AGA Annual Financial Management Training:

Cost Transparency and Support Services

March 29, 2016

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Cost Transparency in Shared Services Requires

Optimizing Customer-Supplier Relationship

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Service providers must develop and utilize proactive mitigation strategies to manage risk

Loss of

Customers

Short-Term Cash

Flow Problems

Unforeseen

Expenses Forecast Errors

Continuing

Resolutions

Risks should be Managed to Ensure Predictability for

Supplies and Customers

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• Performance Level Negotiations

• Capital and Procurement Planning

• Overhead Scaling and Allocation

• Forecasting (Strategic)

• Workforce Planning

• Capacity Planning

• Recovery Basis/Rate

Structure Determination

• Forecasting (Tactical)

• Risk Assessment

• Offset Determination

(e.g., Carry Forward,

Risk, Reserves, etc.)

• Billing

• Costing

• Cash Management

• Demand Monitoring

• Spend Plan Execution

• Performance Monitoring

Efficiency and Effectiveness of Service Delivery

Requires Sound Management Practices

Working Capital Fund's Business-like Financing drives

Cost Transparency in Support Services

Direct Appropriation Revolving Fund

Support Provider

Services Customer

> Justifies Demand & Cost

> Decides Service Changes

"Free" Services

Support Provider

Services + Bill

Customer Pays

Full Cost Rates

"I'll Take a Dozen!"

> Weak Demand Constraints

> Minimal Cost Visibility

"Maybe 6 Will Do."

> Determines Support Required

> Balances Support vs. Mission

> Justifies Cost Given Demand

> Focused on Managing Cost

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Jennifer Ayers, Director, Office of the Secretary Financial Management Directorate, Department of Commerce

Tom Carroll, CFO, Architect of the Capitol

Gretchen Anderson, Director of Revolving Funds, Department of Defense

Moderator: Shiva Verma, Principal, Grant Thornton

Meet the Panelists!

FY 2015 Operating Budget $ milFinancial Management 62.8General Counsel 47.7Chief Information Officer 29.1Human Resources 26Security 22.5Facilities and

Environmental Quality 18.9Other 13.0TOTAL 220.0

Financial Management

28%

General Counsel

22%Chief

Information

Officer

13%

Human Resources

12%

Security10%

Facilities and Environment

al Quality

9%

Other6%

Panelist – Jennifer Ayers Director, Office of the Secretary Financial Management Directorate

Department of Commerce

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• DOC Working Capital Fund: Established June 28, 1944

• Rate setting process and review

• Handbook and Performance Metrics

• Governance and Customers

• Challenges and Best Practices

• Defense Working Capital Funds

Established 1991; 10 USC 2208; $111.9 Billion in FY 2016 Obligation Authority

Navy ($28.5B)

– Base Support ($3.3B)

• Facilities Engineering (utilities and

maintenance)

• Facilities Engineering Service Center

– Supply ($6.4B)

– Fleet Readiness Centers-Depot

Maintenance ($2.1B)

– Research & Development ($13.1B)

– Transportation ($2.9B)

– Marine Corps ($0.7B)

• Supply

• Depot Maintenance

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Army ($8.3B)

• Supply ($3.8B)

• Industrial Operations ($4.5B)

Air Force ($22.0B)

• Supply Management ($9.7B)

• Depot ($6.0B)

• Transportation (TRANSCOM)

($6.3B)

Defense-Wide ($46.1B)

• Finance and Accounting Services ($1.4B)

• Logistics (Supply Chain, Energy, and

Document Services) ($36.0B – the

biggest WCF activity)

• Information Systems ($8.7B)

Defense Commissary Agency ($7.0B)

Source: Locked FY 2016 PB position in the OUSD Comptroller Information System (CIS)

Customers: Military Services, Agencies; Other WCFs; Other Federal Agencies

Panelist – Gretchen V. Anderson Director for Revolving Funds

Office of the Under Secretary of Defense (Comptroller)

Questions?

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Appendix

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Panelist – Jennifer Ayers Director, Office of the Secretary, Financial Management

Department of Commerce

• Ms. Ayers joined the Department of Commerce on January, 20, 1998 as a budget analyst

and is currently the Director of the Office of the Secretary, Office of Financial Management

(OSFM). OSFM provides budgetary and financial management services for the Office of the

Secretary.

• The Department’s WCF finances department-wide administrative functions that are more

efficiently and economically performed on a centralized basis.

• Ms. Ayers has aggressively pursued the restructuring of the WCF from accruals to

obligations, has changed the billing practices, and explored new and better methods to

employ costing to the WCF.

• She started working groups and algorithm reviews to provide transparency throughout the

department. She has provided significant changes that have transformed the way the

Working Capital Fund operates and her efforts earned her Manager of the Year for the Chief

Financial Officer and Assistant Secretary for Administration offices in FY 2008.

• She currently chairs the Government wide Working Capital Fund group sponsored by the

National Academy of Public Administrators and Grant Thornton and is part of the Office of

Management and Budget (OMB) working group to set policy on operating reserves.

• Prior to joining the Department of Commerce, Ms. Ayers worked for the U.S. Air Force and

the Office of Personnel Management. She also accompanied her family for 5 years on an

overseas tour in Greece.

• Ms. Ayers holds a B.S. in Food Science from University of Maryland and a Masters of

Business Administration in Management.

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Panelist – Tom Carroll Chief Financial Officer

Architect of the Capitol

• Mr. Carroll joined the Architect of the Capitol in 2009 as Deputy Superintendent for the

House Office Buildings. He was appointed Chief Financial Officer in December 2011, after

serving in the acting role sine June 2011.

• In 2004, he was assigned to the Pentagon, Office of the AF Civil Engineer and promoted to

Chief of Environmental Integration Branch, and later Chief of MILCON Program Development

Branch responsible for Air Force input to the President's budget submission. In 2007, he was

assigned as Commander, 11th Civil Engineer Squadron, and was responsible for all facility

operations, sustainment, and modernization at Bolling Air Force Base, Washington, D.C.

• Mr. Carroll began his federal career in 1989 as Engineering Programmer and Design

Engineer in the U.S. Air Force, Peterson AFB, Colorado, and in 1991, was promoted to

Executive Officer to the AF Space Command Senior Civil Engineer.

• Mr. Carroll graduated from the University of Vermont with a Bachelor of Science degree in

Electrical Engineering. He earned his commission through the ROTC program as a second

lieutenant in 1988, and entered active duty in January 1989. He holds a Masters degree in

Administration from Central Michigan University.

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Panelist – Gretchen V. Anderson Director for Revolving Funds

Office of the Under Secretary of Defense (Comptroller)

• Ms. Anderson serves as the staff advisor to Under Secretary of Defense (Comptroller) and

Deputy Comptroller (Program/Budget) for financial and operational issues for the Defense

Working Capital Fund, Pentagon Reservation Maintenance Revolving Funds, and the

National Defense Stockpile.

• Ms. Anderson is responsible for budget policy, budget review and formulation, congressional

budget justification, funds allocation and cost control, and program execution and evaluation.

Her portfolio includes the Department's logistics and infrastructure processes including

Supply Management, Fuels, Distribution Depots, Depot Maintenance, Transportation, Navy

Research and Development, Navy Base Operating Support, the Defense Finance and

Accounting Service, Defense Information Systems, Pentagon Renovation, Commissaries,

and other support organizations.

• Ms. Anderson entered the Senior Executive Service in January 2006 as the Associate

Director for Defense-Wide Programs, responsible for oversight of Operation and

Maintenance financial management for the Defense Agencies, including USSOCOM and the

intelligence agencies. She joined the staff of the Under Secretary of Defense (Comptroller) in

1999 as the Senior Accountant on the Deputy Chief Financial Officer’s staff developing policy

for major Department-wide programs including the Defense Working Capital Funds,

Inventory and Related Property, and the DoD Consolidated Financial Statements. As the

Assistant Director for Accounting Policy, she was responsible for review of all accounting

policy changes emanating from the Federal Accounting Standards Advisory Board and

decisions of the Comptroller General of the United States, and policy promulgated in all

volumes of the Department of Defense Financial Management Regulation.

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Panelist – Gretchen V. Anderson Director for Revolving Funds

Office of the Under Secretary of Defense (Comptroller)

• Ms. Anderson previously worked for the U.S. Army as the financial manager for the Plant

Replacement and Improvement Program at the Headquarters, U.S. Army Corps of

Engineers, a Supply Management budget analyst on the staff of the Army Deputy Chief of

Staff for Logistics, and an operating accountant for the Army Stock Fund and the

Conventional Ammunition Working Capital Fund and budget analyst for the Army Industrial

Funds at the U.S. Army Armament, Munitions, and Chemicals Command at Rock Island,

Illinois. She was an associate professor of business and finance at the Western Illinois

University, Blackhawk College, and Panama Canal College.

• Ms. Anderson is a Certified Defense Financial Manager and a member of the American

Society of Military Comptrollers. She is also a Certified Government Financial Manager and a

member of the Association of Government Accountants and holds Defense Financial

Management Career Program Level 3. She earned her Master of Business Administration

degree from St. Ambrose University and her undergraduate degree from Seattle Pacific

University.

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Moderator – Shiva Verma Principal, Grant Thornton LLP

• Mr. Verma leads Grant Thornton’s Cost and Performance Management Service Line. He has

over 18 years of implementing rigorous, repeatable, and defensible cost management

solutions for federal agencies. He has led development of rigorous cost methodologies that

have been scrutinized by oversight bodies and external industry groups.

• Mr. Verma's area of focus includes activity-based costing/management, fee/price setting,

budgeting, business process improvement, change management, lean six-sigma, strategic

planning, value engineering, and target costing. Mr. Verma’s cost management and fee-

setting clients include the Social Security Administration (SSA), Office of Personnel

Management (OPM), Federal Deposit Insurance Corporation (FDIC), Security and Exchange

Commission (SEC), US Postal Service (USPS), and the Departments of Agriculture,

Commerce, Defense, Labor, Energy, Health and Human Services, Energy, and Homeland

Security. At USPTO, he led the implementation of the Activity Based Information (ABI)

program, a federal best practice cost management program per an independent review. The

ABI program provides full cost of USPTO’s over 160 Automated Information Systems

including the financial management systems. This information has been used to conduct

Analysis of Alternatives to host its financial management infrastructure.

• Mr. Verma is a Project Management Institute (PMI)-certified Project Management

Professional (PMP) and an American Society for Quality-certified (ASQ) LSS Black Belt. He

earned his Bachelor of Science in Process Control Engineering from University of Bombay,

India and his M.B.A. in Finance an Strategy from University of Maryland at College Park.

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