information. This has increased the efficiency of the staff as a whole and provided more up-to-date vital information to the senior Army leaders.

• Data Analysis Query System. The Data Analysis Query System (DAQS), sponsored by the Office of the Assistant Secretary of the Army (Financial Management & Comptroller), facilitates the flow of information between Headquarters, Department of Army and Army installations throughout the world. The unique architecture of DAQS allows its users easy access to the system using e-mail on the Internet. This is possible because DAQS operates remotely as an intelligent mail agent capable of operating without human intervention. DAQS provides functionality in the following four areas:

- Disseminating information. DAQS distribution engine allows HQDA to broadcast messages and send files to its user base around the world.

- Generating standard reports. DAQS is capable of generating several different types of reports. When a request for a report is received, DAQS processes the request, connects to the HQDA's Information Resource Management Information System database (containing current and historical POM and Budget data), generates the report as a Microsoft Word document, and mails the resulting document back to the user. This has allowed DAQS' users access to the same reports formerly only available via the Pentagon mainframe.

- Distributing software. Using DAQS allows users to request HQDA-provided software.

DAQS mails the requested software directly to the user as an attached file along with any instructions necessary for installation and operation of the software.

- Processing program and budget data. During a program or budget cycle, the Army's financial analysts at the major commands can send their POM/Budget data to DAQS via e-mail. Upon receiving this data, DAQS first validates the data. If the data is in error, the data is automatically mailed back to the analyst along with an error report. This allows the MACOM to quickly correct their data, and resubmit to HQDA. Once the data is correct, DAQS interfaces with HQDA's IRMIS database and automatically stores the data. At all times during this process, the current status of a given submission is sent by DAQS to the submitting party and the appropriate managers at HQDA. In addition, DAQS maintains statistics for all POM/Budget submissions which in turn is used to generate several different reports that help HQDA track the overall status of a given POM/Budget cycle. This process has dramatically improved the entire POM/Budget submission process by improving the quality of the MACOM's data, automating time-intensive manual processes, and providing accountability.