SLTT_Problem_Statement_(Redacted)_20161213.docx

Department of the Army

Single Labor Time Tracking Capability for the General Fund

Problem Statement

Version 1.4

Nov 2014

Based on Business Case Template Version 3.0, May 2012

Document Revision History

Table of Contents

Business Case: Single Army Labor Time Tracking, v1.2, Apr 2013 ii Problem Statement Signature

Functional Sponsor: Date:

Stephen G. Barth Deputy Assistant Secretary of the Army (Cost & Economics) Office of the Assistant Secretary Army (Cost & Economics)

Problem Statement Approval

IRB Chair: Date:

<Insert name here> <Insert title here> <Insert organization here>

Functional Sponsor: Date:

Program Manager: Date:

Business Case MS A, Pre-ED, and MS C Approvals

Component Acquisition Executive: Date:

<Insert organization here>

Test Plan Summary Director, Operational Test & Evaluation Date:

Test Plan Summary Deputy Assistant Secretary of Defense, Developmental Test & Evaluation Date:

<Insert organization here>

SEP Summary Director, Systems Engineering: Date:

MDA: Date:

Executive Summary The Army does not have a single, efficient and effective capability for associating and allocating labor hours of civilian, military, and contractors with tasks and work output in order to provide timely and accurate input for resource decisions regarding business operations where necessary to determine the full cost for products and services. This leads to less efficient use of resources and the inability to provide necessary information for agile execution, resource leveling, and cost control. In addition, full costing capabilities are reduced because civilian, military, and contractor labor costs are less accurate, reliable, and consistent. Cost management considers all key quantitative aspects of the consumption of resources and provides Army organizations the ability to identify, quantify, and value the economic benefits and related costs of alternatives. Labor accounts for more than 60% of total Army costs. In order to support cost management and full costing methodology it is important to appropriately account for labor and assign costs to the proper output (products and services). Organizations are already implementing their own separate labor tracking systems including: Automated Time, Attendance, and Production Systems (ATAAPS), Army Workload and Performance System (AWPS), Cost Information Management System (CIMS), manual Excel spreadsheets, and others. The purpose of implementing a single labor tracking capability is to align resources to the work performed in a central capability that is cost effective and standard across the Army. A standard enterprise capability offers the capability to compare labor costs of products and services across the Army. The Army recently deployed a new financial and cost management system, General Fund Enterprise Business System (GFEBS) that will serve as the single data source for reporting full costs. Thus, it is critical that an enterprise capability for labor tracking interface with GFEBS or be built directly inside GFEBS.

Cost management is critical to ensure Army decisions at every level are cost-informed. The cost management process involves four primary phases and is continuous:

A. Cost Capture: Capture accurate, timely, and relevant data.

B. Cost Analysis: Analyze variances and trends in product, service or activity cost by element (i.e., labor, contract); forecast potential costs for management and budgeting purposes; and understand the full costs of organizations, operations, products and services.

C. Cost Controlling: Change targets, resources, and quality based on the analysis to inform better planning.

D. Cost Planning: Set cost targets and efficiency goals; compute standard rates (i.e., labor, supplies).

It considers all key quantitative aspects of the consumption of resources and provides Army organizations the ability to identify, quantify, and value the economic benefits and related costs of alternatives. This results in managers being better stewards of the Army's limited financial resources. With full cost visibility of the organization's business processes, products, and services, the Army will be able to manage operations more efficiently and effectively, and maximize value to customers and tax payers.

Introduction Purpose The Department of the Army will identify, evaluate, select, implement, and sustain a single, standard Army enterprise-wide capability for labor tracking. The purpose of this business case is to gain approval of the problem statement and to advance to the next phase and conduct a Cost Benefit Analysis (CBA) recommending a single labor tracking capability. The purpose of such a capability would ultimately be twofold: to provide sufficient cost data for management decisions, and to cut costs by consolidating the current labor tracking efforts into an Army-wide single capability.

The new enterprise labor tracking capability will interface with GFEBS or be built directly inside GFEBS, to ensure labor is properly assigned to Army projects, products, and services. This will allow for full cost reporting of the Army’s outputs (products and services) and will create an auditable trail. By doing this, the Army can terminate other time tracking systems or processes currently being used.

The scope of this business case is to validate a requirement for a capability that can:

Capture labor hours for all personnel in the Army. There are three general labor groups: civilian, military, and contractor. The purpose of the single labor tracking capability is analytical, and will not be used for disbursement. This will allow people to have multiple cost/labor views by organization, products/services, or customers. Regarding special cases, (UARC, FFRDC, TOE, MTOE, etc.) refer to a general rule - if the project draws funds from the General Fund, it will be included in this effort to capture labor hours.

· Civilian employees can be full-time, part-time, government, volunteers or foreign nationals.

· Military includes all TDA military and any borrowed or loaned military personnel. The intent is not to have deployed military personnel account for their time, but those in administrative positions, such as the Pentagon or Fort Belvoir. We could allocate military costs to products and services if necessary, or make it an option for those on administrative assignments.

· Contractor labor for Time and Materials contracts and Cost Reimbursable contracts may be captured, and allocations or estimates will have to be used with Firm Fixed Price Contracts. The capability will not require contractors to input their labor hours.

Capture all of the major products and services produced by the Army. The Army’s products and services range from installation services to exercises and maintenance of tactical equipment and buildings.

Associate all labor hours with a product or service. There are two types of labor: direct and indirect. Direct labor is work that can be accurately assigned to output. Indirect labor is also referred to as overhead and is work that should be directly tracked to an organization and allocated to outputs. Labor tracking will focus on direct labor and the importance of properly capturing and assigning these costs to outputs.

Associate this information with other cost information contained in GFEBS. GFEBS is the system of record for general fund transactions; labor costs need to be combined with other costs like supplies, contracts, etc. for full cost reporting capabilities, and creating an appropriate audit trail.

Background Time and attendance is currently performed throughout the Army as it is necessary to support payroll processing for employee compensation. However, labor time tracking for the products/services performed is currently handled in an inconsistent manner across the Army, to include its agencies, contractors, and subcontractors. Further, the process is also supported by a wide range of manual processes and/or isolated IT applications. Public demand and budgetary pressures to reduce Federal spending have forced the Government to improve accountability for the way it provides goods and services. There are several major Laws, Regulations, and Policies that have been enacted over the past decade which have significantly impacted Army accountability. See below table for details:

Laws, Regulations, and Policies

Standard Financial Information Structure (SFIS)

SFIS is a DoD-wide comprehensive data structure that supports requirements for budgeting, financial accounting, cost/performance, and external reporting needs.

activity’s inputs (such as costs or hours worked by employees) to its outputs (amount of products or services delivered) or outcomes (the desired results of a program);

(6) milestone’ means a scheduled event signifying the completion of a major deliverable or a set of related deliverables or a phase of work;

(9) performance goal’ means a target level of performance expressed as a tangible, measurable objective, against which actual achievement can be compared, including a goal expressed as a quantitative standard, value, or rate.

DFAS 37-1, Finance & Accounting Policy Implementation, Chapter 15, Cost Accounting

Financial Information Several of the CFO Act’s requirements aim to improve the financial information available to agency managers, the Congress, and others. One of them requires that agency CFOs develop and maintain accounting and financial management systems which report cost information.

shall be responsible for developing guidance for—

(i) the collection of data regarding functions and missions performed by contractors in a manner that is comparable to the manpower data elements used in inventories of functions performed by Department of Defense employees;

(ii) the calculation of contractor full-time equivalents for direct labor, using direct labor hours in a manner that is comparable to the calculation of Department of Defense civilian full-time employees.

Regulation Supplement (DFARS) to implement a section of the National Defense Authorization Act for Fiscal Year 2008. The rule proposes to require contractors to annually report, using an online DoD database, service contract data at the end of the Government fiscal year or at the end of contract performance, whichever comes first.

All of these Laws, Regulations, and Policies provide the statutory foundation to better allocate resources and monitor program spending and emphasize three areas where improvement is needed: financial accounting, budgeting, and cost management. Of these three areas, cost management is an area of particular concern.

Cost management is the key to ensuring that limited financial resources are being spent prudently and effectively. Capturing, understanding, and managing costs will be essential in ensuring that the Army is able to continue to support vital missions with fewer resources.

In order to conduct cost management, the Army needs to capture several key pieces of data:

1. The salary and benefits currently paid to civilian employees

2. The personnel structure of Army organizations

3. The costs of contractor support

4. The products and services that labor and contracts are supporting Until the Army is able to obtain the key information highlighted above, it will be unable to properly manage its costs and operate efficiently. In addition, the Army's goals of auditability at the product, service, and customer level, will be difficult, if at all even possible, to achieve.

Summary of Business Case Content to date: There are several options with commercial and Government developed systems that would be potential options for labor tracking. Further analysis of these alternatives is needed to develop a cogent strategy to ensure compliance with the Chief Financial Officers (CFO) Act, Government Performance and Results Act (GPRA), Government Management Reform Act (GMRA), and Statement of Federal Financial Accounting Standards (SFFAS) No. 4 with regard to Cost Management. A Cost Benefit Analysis (CBA) will be performed once the problem statement, requirements, and scope are approved at the OSD Defense Business Council.

Business Case: Single Army Labor Time Tracking, v1.2, Apr 2013 10 Problem Statement “As-Is” Analysis The Problem The Army does not have a single, efficient and effective capability for associating and allocating labor hours of civilian, military, and contractors with tasks and work output in order to provide timely and accurate input for resource decisions regarding business operations where necessary to determine the full cost for products and services. This leads to less efficient use of resources and the inability to provide necessary information for agile execution, resource leveling, and cost control. In addition, full costing capabilities are reduced because civilian, military, and contractor labor costs are less accurate, reliable, and consistent. Army organizations use different systems to track their labor (i.e. ATAAPS, AWPS, CIMS, and Manual Spreadsheets). Without consolidated labor tracking information, the Army has limited capabilities to conduct sound analysis and decision making especially in the following areas: capacity management, planning and budgeting, funds optimization, benchmarking, and decisions on outsourcing versus in-sourcing personnel.

Problem Description and Context Without an enterprise capability that provides full costing capability:

· The Army is supporting multiple redundant labor tracking capabilities at a large expense to the Army. A CBA will need to be performed to determine “As-Is” costs of these disparate systems.

· The Army does not have an auditable process for assigning labor to products and services for all Army organizations.

· The Army cannot measure efficiencies realized through resource changes.

· Managers cannot make cost-informed managerial decisions.

As an example, consider the costs associated with labor and service contracts in the Army. The Army can identify how much is being spent in these areas, but does not have visibility on what the spending supports. In recent years, the amount of resources spent on service contracts has increased and continues to consume larger portions of the Army's operating budget Root Cause Analysis The problem is that the Army is spending money on multiple redundant and inconsistent labor tracking capabilities which is inefficient and cost prohibited. In addition, the Army does not know the complete costs of our products and services. The complexity of how and who supports those products and services calls for a system to collect and account for the various costs, and integrate them with our accounting system. It is not as simple as, for example, adding the cost of 2 GS-13s and a FFP contract. Often civilians, contractors, and military members will contribute to a product, and often that product is not their only responsibility. So it is more likely to be along the lines of 27 hours/pay period of one GS-13, 50% of the FFP contract, and 33 % of 2 O-4s.

The Army is beginning to recognize the benefits of labor tracking. This can be seen by the disparate labor tracking already being recorded by IMCOM, ATEC, AMC, and parts of FORSCOM, TRADOC, and MEDCOM. Because there is not a single Army wide time tracking capability, there are multiple ways in which organizations are accounting for labor costs and allocating them to products and services. Examples of time tracking capabilities include off-line methods to allocate labor costs and actual labor tracking systems. One side-effect of the lack of a centralized, official labor tracking system has been detrimental to GFEBS reports. DASA-CE has found that some organizations employ a 'work-around' that maps primary payroll costs with Journal Vouchers, thereby negatively impacting Manpower reporting.

DOTMLPF-P Constraints, “As-Is” State

Table 1 – DOTMLPF-P Constraints, “As-Is” State

· The Army does not have an auditable process for assigning labor to products and services for all Army organizations.

· The Army cannot measure efficiencies realized through resource changes.

· Managers cannot make cost-informed managerial decisions.

“To-Be” Analysis High-Level Outcomes (HLOs) Table 2a - HLOs

SMP Goal 3:

Eliminate any redundant systems

SMP Goal 2:

Increase efficiencies and continuous improvement

SMP Goal 1:

Ensure the DoD workforce is the right size and mix

SMP Goal 4:

Financial Auditability

Targeted Objective Value

--% of targeted labor hours captured --% of data/”labor” input sources identified and designated as ADS/point of entry (for these capabilities) There are currently multiple commands with their own labor time tracking system, unable to coordinate or aggregate data

A Single, comparable, auditable labor time tracking capability

A Single, comparable, auditable labor time tracking capability that captures consistent outputs (tasks, products, services)

Amount of costs that can be mapped to outputs There are currently multiple commands with their own labor time tracking system that relates labor hours to output and estimates costs.

A Single, comparable, auditable labor time tracking capability will associate labor hours with work output (tasks, products, services) and estimate costs.

--Number of times a report was accessed ; volatility of the reports (Change requests) Civilian, military, and contractors are not adequately considered in costs of products and services.

D: Integration with the Army’s cost management system, GFEBS

Ability to analyze resources (Capability to provide/expose the authoritative data in a timely manner to make process improvements and resource efficiencies Output - Produce consistent and useful reports --Visibility of costs by Army-wide services and products within the Army (Output of hours and associated cost within an acceptable period of time (daily, weekly monthly) and cost % of data (labor input sources) identified and designated as authoritative for these capabilities) Availability of data/reports to user population The full costs of products and services cannot be compared across commands or organizations. This prohibits us from discovering inefficiencies and waste for similar products and services across commands.

D: Integration with the Army’s cost management system, GFEBS

Provide insight to key pieces of data required for charging labor

Table 2b – HLOs and Measurement Criteria

Business Case: Single Army Labor Time Tracking, v1.2, Apr 2013 12 Business Process Re-Engineering (BPR)

Table 3a – Business Outcomes

Provide capability to conduct capacity management analysis and evaluate resource mix

2.Establish an audit trail related to charged hours and rates Leveraging a standardized enterprise capability in combination with the Army’s new cost management system, GFEBS will allow for accurate and timely data as well as transparency with respect to the labor hours and rates charged

Table 3b – Business Outcomes and E2E Alignment (“To-Be” State)

Apply trending techniques, Consolidate and interpret results, Generate forecast, Improve and validate assumptions, Populate cost performance model

1. Provide Army and DoD leaders with accurate, reliable, and timely data 2.Establish an audit trail related to charged hours and rates

Business Case: Single Army Labor Time Tracking, v1.2, Apr 2013 14 Table 3c – Business Outcomes and Measurement Criteria (“To-Be” State)

Benefits

Targeted Objective Value

A Single, comparable, auditable labor time tracking capability

D: Integration with the Army’s cost management system, GFEBS

D: Integration with the Army’s cost management system, GFEBS

Establish an audit trail related to charged hours and rates

Provide insight to key pieces of data required for charging labor

Business Case: Single Army Labor Time Tracking, v1.2, Apr 2013 17 DOTMLPF-P Impact, “To-Be” State As the proponent for Army Cost Management, DASA-CE will own the DOTMLPF-P for the Single Labor Time Tracking Capability.

Table 4 – DOTMLPF-P Impacts, “To-Be” State

Recommended Course of Action The purpose of this Business Case is to obtain approval of the Business Case, Problem Statement, Requirement, and scope of the effort from OSD Defense Business Council, in order for the Army to proceed to the next stage of the Army Business Systems Requirements Validation Process. The implementation of an enterprise labor tracking capability for general fund users will enable the Army to achieve full cost of output (products and services) in order to make informed managerial decisions. Leveraging an Army wide labor tracking capability will provide numerous benefits to the Army that has been discussed throughout this Business Case.

Operational Characteristics: Labor tracking is the allocation of labor hours to some sort of output, be it a tangible product, or a service. Most Army organizations have multiple products and services that they provide and a given individual may support different products and even different organizations.

Cost management information is a conversion of financial and operational data into managerial information for decisions, where cost generally flows as described below in the example in Figure 1. In the figure below, payroll will post to the organization (IT Support Group). As resources (employees) provide services (respond to tickets) resource costs (labor) should be allocated via labor tracking. This allows managers to see full costs of their organization as well as output.

Figure 1: Labor Cost Flow Process –Director of Information Management Example

IT Support Group Resource Driver Software Ticket Lbr 1 Hr Lbr 2 Hr Hardware Ticket Consumer:

Brigade 1 Consumer:

Brigade 2 Usage Driver

Direct labor costs will be tracked to an output when possible. Labor tracking must be accurate, timely, and undergo an approval/confirmation process through the chain of command as required. Employee’s labor must be assigned to activities or outputs on which work is performed in order to capture full cost. An organization’s funds or budget do not drive where labor hours will be posted. Labor must be posted in accordance with the employee’s actual work. Labor tracking data should be entered into the capability in a timely manner. Timely data may require daily submissions or submissions at the end of each pay period. The capability should have the capability to collect data at no less than 15 minute increments and no greater than 1 hour increments between data collection. The capability shall also interface with the Army’s cost management system of record, GFEBS, DCPS, and IPPS-A. Interfacing with GFEBS will provide the ability to capture all cost data in one location and therefore enable full cost reporting.

Assignment of Labor Hours All hours that are charged to the government should be captured. This includes duty hours, leave hours, and overtime. Most positions require labor that is directly related to outputs, but even these positions have “non-productive” labor hours. All time not spent on a product or service should be allocated to an appropriate category such as leave or training.

Cost objects have been created in GFEBS by organization to accumulate labor and other costs. The majority of cost objects are created to capture the final outputs of an organization, such as the services that are provided, the products that are produced, or the customers who are supported. Cost objects should also be created to accumulate the labor and costs that do not contribute directly to the outputs of an organization. For example, the cost objects should accumulate the labor hours and costs for attending training, conferences, or idle capacity.

Although there will be a burden on personnel and supervisors following deployment of a labor time tracking tool, ideally it would be similar to what personnel expend on ATAAPS; Labor tracking may not make sense for certain offices or efforts, and will be optional, leaving organizations to decide whether the value of the data is worth the capture of the data.

Regardless of the platform employed, the technical capability shall meet the following critical requirements:

Time Tracking Capability Requirements

Scope: An enterprise labor tracking system will be able to track labor hours for Civilian, Military and Contract personnel of the General Fund and map them to the outputs (products and services) which they support. These labor hours will be accurate and the costs associated with this labor will be mapped in a timely manner (especially since some Army organizations are fully reimbursable). The Army has a diverse workforce who works on different schedules, in different time zones, and in multiple locations; all of this and more will be managed in the labor tracking capability.

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