DoD Business Transformation and Environmental Liabilities Recognition,

Valuation and Reporting

March 2006

Office of the Deputy Under Secretary of Defense for Installations and Environment

ODUSD(I&E) Business Enterprise Integration

2

Overview

• Defense Business Transformation

• DUSD(I&E) Business Enterprise Integration (BEI)

• Initial ESOH Priority: Environmental Liabilities

3

Transformation “Drivers”

Industry/Government Leading Practices

Business Management Drivers

Information Management Drivers

Warfighter Transformation Drivers

The Budget

CFO Act 1990

Continuity of Operations

GAO Reports

Friedman Report

Congress/ Public Laws

President’s Management

Agenda

Joint Vision

2010/2020

Defense Planning Guidance

Quadrennial Defense Review (QDR) Report

Defense Transformation

Planning Guidance

Clinger-Cohen Act 1996

GAO Reports

Global Information Grid (GIG)

OMB A-130

OMB FEA

GPRA 1993

DoD Business Transformation

OMB A-11

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Evolution of Business Transformation in DoD

• July 2001: SECDEF established Financial Management Modernization Program (FMMP)– Established under DoD Comptroller to:

o improve efficiencies of financial operationso achieve unqualified audit

• April 2003: Scope expanded and renamed Business Management Modernization Program (BMMP)– Established under Comptroller, with functional “Domains” to:

o reengineer business processes o identify standard data requirements o implement an integrated net-centric business environment to supports warfighters’

needs

• October 2005: Defense Business Transformation and BTA

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Business Transformation Agency

Vision

The Business Transformation Agency will be recognized as the champion for driving and accelerating improvements to business operations across the Department of Defense. We will serve as a magnet to attract talented, dedicated professionals, creating a model for transformation leadership across the Federal Government.

Mission

The mission of the Business Transformation Agency is to guide the transformation of business operations throughout the Department of Defense and to deliver enterprise-level capabilities that align to warfighter needs.

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The Business Enterprise Priorities on the right address the top level responsibilities for the Department of Defense associated with each Core Business Mission (CBM) on the left.

Who are our people, what are their skills, where are they located?

Who are our industry partners, and what is the state of our relationship with them?

What assets are we providing to support the warfighter, and where are these assets deployed?

How are we investing our funds to best enable the warfighting mission? Financial Visibility

Materiel Visibility

Common Supplier Engagement

Personnel Visibility

Real Property Accountability

Acquisition Visibility

Financial Management

Materiel Supply & Service Management

Weapon System Lifecycle Management

Human Resources Management

Required Integration

DoD Core BusinessMissions (CBMs)

BEA 3.0 Construct

DoD Business Enterprise Priorities (BEPs)

ARMY NAVY/MC Air Force DLA USTRANSCOM …

Components

Real Property & InstallationsLifecycle Management

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Business TransformationOrganization and Governance – I&E View

Program Success Factors(i.e., ‘Why we will

succeed’)• Senior leadership engagement --

with realistic and robust governance model

• Joint warfighting imperatives --creates opportunities for collective decisions

• Statutory and regulatory requirements for business transformation

• Acknowledgement of tiered accountability

• Continuity – leverages learning from past three years, with visible opportunity for success during next four years.

• BRAC – forcing function for integration

• Team members who have done this before in private sector

• Business Enterprise Architecture (BEA) and Enterprise Transition Plan (ETP) serve as blueprint and course of action for transformationDoD ComponentDoD Component——BEI Business BEI Business

Process Reengineering TeamsProcess Reengineering Teams

DEPSECDEF, USDs, CJCS, Secretaries of the Military Departments

DUSD(BT)DUSD(BT)DUSD(FM)DUSD(FM)

Defense Business Systems Management Committee

Governance

Governance

Subject Matter E

xpertiseSubject M

atter Expertise

I&E Domain

Governance Board

RP&ILM Investment

Review Board

DUSD(I&E)DUSD(I&E)

BEI DirectorateBEI Directorate

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ODUSD(I&E) Business Enterprise Integration

Vision:An I&E community that provides timely, accurate and reliable information within I&E and

to the warfighter and DoD business enterprise

Mission: Support both the I&E and DoD Business Transformation goals

Goals: The ODUSD(I&E) Business Enterprise Integration Directorate will produce outcomes that:

Provide better information for strategic and tactical decisionsReduce the cost of business operations

Improve stewardship of I&E assetsSupport integration of DoD enterprise business operations

• Support joint warfighting• Provide better information

for strategic resourcing decisions

• Reduce the cost of business operations

• Improve stewardship to the American People

• Enable achievement of I&E strategic and tactical goals and objectives

• Provide better information for strategic resourcing decisions

• Reduce the cost of business operations• Improve stewardship of I&E assets• Support integration of DoD enterprise

business operations

• Right Size and Place

• Right Quality• Right Safety and

Security• Right Resources• Right Tools and

Metrics

DoD BTEnterprise Goals

AlignmentI&E Business Enterprise Integration GoalsI&E Strategic Goals

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Enabling Transformation: The BEI Approach

Collaborative Business Process Reengineering

Document Collaborative Results

• Integrate requirements and processes

–Business Enterprise Architecture (BEA)

–Enterprise Transition Plan (ETP)

• Update policies

Implementation• Develop enterprise

capabilities• Development of

implementation plans and milestones

• Implementation• Program management• Achievement of

outcomes

Ongoing Activities• Manage the real property and installations lifecycle management portfolio, and provide investment review• Host new I&E enterprise capabilities• Pursue new reengineering opportunities

Requirements Documentation

• Prepare document• Component

authorization

KeyGreen: Responsibility of components Purple: Responsibility of components and BEI Blue: Responsibility of BEI

Environmental Liabilities Recognition, Valuation and Reporting

The Initial ESOH Application of the ODUSD(I&E)/BEI Approach to Transformation

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Environmental Liabilities Recognition, Valuation and Reporting Requirements

• Problem: DoD is unable to provide auditable environmental liabilities information (a material weakness)

• Key efforts– Collaborative development of standard processes and data (in process)– Upgrade of policies (in process)– Incorporation by Components (in process)

• Outcomes– Standard and auditable process and data model for recognizing, valuing

and reporting environmental liabilities– Complete, accurate and visible inventory of environmental liabilities

reconciled with asset records (includes real and some personal property)

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Real Property Accountability (RPA) –Perform ESOH Services Business Process

RealProperty

andInstallationLifecycle

Management

FinancialManageme

nt

Shared

MaterielSupply

andService

Management

WeaponSystem

LifecycleManageme

nt

HumanResourcesManageme

nt

ExternalNon-DoDUser or

Non-DoDSource

Warfighteror DoDUser or

DoDSource

Perform ESOH AspectIdentification

50.01

Verify Environmental LiabilitySummary Documentation

50.12

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Provide Information forEnvironmental Liability Form and

Content50.11

Determine Likelihood of PotentialLiability50.03

Classify Environmental Liability50.05 Verify Accuracy and

Completeness ofEnvironmental Liability

50.09

Develop or CollectEnvironmental Liability

Documentation50.08

Attest to Documentation50.10

Develop ESOH ControlAgreement

50.13

Implement ESOHSolution50.07

Assess ESOH Risk50.04

Develop ESOHSolution50.06

Perform ESOHAspect Assessment

50.02

EnvironmentalLiability Information

[Rejected]

Real PropertyPlaced inService

Notification

EnvironmentalLiability CostInformation

EnvironmentalCost Estimate

EnvironmentalCost Estimate

EnvironmentalCost EstimateEnvironmental

Cost Estimate

Program andFunding

Document

ESOH IssueDescription

EnvironmentalCost Estimate

ESOH ControlRequirement

ESOH ControlRequirement

ESOH ControlRequirement

ESOH ControlRequirement

ESOH ControlRequirement

ESOH ControlRequirement

ESOH ControlRequirement

ESOH ControlRequirement

ESOH ControlRequirement

Form andContent

Guidance

DeployedESOHSolution

CostInformationRequest

AnalyticalResults

BusinessPlan

Dispose or ReturnProperty and Materiel

Manage Sales and Procurement

End - EnvironmentalLiability Process

Perform Installations Support

Perform AssetAccountability

Manage Defense Acquisition SystemConduct Program ManagementGenerate Requirements Response

Manage Organization

Manage Sales and Procurement

Execute Sourcing Strategy

Develop Sourcing StrategyProcess Requirement

Perform Forecasting PlanningProgramming and Budgeting

Manage Liabilities

Manage Financial Management Policy

Perform Cost AnalysisDefine Cost Performance Model

Liability Update Requirement

No Environmental Liability

End ESOH Operations

13. RPA - Perform ESOH Services (OV-06c Business Process)System Architect

Fri Oct 14, 2005 13:07

Stakeholder Input

Research Information

Deployed ESOH Solution

Environmental Liability Information

Analytical Results

Form and Content Guidance

Cost Information Request

ESOH Issue Communication

Program and Funding Document

ESOH Issue Communication

ESOH Issue Description

Real Property Operation Ceased Notification

AttestationCompleteFailed Document Verification Failed

Attestation

DocumentationVerified

Evidence of Goods Tendered and Services Rendered

Real Property Placed in Service Notification

Potential Environmental Liability

Estimate Required

Remote or Operational Cost orNon Environmental Liability

Environmental LiabilityCost Information

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ESOH Interest Areaand Unique Identification

• Definition: ESOH Interest Area (EIA) is a place, location, or a program management initiative of specific interest that may be described, located, or referenced geospatially

• Attributes -- may– Be created due to one or more ESOH events or because an area has ESOH interest– Not be constrained by RPI boundaries– Be part of an asset, or linked to one or more real property assets (RPA)– Be overlaid

• Definition: ESOH Interest Area Unique Identifier (EIAUID) is a code used to permanently and uniquely identify an ESOH interest area

• Attributes:– Permanently and uniquely identifies ESOH Interest Areas– Is owner or organization independent– Does not change over the life of the EIA even if EIA attributes change– Links to the common data describing financial, legal, and physical attributes at the

enterprise level– Supports parent – child relationships and enables audit trails within and between DoD

systems

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UST

LAKE

ESOH INTEREST AREAUST: StructureLake: Natural Water bodyGrounds: Govt Land (Partial)Grounds: TPS #1 (Partial)Grounds: TPS #2 (Partial)

ESOH INTEREST AREAGround Floor: Building

DoD-owned Building

DoD-owned land parcel

Privately owned land parcels

ESOH INTEREST AREA Grounds: Govt Land (Partial)

ESOH INTEREST AREA Grounds: Govt Land (Partial)

ESOH INTEREST AREAGrounds: TPS Land (Partial)

wetland

release

release

cultural

TPS #1 TPS #2

ESOH Interest Area Examples

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BEA, ETP and FIAR Plan Relationship

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09/30/0509/30/05 03/31/0603/31/06 09/30/0609/30/06 03/31/0703/31/07 09/30/0709/30/07

Hazardous Hazardous Materials Materials Process Process

Controls & Controls & Information Information Management Management RequirementsRequirements

Draft Phase I Hazardous Materials Process Controls and Information Management Requirements Document

Define Approach for Unique Association of Haz. Products and Std. Product Haz. Data

Release Phase I Hazardous Materials Process Controls and Information Management Requirements Document

Draft Configuration Control Process for Hazardous Materials Management

Incorporation of Product Data in DoD Data MasterIncorporation of Product Data in DoD Data Master

Draft Phase II Hazardous Materials Process Controls and Information Management Requirements Document

BPR Phase IIIncorporate Phase II Results in BEA 5.0Incorporate Phase II Results in BEA 5.0

Hazardous Materials Controls in BEA 3.0 Implement Requirements into Core Business Mission Areas

ESOH Enterprise Transition PlanActivities, Milestones, Responsibilities and Status

12/31/0512/31/05 06/30/0606/30/06 12/31/0612/31/06 06/30/0706/30/07

Environmental Environmental Liabilities, Liabilities,

Recognition., Recognition., Valuation &Valuation &Reporting Reporting

RequirementsRequirements

Update Data Model and Begin Linkage to Asset Records

Release Environmental Liabilities Recognition, Valuation and Reporting Requirements document

Complete Linkage to Real Property Inventory

Implement Environmental Liabilities RequirementsImplement Environmental Liabilities Requirements

EL Process and Data Model in BEA 3.0

Issue Final Implementation Plan

BT Efforts currently unfundedBT Efforts currently unfundedEfforts complete or scheduled for completion on/before 12/31/05

Efforts funded, on schedule and underway; No issues at this time.

Efforts funded; schedule or deliverable risk potentialComponent Responsibility I&E BT Responsibility

Milestone Status

Component status unknown

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One More Thing….

Business

Enterprise Integration

Booth (#1037)

Please visit the Business Enterprise Integration booth!

Located in Exhibit Hall D,

space #1037, across from the Lounge