RFI_Attach_1_ONRR_BPR_AS-IS_Final_Report_1.pdf

U.S. Department of the Interior

Office of Natural Resources Revenue

Business Process Reengineering As-Is Baseline Report

Prepared by: Booz Allen Hamilton

September 30, 2019

FINAL

ONRR BPR As-Is Baseline Report as of September 30, 2019 - FINAL

Contents

Executive Summary

1.0 Introduction

2.0 Approach

2.1 Data Gathering and Planning

2.2 Develop As-Is Process Maps and Narratives

2.3 Analysis of As-Is Processes

3.0 Results

3.1 Mapped As-Is Processes

3.2 Process Performers

3.3 Systems Supporting Processes

3.4 Data Elements

3.5 Forms

3.6 Strengths and Pain Points

3.7 Performance Metrics

4.0 Findings

4.1 How Industry Data Impacts ONRR

4.2 How Key Partners Provide Data

4.3 How ONRR Stores Data

4.4 How ONRR Uses Systems

5.0 To-Be Design Considerations

6.0 Way Ahead

7.0 Appendices

7.1 Appendix A: Focus Groups

7.2 Appendix B: Process Maps and Narratives

7.3 Appendix C: Process Performers

7.4 Appendix D: Systems and Tools

7.5 Appendix E: System Owners

7.6 Appendix F: Data Elements

7.7 Appendix G: Data Element Categories

7.8 Appendix H: Forms

7.9 Appendix I: Strength and Pain Point Themes

7.10 Appendix J: Strength and Pain Point Themes Across Processes and Primary Activities

7.11 Appendix K: Performance Measures

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Acronyms

ACH – Automated Clearing Housing

AoA – Analysis of Alternatives

AM - Audit Management

AP – Accounts Payable

AS – Accounting Services

BIA – Bureau of Indian Affairs

BLM – Bureau of Land Management

BOEM – Bureau of Ocean Energy Management

BP – Business Process

BPR – Business Process Reengineering

BSEE – Bureau of Safety and Environmental Enforcement

CA – Communitization Agreement

CARS – Central Accounting Reporting System

CIR – Collections Information Repository

CM – Compliance Management

CFR – Code of Federal Regulations

CPS – Coastal Political Subdivision

DOI – Department of the Interior

DOJ – Department of Justice

EDM – Enterprise Data Management

EMARF – External MRMSS Application Request Form

EOP – Explanation of Payment

FDR – Federal Disbursement Report

FOGRMA – Federal Oil and Gas Royalty Management Act

FM - Financial Management

FS – Financial Services

GL – General Ledger

GPRA – Government Performance and Results Act

IBC – Interior Business Center

IBLA – Interior Board of Land Appeals

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IDEA Indian Daily Estimate Analysis

IPAC – Intra-Governmental Payment and Collection

IPT – Integrated Project Team

LDV – Lease Data Verification

LOR – Lessee of Record

NOD – Notice of Demand

NONC – Notice of Non-Compliance

O&G – Oil and Gas

OCS – Outer Continental Shelf

OGOR – Oil and Gas Operations Report

OMT – Operation Management Tool

OnPR – Onshore Production Reporting Team

ONRR – Office of Natural Resources Revenue

ORO – Operating Rights Owner

ORPS – Online Rental Payment System

OST – Office of the Special Trustee for American Indians

OTR – Order to Report

POC – Point of Contact

SME – Subject matter expert

STRAC – State and Tribal Royalty Audit Committee

TIMS – Technical Information Management System

VC – Volume Comparison

VCT – Volume Comparison Tool

VTT – Valuation Tracking Tool

ONRR BPR As-Is Baseline Report as of September 30, 2019 - FINAL 1

Executive Summary

The US Department of the Interior Office of Natural Resources Revenue (ONRR) tasked Booz Allen Hamilton (Booz

Allen) with conducting agency-wide business process reengineering (BPR) of its primary mission functions. The first phase of this effort was an “As-Is” analysis of ONRR’s business processes. To do this, Booz Allen focused on three tasks:

(1) identify all business processes ONRR currently performs and prioritize them for process mapping; (2) develop detailed process maps and narratives that capture ONRR’s As-Is state; and, (3) analyze As-Is maps for trends. Findings from the

As-Is analysis provide focused areas of opportunity to address when designing ONRR “To-Be” business processes.

In collaboration with the ONRR BPR Integrated Project Team (IPT), Booz Allen analyzed the ONRR value chain to determine mission-focused activities, important for baselining the As-Is process mapping effort. Booz Allen and the IPT identified five primary activities of ONRR’s value chain: Collect, Disburse/Distribute, Verify, Secure Industry

Compliance, and Report/Share. Booz Allen and the IPT identified 93 processes comprising those primary activities and then prioritized those processes for mapping. As-Is mapping focus groups included ONRR subject matter experts (SMEs) and IPT members. Those focus groups mapped As-Is processes; captured the activities, people, tools, technology, and data used to perform a process; and, captured strengths and pain points associated with a process. Booz Allen facilitated the

As-Is focus groups to ensure a consistent approach for developing and validating the process maps and narratives.

In total, 197 ONRR employees participated in the As-Is mapping effort. Booz Allen facilitated 38 focus groups, resulting in 82 unique As-Is process maps. ONRR SMEs identified 73 distinct process performers and 52 unique systems or tools, both internal and external to ONRR. In addition, ONRR SMEs identified 221 distinct data elements, and Booz Allen further developed thirteen data categories such as royalty data and financial documents. Lastly, participants identified 118 strengths and 428 pain points, which Booz Allen grouped into 23 themes such as positive stakeholder impact, and overly time-intensive processes.

Booz Allen analyzed the As-Is process maps and narratives for impacts, positive and negative, to ONRR performance.

This analysis yielded nine findings:

Finding 1: ONRR collects data on production, royalties, and payments in a manner that makes it difficult to determine if the data are consistent, correct, and complete.

Finding 2: Repeated communications with industry to address various issues increase the amount of time it takes to complete multiple processes.

Finding 3: The format that ONRR receives data from key partners often requires additional work to input into

ONRR systems.

Finding 4: Data received from key partners may require additional validation steps via the partner’s source systems, creating additional work for ONRR to validate data that it does not own.

Finding 5: The timing of when key partners provide data to ONRR creates additional work and delays how quickly ONRR performs various processes.

Finding 6: Updates and/or enhancements to some data elements are not always communicated or available across

ONRR thus creating rework.

Finding 7: Many processes require data that is stored in different systems, databases, or files that have access restrictions creating additional work to obtain the necessary data.

Finding 8: While ONRR has made attempts to automate some activities, the outputs of these automated activities do not have the intended results, often requiring manual input.

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Finding 9: Many processes use systems to aggregate data and generate reports, and computational analysis is performed outside the systems which is inefficient.

As ONRR proceeds with its To-Be design efforts, Booz Allen recommends rethinking the following to obtain significant performance improvements across ONRR:

How and what information is collected from industry in a way that facilitates subsequent analyses

How the organization interfaces with industry for information sharing and communication

How to obtain information from other government entities in the most efficient manner

How information is exchanged within ONRR

What tasks are best performed by systems versus people

How to routinely assess and update systems and business rules based on performance and changing needs.

Booz Allen recognizes that accomplishing these recommendations may require complex actions such as changing regulations or extensive coordination with other government entities on technological and procedural changes. As part of the To-Be design efforts, Booz Allen will collaborate with ONRR to define one or multiple approaches to accomplish these items, along with identifying the associated benefits, costs, and risks.

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1.0 Introduction

In 2017 the US Department of the Interior (DOI), Office of Natural Resources Revenue (ONRR) tasked Booz Allen

Hamilton (Booz Allen) with the development of alternatives and the identification of recommendations to support modernization of its Minerals Revenue Management Support System (MRMSS). Booz Allen’s Analysis of Alternatives

(AoA) documented two major findings: (1) ONRR could realize substantial benefits from IT system modernization, and

(2) for modernization to be successful, ONRR would need to reengineer its business processes.

ONRR thus engaged Booz Allen to support organization-wide business process reengineering (BPR) in the fall of 2018.

For ONRR, BPR furthers its pursuit of excellence as an agency. BPR presents an opportunity for ONRR to reimagine its mission critical business functions and how it accomplishes them. It gives ONRR the ability to evaluate best practices that could shape how it manages minerals revenue for the next decade and beyond.

This outcome requires ONRR to explore why its business processes today are highly customized, overly complex, inefficient, and extensively manual. It requires leaning forward, to push the agency to adopt approaches and technologies that may stretch it out of the comfort of day-to-day routines. In doing so, the

ONRR of tomorrow can be faster and smarter with how it approaches its business in a simpler way.

To execute BPR requires developing a deep understanding of existing processes. That knowledge then shapes the desired future, or “To-Be” processes. Booz Allen will follow seven steps to support ONRR in the development of that radically redesigned future state (Figure 1).

Figure 1. Steps Planned for ONRR BPR

An early milestone in the BPR process is the modeling and assessment of the current or “As-Is” processes in Step 2 of 7.

Robust planning and the collection of data determine which As-Is processes to map and analyze (Step 1). This document reports the outcomes of Steps 1 and 2 of ONRR’s BPR effort. In this document, Booz Allen:

Describes the approach for identifying, documenting, and evaluating ONRR’s As-Is business processes

Provides results of the As-Is evaluations

Reports notable findings

Discusses implications on and recommendations for the To-Be process design, and

Closes with next steps.

Supporting information collected during this phase (e.g., the As-Is process inventory, maps, and narratives) are provided as eleven Appendixes.

2.0 Approach

This section describes Step 1 and Step 2 of the BPR approach. These two steps consist of: inventory and prioritization of current business process, developing process maps and narratives, and analyzing the documented processes.

BPR is the fundamental rethinking and radical redesign of business processes to achieve dramatic improvements in critical, contemporary measures of performance, such as cost, quality, service, and speed.

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2.1 Data Gathering and Planning

Fundamentally, data gathering and planning included: (1) identifying ONRR’s BPR team, (2) identifying the processes to reengineer, and (3) prioritizing those processes. Following the ONRR BPR kick-off, ONRR moved quickly to establish a team of forward-thinking employees to lead the effort. This BPR Integrated Project Team (IPT) included an executive sponsor as well as a program manager-level BPR champion. With the BPR IPT in place, ONRR focused on developing a prioritized inventory of business processes, the core output of Step 1: Data Gathering and Planning. This inventory of business processes will be the focus of BPR.

2.1.1 Business Process Inventory

The BPR IPT developed ONRR’s business process inventory. Booz Allen facilitated discussions with the IPT using a traditional value chain model (Figure 2) to help the IPT develop that inventory of ONRR’s primary business processes.

When developing the ONRR value chain, the IPT focused on processes that fulfill ONRR’s mandate from its enabling regulations, statutes, policy and governance. ONRR identified 93 processes and organized them into the five primary activities (Collect, Disburse / Distribute, Verify, Secure Industry Compliance and Report / Share). The IPT next prioritized the 93 business processes based on five criteria to gauge processes with the greatest re-engineering opportunities. The purpose of the prioritization was solely to identify the limited number of processes for which As-Is process maps could be developed, due to scope limitations of the Booz Allen contract. Appendix B: Process Maps and

Narratives provides the full list of 93 business processes.

Support activities, such as human resources, while essential to ONRR’s mission readiness, fall outside the scope of BPR.

Figure 2. ONRR Value Chain

2.2 Develop As-Is Process Maps and Narratives

Since ONRR wanted BPR to be a grass roots effort, Booz Allen and the IPT established an approach for mapping As-Is business processes that maximized employee involvement. That approach included: identifying focus groups and focus group participants, conducting focus groups, and mapping of business processes.

2.2.1 Identifying Focus Groups

Using the list of prioritized processes, Booz Allen planned focus groups to discuss and map 56 of the 93 prioritized processes. Grouping like-processes, Booz Allen identified 38 focus groups to map the 56 processes. The remaining 37 processes that Booz Allen could not map due to scope limitation will still be topics for discussion during To-Be mapping

(Step 4 of BPR). Additionally, ONRR staff are compiling existing documentation (e.g., Standard Operating Procedures, ONRR BPR As-Is Baseline Report as of September 30, 2019 - FINAL 5 system documentation) for all As-Is business processes to inform future modernization tasks such as functional requirements development. Appendix A: Focus Groups captures the group list and associated business process names.

The BPR IPT identified subject matter experts (SMEs) (e.g., business users, business analysts, and data stewards) to participate in each focus group. Two IPT members signed up to lead each focus group. ONRR provided Booz Allen with documentation and standard operating procedures for each process, where available, in advance of each focus group. Booz

Allen used this background information to develop notional or “strawman” maps to guide focus group discussion.

2.2.2 Conducting Focus Groups

Booz Allen developed a comprehensive As-Is mapping schedule, which for each focus group included an initial meeting to map the process; a second meeting to review, clarify and validate the resulting map(s); virtual follow-up reviews of map(s) and associated narratives; and, a final review of map(s) and narrative(s) by a BPR IPT member.

During the first meeting, the BPR IPT lead established the process background and scope. Booz Allen facilitated discussion to map the target process or processes. (A focus group could develop more than one map if during discussion the group determined that the business process topic represented more than one actual process.) Booz Allen actively updated the maps based on SME feedback. To the extent possible, mapping captured the activities, people, tools, technology, and data used to perform a process. Additional details such as critical process outputs, number of outputs, and process frequency were recorded in the narrative. Maps also denoted preceding and succeeding processes. In one instance, Booz Allen documented a future process that captured activities based on the assumed use of an Online Form expected to go live in the summer of 2019.

Participants identified strengths and pain points for each process, information important for analyzing the processes and to inform the To-Be phase of BPR. Strengths denote something that works well, such as a recently implemented change that significantly improved the process for its direct performers or downstream stakeholders. Pain points reflect recurring issues that negatively impact the process, its performers, or downstream stakeholders. One-off strengths and pain points, (i.e., rarely occurring or those with limited impacts to the process) were not captured.

The second meeting for each focus group served to validate the process map, clarify the narrative, and capture additional details on strengths and pain points.

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2.2.3 Mapping of Processes

Figure 3 shows an example process map output. Maps captured each process performer using horizontal swim lanes. Standard process mapping shapes were used to identify each step or activity. Separate swim lanes at the bottom of each map illustrated systems and data elements used. Strengths and pain points were aligned to appropriate steps using circle icons.

Booz Allen developed an accompanying narrative that describes the process. Figure 4 shows an example narrative. The narrative includes details not suited to put on the map, such as long descriptions for each process step, related regulations, systems or tools used, and further explanation of strengths or pain points. Booz Allen also captured process frequency, outputs, and performance measures when available.

Booz Allen shared completed maps and narratives with focus group participants. SMEs provided feedback on the documents during a review period. Feedback included editorial changes, additional process details, new strengths or pain points, and logic corrections. Booz Allen reviewed SME feedback and either addressed the changes or escalated the decision to the focus group's IPT lead. Finally, the IPT lead for a given focus group’s output reviewed and signed off on each map and narrative.

2.3 Analysis of As-Is Processes

Booz Allen compiled the As-Is maps and narratives (Appendix B: Process Maps and

Narratives). Booz Allen tabulated simple results in terms of number of strengths and pain points by process, by primary activity, and in total. Booz

Allen compiled information around performance measures, regulations and policies, and system / tool usage to look for trends. The results and findings from this analysis will inform the To-Be phase. The next two sections summarize those results and findings, respectively. Appendices C through K present additional details from As-Is mapping that informed the analysis.

Figure 4. Example Process Narrative

Figure 3. Example Business Process Map

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3.0 Results

Booz Allen held 38 focus groups from March through June 2019 (Appendix A: Focus Groups). Up to 23 employees participated in each focus group. One hundred ninety-seven ONRR employees participated in the As-is focus groups altogether. These focus groups successfully documented all ONRR business processes selected by the BPR IPT for As-Is mapping and analysis.

This section presents results of the As-Is mapping undertaken by those focus groups. Section 3.1 Mapped As-Is Processes describes the areas of the organization this analysis covered. Sections 3.2 Process Performers and 3.3 Systems Supporting

Processes highlight ONRR’s dependencies on external entities. Sections 3.4 Data Elements and 3.5 Forms capture the variety of ways ONRR collects and stores data. Section 3.6 Strengths and Pain Points reveals common themes identified across the organization's value chain. Section 3.7 Performance Metrics describes the performance metrics and outputs tracked by ONRR. These results provide critical content that Booz Allen further analyzed to develop findings and major implications that will shape ONRR’s To-Be business processes.

3.1 Mapped As-Is Processes

Each focus group identified between one and six distinct processes. Booz Allen captured 82 processes (Appendix B:

Process Maps and Narratives). Figure 5 illustrates the distribution of processes by value chain primary activity. Process maps visually display the steps, performers, systems, and data using the swim lane format. Process narratives include additional details and descriptions for each step. Most processes captured in As-Is focus groups belong to either the

Collect or Verify primary activities of ONRR’s value chain.

Figure 5. Number of As-Is Processes by Primary Activity, as defined in the ONRR Value Chain

3.2 Process Performers

ONRR SMEs identified 73 distinct process performers during focus groups. Examples of process performers include an

AP accountant, audit supervisor, industry operator (company), or the Bureau of Ocean Energy Management (BOEM).

Booz Allen consolidated this list into 45 groups by combining similar entities (Appendix C: Process Performers). ONRR interacts with Other DOI Bureaus and Agencies (i.e., Other DOI) in 25 processes, and with industry in 40 processes.

Other DOI includes BIA, BLM, BSEE, BOEM, IBC Agreements Officer, IBLA, Other DOI Bureau, and OST. There are many entities outside of ONRR involved in the organization’s processes.

N u m b er o f P ro ce ss es

As-Is Value Chain Primary Activity

Collect Verify Report/Share Secure Industry Compliance Disburse/Distribute

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3.3 Systems Supporting Processes

SMEs identified 52 distinct systems referenced in processes (Appendix D: Systems). Most systems (63%) are internal to the organization (Appendix E: System Owners). ONRR’s internal PeopleSoft and Operations Management Tool (OMT) systems are used in 42 and 16 processes respectively. Two DOI systems, LR2000 and the Technical Information

Management System (TIMS) are used in 9 processes each. Figure 6 shows how many systems ONRR references by owner in blue, and the number of processes which use a system from that owner in orange. About one third of ONRR’s processes reference a system outside of the organization’s control.

Figure 6. Number of Systems and Number of Processes Touched by System Owner

3.4 Data Elements

Booz Allen requested SMEs identify key data elements in each process to inform the As-Is analysis. Focus groups captured 221 distinct data elements (Appendix F: Data Elements). This is not an exhaustive list of data elements used by the agency. Data elements can include databases, spreadsheets, and written documents. Booz Allen developed thirteen categories (Appendix G: Data Element Categories). All five primary activities used reports and financial documents. More than fifty processes use financial, enforcement/legal documents, or reports. Figure 7 shows each data element category, the number of processes it appears in, and the distribution by primary activity. ONRR uses many data elements to capture the information used in business activities.

0 10 20 30 40 50 60 70 80

ONRR

Other DOI

Treasury

External

Number of Systems Number of Processes

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Figure 7. Data Element Categories’ Number of Processes, grouped by Primary Activity

3.5 Forms

ONRR collects information using 23 different forms (Appendix H: Forms). Multiple forms are required to collect information to verify correct royalty payments. While ONRR uses one form to capture the royalty amount owed (with the exception of solid minerals), there are seven other forms that may influence how the royalty amount owed is determined

(e.g., allowances, exceptions, compliance activities). Production and royalty information for O&G are reported on different forms. Solid mineral reports include both production and royalty information in one document. Table 1 summarizes forms by category. ONRR uses multiple forms to capture related information.

Table 1. Form Categories

Form Category Number of Forms

Royalty Reporting 8

Solid Minerals Production & Royalty Reporting 5

Production Reporting 4

Appeal Surety Forms 3

Other 3

3.6 Strengths and Pain Points

Participants identified 118 strengths and 428 pain points (Table 2). Twenty-three themes were developed to organize these points (Appendix I: Strength and Pain Point Themes, and Appendix J: Strength and Pain Point Themes Across Processes and Primary Activities). Table 2 captures themes that occur across all five primary activities. Figure 8 identifies the primary activities where each strength or pain point theme occurs. None of the strength or pain themes are confined to a single primary activity, most appear in three or more.

0 10 20 30 40 50 60 70 80 90

Workplan/Case

Tracker

Royalty data

Requests

Reports

Reference data

Production data

Other

Finance docs

Enforcement/Legal docs

Database

Customer data

Analytics/Summary

Number of Processes

D at a El em en t C at eg o ry

Collect Disburse/Distribute Report/Share Secure Industry Compliance Verify

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Table 2. Strength and Pain Point Themes that Touch All Five Primary Activities

Theme Type Number of Processes

Effective stakeholder communication/interaction Strength 18

Effective tools & practices Strength 29

Positive stakeholder impact Strength 16

Process efficiency Strength 24

Constraining procedures Pain Point 15

Data issue – Industry Pain Point 25

Data issue - other DOI bureau/state/tribe Pain Point 22

Lacking clarity Pain Point 30

Limited internal communication/tracking Pain Point 28

Limited system/data/software permissions Pain Point 28

Query limitations or errors Pain Point 17

Unnecessarily time-consuming processes Pain Point 32

Figure 8. Strength and Pain Point Themes by Primary Activity

C o u n t o f P ri m ar y

A ct iv it ie s

Collect Disburse/Distribute Report/Share Secure Industry Compliance Verify

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3.7 Performance Metrics

ONRR tracks 32 performance metrics and workload outputs across the organization (Appendix K: Performance

Measures). Booz Allen did not emphasize identification of performance metrics for individual processes during As-Is focus groups. The agency’s DOI Plan/ Government Performance and Results Act (GPRA) measures report the timely disbursement of Federal and Indian revenues, annual collections as a result of compliance activities, and a three-year average ROI of compliance activities. These are the only metrics that track outcomes. The remaining 29 metrics track workload outputs within specific programs. Some of these metrics are only tracked internally. There are metrics which track performance dependent upon things outside of ONRR’s control, such as number of appeals received.

4.0 Findings

Booz Allen analyzed the As-Is process maps and narratives for impacts, positive or negative, to ONRR performance. For negative impacts, the analysis focused on (1) finding those that recurred in multiple processes, and (2) identifying issues that increased the amount of time it took ONRR staff to perform work, introduced the opportunity for error, and created the need for additional work. These two types of impacts provide greater opportunity for realizing benefits from reengineering. This analysis produced nine findings that Booz Allen grouped into four categories:

1. How industry data impacts ONRR

2. How key partners provide data

3. How ONRR stores data

4. How ONRR uses systems.

The sub-sections provide details about each category and supporting findings, including examples from As-Is processes addressed during focus groups that best illustrate the findings. The supporting details examples are not an exhaustive list and only reflect As-Is processes addressed during focus groups versus captured in the business process inventory. For instance, Booz Allen held a focus group on Order to Report and not Order to Report and Pay or Order to Perform

Restructured Accounting so findings and examples only mention Order to Report.

4.1 How Industry Data Impacts ONRR

Many ONRR processes directly or indirectly use data provided by industry (e.g., reporters, and payors). Currently, data submitted by industry (e.g., royalty and production data) requires significant effort by ONRR staff to both input and analyze to ensure it is consistent, correct, and complete. Three aspects of this industry data and how it moves through

ONRR affect how quickly or accurately ONRR can perform its processes:

Who provides the data, what information they provide, and data completeness and accuracy

Timing of data provided

Methods for providing data.

Finding 1

ONRR collects data on production, royalties, and payments in a manner that makes it difficult to determine if the data are consistent, correct, and complete.

Supporting Details

The reporting of (1) royalties owed, (2) sales volumes, and (3) royalty payments to ONRR should correspond since they are the key factors in the royalty equation (i.e., sales volumes define royalties owed [minus allowances], which should

ONRR BPR As-Is Baseline Report as of September 30, 2019 - FINAL 12 match royalty payments). ONRR requests these three types of information in separate work streams, and requests these three types of data in incongruent formats. These two facts make it difficult in some cases for ONRR analysts to understand how data correspond, and to determine whether royalty payments are correct.

Misalignments exist between production reports and royalty reports in five ways:

1. Time: Royalty reports are due on the last day of the month, following the month of production. While production reports are due on the 15th business day of the second month following production. This can lead to industry submitting royalty reports before production volumes are known, necessitating later adjustments or estimated royalty payments.

2. People: Production volumes are reported by operators (or their designees) while royalties are reported by any designated payor including working interest owners. These discrepancies are largely caused by practices in the oil and gas industry and DOI policy.

3. Level: Production volumes are reported at the well level while royalties are reported at the lease level (potentially including working interest owners of the lease).

4. Working Interest: Production volumes are reported for all wells on a given lease while, in the case of working interest owners, royalties are reported on a percentage of the lease.

5. Takes vs. Entitlements: In accordance with statute, working interest owners of a lease can pay royalties on their exact working interest share of the lease (referred to as “entitlements”) or they can choose to pay royalties on a volume of product they actually took from the lease, which can differ from their working interest percentage

(referred to as “takes”). This means that, even if an ONRR analyst knows production volumes for the lease and all working interest shares, it may not be possible to know exact royalties owed by each working interest owner if they report based on takes. In this situation, the ONRR analyst can only evaluate whether the sum of all royalties reported by working interest owners matches the production volume.

While ONRR uses the Volume Comparison Tool (VCT) to automate the volume comparison process, analysts are often missing key reference information (e.g., who are the working interest owners, what are their working interest shares, are they operating under takes or entitlements) that require information requests and manual research to resolve.

Theoretically, if these types of reference information could be obtained in a consistent an accurate manner, this process could be largely automated.

Each royalty report generates a receivable, which is used to match payments and evaluate whether payments are correct.

While royalty reports and receivables are consistent, there are misalignments between payments and receivables, requiring effort to understand how they correspond and evaluate whether payments are correct. Generally, ONRR accepts payments that can have a variety of relationships to receivables as follows:

1. One to One: In some cases, payments can perfectly match receivables. This is the ideal.

2. One to Many: If one payor owns multiple leases, or multiple working interest shares across multiple leases, that payor can submit one payment to cover many receivables. In this case, ONRR will have to identify a group of receivables, the sum of which match the payment.

3. Many to One: A single payor could submit multiple payments for a single receivable.

4. Many to Many: A single payor could submit multiple payments for multiple receivables.

5. Overpayments and Underpayments: ONRR accepts overpayments and underpayments for receivables, tracks account balances, and applies previous balances to upcoming payments, leading to significant effort on ONRR’s part to track this information.

While ONRR uses an automated program, Payment Predictor, to match payments with receivables, problems still occur.

Payment Predictor accepts matches within certain variance ranges for Federal payments (Indian matches must be exact).

For example, if the payment and receivable are within $25, the program will consider it a match. This tool logic can lead to acceptance of incorrect payments or receivables that may need to be corrected later. And, when a match cannot be found by the program, ONRR must manually research and resolve the issue. To compound matching challenges, industry

ONRR BPR As-Is Baseline Report as of September 30, 2019 - FINAL 13 submitted payments do not always include necessary fields (e.g., PAD numbers and payor codes) for Payment Predictor to auto-match payment(s) to receivable(s). Therefore, ONRR must research the payment and manually match the payment to a receivable in the system.

ONRR conducts analyses to ensure that proper royalties are paid by calculating the royalty equation based on sales volumes and ensuring that payments match royalties owed. These analyses require knowing accurate sales volumes, gathering corresponding royalty reports, and then matching payments that correspond back to the royalty reports. Under

ONRR’s current business processes, the relationships between payments, receivables, royalty reports, and sales volumes can be extremely complex, in some cases making it difficult for analysts to evaluate whether payments are commensurate with sales volumes.

A related issue is that the 2014 and Oil and Gas Operations Report (OGOR) forms collect royalty and production information in aggregate, with form headers. Aggregations of reporting lines to headers at the lease or communitization agreement (CA) level increases the effort required to address individual line errors or updates.

For example, production data is reported for all wells associated with one lease. An OGOR may be associated with multiple payors because of interest ownership and CAs. Leases change hands frequently, and whenever this happens production reporting after the lease’s effective date must be updated. The entire OGOR form must be removed from the system and re-submitted by the new operator(s), even if only some of the wells changed ownership.

ONRR allows the company to request an override when eCommerce up-front validation edits are triggered. Overrides are requested for a variety of reasons and always require additional documentation. There is no method for a company to attach supporting documentation (e.g., well logs, run tickets) to their OGOR or 2014 submission. These documents are submitted separately via email, outside of the system.

Table 3. Processes That Illustrate Finding 1 by Primary Activity

Collect Disburse / Distribute Verify Secure Compliance Report / Share

1. 2014

2. OGOR

3. Valuation Forms

4. Payment Deposits

5. Disbursements

6. Vendor Refunds

7. Indian Over

Recoupment

8. Exception

Processing

9. Payment

Reconciliation

10. Debt Collection

11. Bankruptcy

12. Appeals

Finding 2

Repeated communications with industry to address various issues increase the amount of time it takes to complete multiple processes.

Supporting Details

Multiple processes involve back and forth communications with the industry to address incomplete or inaccurate submitted data, or to gather additional information necessary for more thorough analysis. These back and forth communications increase the time it takes to complete the process. In some instances, they increase the amount of data that ONRR must review and possibly reconcile.

For example, a Compliance Management analyst may have to reach back to a lessee who does not submit a lease document with their ONRR-4410 (Dual Accounting form) and then again if there are any additional issues. ONRR noted that “there is no central point of contact for forms in ONRR or clear instruction for lessee on where to send the form resulting in forms being sent to a number of ONRR staff.”

ONRR makes an initial data request to the company for each audit type (company and issue, solids and geothermal, and unbundling). Companies rarely sufficiently comply with the initial data request the first time. The auditor must

ONRR BPR As-Is Baseline Report as of September 30, 2019 - FINAL 14 communicate back and forth with the company to acquire sufficient data. The auditor may involve the Office of

Enforcement (OE) if the company does not respond to the data request or repeatedly fails to meet the auditor's requirements. Referral to OE results in communication between the company and an additional ONRR program.

When a company submits erroneous lines of data, one or more ONRR programs may interact with the company to obtain corrected data. The RRM team may be working with the company to correct erroneous 2014 lines. This request may be in the form of a CMP 2014 submitted by an auditor actively evaluating the case. Compliance Management (CM) analysts may simultaneously be evaluating overlapping leases from that company and request corrected lines using an Order to

Report (OTR). Alternatively, two CM analysts working on overlapping or identical cases may both request corrected lines using separate OTRs. There is no enterprise-wide tool to track or coordinate orders sent to industry.

Table 4. Processes That Illustrate Finding 2 by Primary Activity

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1. Valuation Forms

2. Reference Data –

Contracts

3. Reference Data -

Customer

Information

4. 2014

5. OGOR

6. Liquidated

Damages

7. Vendor Refunds 8. Audit - Company and

Issue

9. Audit - Solids and

Geothermal

10. Audit – Unbundling

11. OGOR Missing

Exception

12. Exception Processing

13. Exception Processing

- Net Negative

14. Payment

Reconciliation

15. Order to Report

4.2 How Key Partners Provide Data

Similar to industry, many ONRR processes directly or indirectly use data provided by key partners (e.g., Treasury, sister agencies). Three aspects of this data impact how quickly or accurately ONRR can perform its processes:

Format of data provided to ONRR

Accuracy

Timing of data provided.

Currently, the technology practices and processes of other DOI bureaus and federal agencies create more work for ONRR to input and validate data. These external practices and processes limit ONRR’s ability to fully automate its processes.

Finding 3

The format that ONRR receives data from key partners often requires additional work to input into ONRR systems.

Supporting Details

ONRR receives contract data from BOEM, BSEE, BLM, and BIA in various formats (e.g., text files, email, and physical mail) and the content may vary depending on the sender. For solids minerals contracts, ONRR receives contract information from industry in addition to BIA and BLM. Participants noted that documents from BIA and BLM field offices often lack consistency in both structure and information content. ONRR can directly retrieve offshore oil and gas contract data and pipelines from TIMS. Once validated, the contract data is uploaded or manually entered into the

PeopleSoft Reference module.

ONRR BPR As-Is Baseline Report as of September 30, 2019 - FINAL 15

For various electronic payments from industry, ONRR downloads files from the Collections Information Repository

(CIR) and Pay.gov; modifies the information (e.g., delete retired transactions) and imports the file into an Access database; runs error checks in the Access database and creates an output file; then uploads the output file to Citrix; and finally, Citrix uploads deposit information into MRMSS.

Table 5. Processes That Illustrate Finding 3 by Primary Activity

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1. Reference Data –

Contracts

2. Payment Deposits

3. OCS Refunds 4. OGOR Missing

Exceptions

5. Work planning -

Audit and

Compliance

Reviews

Finding 4

Data received from key partners may require additional validation steps via the partner’s source systems, creating additional work for ONRR to validate data that it does not own.

Supporting Details

Data from other bureaus may require multiple validation steps. ONRR staff validate contract data received from sister agencies with sister agency source systems (e.g., TIMS, LR2000, TAAMS). Issues could arise with contract data not matching with sister agency source systems or existing data in the PeopleSoft Reference module. Addressing errors could range from updating a field to reaching out to sister agencies or industry.

Once contract information is captured in ONRR’s systems, other ONRR staff will reference the sister agency source systems during other processes. For instance, the Debt Collection Team will research operating rights owners (OROs) and lessee of records (LORs) in LR2000 and TIMS as part of preparations to send a notice of demand (NOD).

Table 6. Processes That Illustrate Finding 4 by Primary Activity

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1. Reference Data –

Contracts

2. Reference Data –

Customer

Information

3. Audit – Company and Issue

4. Audit – Solids and Geothermal

5. Audit-

Unbundling

6. Exception

Processing

7. Debt Collection

8. Bankruptcy

Finding 5

The timing of when key partners provide data to ONRR creates additional work and delays how quickly ONRR performs various processes.

Supporting Details

When a company procures a new offshore renewable lease, or makes an update to an existing lease, BOEM will send the new/updated lease instrument to ONRR, generally via email or physical mail. Upon receipt, an ONRR reference analyst reviews and validates that the lease information is correct by comparing the information against BOEM’s TIMS system.

Often times, the data in TIMS is outdated, inhibiting the analyst’s ability to validate the information. The analyst has to

ONRR BPR As-Is Baseline Report as of September 30, 2019 - FINAL 16 reach out to BOEM to understand the discrepancy and request that they update the data in TIMS. A similar problem occurs for new/updated Indian Oil and Gas leases, where a lag between the moment in which ONRR receives the lease instrument (with the correct information) and when BIA updates its systems (i.e., TAAMS), creates additional work for the analyst, which could potentially affect the timeliness in which downstream processes can occur.

ONRR’s Onshore Production Reporting Team (OnPR) is responsible for identifying and handling OGOR missing exceptions (100% missing OGOR) and well missing exceptions (missing API number from OGOR). Currently, there are two timing discrepancies involved with the process: (1) OGOR missing exceptions are only run monthly but companies are able to submit OGORs whenever they want, and (2) well missing exceptions are run daily but BLM and BSEE only refresh its well data once a week. This misalignment between when ONRR runs a batch process and when industry, BLM, and/or BSEE update its data can create inconsistencies, requiring ONRR analysts to expend effort reconciling the information or trying to procure the correct data (i.e., getting well data directly from the operator).

As part of the current audit process, ONRR’s solid and geothermal auditors are required to conduct and consolidate background research on a case, such as company operations and a general history. As part of this process, auditors reach to BLM to obtain a Production Verification report on the company being audited. Often, BLM fails to provide this information in a timely manner, sometimes failing to provide the information at all. This delay can impact the overall audit schedule. If the Production Verification report is never even provided, that can impact the level of due diligence that

ONRR is able to conduct.

Table 7. Processes That Illustrate Finding 5 by Primary Activity

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1. Reference Data –

Contracts

2. Reference Data -

Customer

Information

3. OCS Refunds 4. OGOR Missing

Exception

5. Audit – Solids and Geothermal

6. Order to Report 7. 202 & 205

Agreements

4.3 How ONRR Stores Data

Individual ONRR programs manage data differently from one another which leads to the following:

Duplicate copies of data and confusion around the correct value

Inability to directly access another program’s data.

Currently, how ONRR stores data requires significant effort by ONRR staff to obtain the data necessary to perform their work and then validate the accuracy of that data.

Finding 6

Updates and/or enhancements to some data elements are not always communicated or available across ONRR thus creating rework.

Supporting Details

Company contact information is originally collected using Form 4444. This information is stored within Web Center

Portal and PeopleSoft. There is no formal protocol to update the form information as employee roles at the company change. This contact information becomes outdated quickly and individual programs such as Audit, Debt Collection, and

Enforcement develop their own internal lists of contact for company information.

ONRR BPR As-Is Baseline Report as of September 30, 2019 - FINAL 17

CM analysts store identical information in systems, databases, and spreadsheets for some cases. The analyst records information in an Access database, OMT, various spreadsheets, and the VCT. Data is stored in both OMT and VCT because of system limitations. OMT is unable to handle cases with 100% missing data.

The Outer Continental Shelf (OCS) bid payment tracking system utilizes both an Access database and a spreadsheet to track bid payments when they are initially received. No payment information is entered into PeopleSoft until bids have been accepted. This is problematic because large dollar amounts are being accounted for outside of the financial system up to several months after money is received.

On occasion, the work planning process outputs result in the duplication of work or non-value-added work. Examples of duplication of work are when one property is assigned to different CM Analysts or one company has multiple exception categories (e.g., processed gas, volume comparison). Examples of non-value-added work include back and forth between

CM Analyst and Work Planning due to unclear instructions or outdated data used to justify a case need.

Table 8. Processes That Illustrate Finding 6 by Primary Activity

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1. Reference Data -

Customer

Information

2. Reference Data -

Contracts

3. OCS Refunds 4. Payment

Reconciliation

5. Work planning -

Audit and

Compliance Reviews

6. Work planning -

Exception Processing

7. Exception Processing

8. Audit – Company and Issue

9. Audit – Solids and

Geothermal

10. Audit - Unbundling

11. Bankruptcy

12. Notice of Non-

Compliance

Finding 7

Many processes require data that is stored in different systems, databases, or files that have access restrictions creating additional work to obtain the necessary data.

Supporting Details

The Work Planning focus groups identified many spreadsheets and databases owned by individual programs. Work

Planning must access each of these individual sources to determine which programs within ONRR have worked on a case.

Appeals, Bankruptcy, Enforcement, and Work Planning all maintain separate spreadsheets to track their cases. Whenever an auditor or analyst requires a comprehensive case history for a company or property, they must manually access and reconcile information from all these documents.

Analysts in Exception Processing often access additional information outside of VCT because it does not provide comprehensive information. VCT does not include several commonly used data fields and contains no data on geothermal related topics. The analyst must run separate reports to gather this information and then re-combine the data.

Many appeals are tied to existing invoices. Appeals does not have access to all systems and must manually request copies of documents from other ONRR programs such as AM or FS. Other documents sent to ONRR by the appellant, Solicitor’s office, and DOJ must be scanned into the system so that staff can access the information.

ONRR BPR As-Is Baseline Report as of September 30, 2019 - FINAL 18

Table 9. Processes That Illustrate Finding 7 by Primary Activity

1. Valuation Forms 2. OCS Refunds 3. Work planning -

Audit and

Compliance

Reviews

4. Work planning -

Exception

Processing

5. Compliance

Reviews

6. Audit - Company and Issue

7. Audit - Solids and Geothermal

8. Audit –

Unbundling

9. Exception

Processing

10. Valuation

Guidance

11. Appeals

12. Notice of Non-

Compliance

13. Bankruptcy

14. Data Retrieval

15. Data Display

16. Indian Outreach and Consultation

4.4 How ONRR Uses Systems

While most processes are supported by one or more internal or external system, these processes still require efforts outside of the system, which consume time and introduce errors. These efforts outside the systems include:

Manual entry of new or updated data into systems

Use of desktop applications to conduct analysis outside of a system

Manual manipulation of data’s structure to meet system requirement.

The way in which ONRR uses systems requires significant effort to input, validate, and analyze data. It also introduces opportunities for and increases risk of error.

Finding 8

While ONRR has made attempts to automate some activities, the outputs of these automated activities do not have the intended results, often requiring manual input.

Supporting Details

Some ONRR activities involve automated generation of forms or letters that are designed to save time for ONRR.

However, in some cases these forms or letters are not properly generated and require additional manual edits and…