Air Force Working Capital Fund

Transcription

1 Headquarters U.S. Air Force I n t e g r i t y - S e r v i c e - E x c e l l e n c e Air Force Working Capital Fund 22 April

2 Overview Working Capital Fund (WCF) Operations Air Force WCF Changes Maintenance and Supply Divisions Pyramid of Information AFWCF Cash Way Ahead I n t e g r i t y - S e r v i c e - E x c e l l e n c e 2

3 How the WCF Works The WCF is a Financing Mechanism A Fund in which all income is derived from its operations and is available to finance the Fund s continuing operations without fiscal year limitations Key Concept: Unlike appropriated funds, a revolving fund temporarily holds gains and losses this is the key to its flexibility Bill Customers I n t e g r i t y - S e r v i c e - E x c e l l e n c e 3

4 WCF Business Concepts Activities financed by working capital funds Operate like a business and earn revenue Identify and recover total costs Designed to break even over time Develop stabilized rates and prices some exceptions allowed by current policy Maintain cash liquidity Temporarily hold gains and losses Balance WCF operations to anticipated customer funding Private Sector Model Overlaid On Public Sector Operations I n t e g r i t y - S e r v i c e - E x c e l l e n c e 4

5 DWCF Activity Groups in FY07 Air Force $25.7B DWCF $116.1B Navy $24.0B Army $16.8B Defense Commissary $6.8B Defense-Wide $42.8B I n t e g r i t y - S e r v i c e - E x c e l l e n c e 5

6 AFWCF Activity Groups in FY07 Transportation $10.3B TRANSCOM Airlift/Sealift/Ground AFWCF $25.7B Depot Maintenance $6.0B $5.1B Organic $0.9B Contract $9.4B Supply Management $6.3B DLRs (MSD) $2.0B Consumables (GSD) $1.1B Medical/Dental $.005B AF Academy I n t e g r i t y - S e r v i c e - E x c e l l e n c e 6

7 AFWCF Recent Changes Consolidated Sustainment Activity Group (CSAG) Two divisions Maintenance (formerly DMAG) and Supply (formerly MSD) Annually eliminates ~2M internal billing transactions between Maintenance and Supply valued at ~$4.0B Reduces annual cash requirement by $150M Improves customer support by efficiently working as one entity Focuses on Maintenance and Supply relationship I n t e g r i t y - S e r v i c e - E x c e l l e n c e 7

8 AFWCF Recent Changes Flying Hour Revenue Recognition Process Implemented Shifted from Selling a Spare Part to Selling a Flying Hour WCF bills AF customers by hours flown monthly (Active, Guard, Reserve, SOCOM and TWCF) Supports enterprise management of the Flying Hour Program Other Customers billed by part purchased (e.g., Army, Navy, FMS) Avoids ~1M transactions each year Discontinued Contract DMAG in FY08 Discontinues using WCF as a middleman Targeting accounting closure in FY10 I n t e g r i t y - S e r v i c e - E x c e l l e n c e 8

9 AFWCF Activity Groups in FY09 Transportation $9.8B TRANSCOM Airlift/Sealift/Ground AFWCF $21.8B Consolidated Sustainment Activity Group $8.3B $3.6 B Maintenance $4.7 B Supply Supply Retail $3.7B $2.5B Consumables (GSD) $1.2B Medical/Dental $.006B AF Academy I n t e g r i t y - S e r v i c e - E x c e l l e n c e 9

10 AFWCF Activity Groups Future State Transportation $9.6B TRANSCOM Airlift/Sealift/Ground AFWCF $17.8B CSAG $8.2B $7.5B - Maintenance & Spares $.7B - Fly Consumables Retail Supply Management $2.7B $.6B Base Supply (GSD) $1.2B Medical/Dental $.007B AF Academy $.9B-Depot Consumables Under review for elimination BRAC directed Transfer to DLA I n t e g r i t y - S e r v i c e - E x c e l l e n c e 10

11 Maintenance Division Scope of Operations Sched/Unsched Production 658 Aircraft 260 Engines Aircraft & Engines Reparables, Mods, Rotors & Miscellaneous 322K Repairables 1.4K Mods/Rotors 2,081K Software(DPEH) 187K Maj End Items(DPEH) Total Production 1042 Aircraft Total Orders $3.6 Billion 2% AIR FORCE ARMY/NAVY TRANSCOM FMS Plus Oversight for 90 Aircraft, 26 MDS Variants Supply Division I n t e g r i t y - S e r v i c e - E x c e l l e n c e 11

12 How Maintenance Funds Work for External Customers 2) Customers Order Repair Services Maintenance Division Service Provider 1) Congress Appropriates Funds to Maintenance Customers 7) External Customer Pays $$ for Services Rendered Labor 3) Pays for Operating Costs Consumable Material Other 4) Collects Costs of Repair and Maintenance Contract (Close 2010) Maintenance Division Customer 5) Maintenance Division Bills External Customer 6) Maintenance Division Delivers Goods or Services I n t e g r i t y - S e r v i c e - E x c e l l e n c e 12

13 Maintenance Division & Contract Depots Managing 106,000 Spare Parts 5,408 USAF aircraft (41 Organic Weapon Systems) Repair Orders Supply Division Scope of Operations Orders for new spares Manufacturers Net Sales $4.7 Billion Other federal agencies and other WCF 3% Maintenance Division AIR FORCE ARMY/NAVY TRANSCOM FMS I n t e g r i t y - S e r v i c e - E x c e l l e n c e 13

14 1) Congress Appropriates Funds to AF MAJCOMs How Supply Funds Work for External Customers 5) Supply delivers part to MAJCOM; Customer funds billed based on executed Flying Hours or by part Supply 4) Maintenance accomplishes repair and returns to Supply (Transaction is not billed to Supply Division unless KTR) 2) New Part Ordered & Carcass Returned (Funds obligated) 3) Carcass sent to Maintenance or Contractor (Funds only obligated w/ktr) I n t e g r i t y - S e r v i c e - E x c e l l e n c e 14

15 AFWCF Pyramid of Information CONGRESS OMB/OSD HAF/SAF MAJCOM Base Level, ALCs and Product Centers I n t e g r i t y - S e r v i c e - E x c e l l e n c e 15

16 Information Used for Oversight Budget Submission Budget Roll-Out Briefing SF133 Budget Execution and Budgetary Resources 1307 Accounting Reports Cash Work Sheets I n t e g r i t y - S e r v i c e - E x c e l l e n c e 16

17 Cash - How much is enough? How Do We Measure WCF Cash? I n t e g r i t y - S e r v i c e - E x c e l l e n c e 17

18 Cash - How much is enough? How Do We Measure WCF Cash? Adequate balances required for Fund flexibility Short term fluctuations in demand; execution year price changes or activity group usage changes DoD Financial Management Regulation directs minimum levels 7-10 days operating expenses 6 months capital outlays Too little jeopardizes customer stability; too much represents opportunity lost I n t e g r i t y - S e r v i c e - E x c e l l e n c e 18

19 WCF Operating Results Budget Process Attempts to Maintain Balance AFWCF DPEM Programmed Over & Above Drop-ins Flying Hours DLRs Consumables Non-fly Other Base Supplies Medical - Dental Academy Maintenance Direct Labor Direct Material Production Overhead G&A Supply Buy Repair Overhead Cost Stabilized Rates (Set in Advance) Time Lag Cost Control (Execution Year) I n t e g r i t y - S e r v i c e - E x c e l l e n c e 19

20 AFWCF FY09 Cash Position As of 31 March 2009 $ in $ Min M 1,637 1,077 1,246 1,222 1,005 1, day goal $1,087 7-Day Goal $831 Actual Plan Below $200 administrative action required I n t e g r i t y - S e r v i c e - E x c e l l e n c e 20

21 AF Blue FY09 Cash Position As of 31 March 2009 $ in M $ in M 1,172 1,189 1, Actual Plan 10-day goal $529 7-Day Goal $389 Below $200 administrative action required I n t e g r i t y - S e r v i c e - E x c e l l e n c e 21

22 TWCF FY09 Cash Position As of 31 March 2009 $ in in M M 10-day goal $ Day Goal $442 Actual Plan Below $200 administrative action required I n t e g r i t y - S e r v i c e - E x c e l l e n c e 22

23 I n t e g r i t y - S e r v i c e - E x c e l l e n c e Way Ahead Blueprint financial processes for Expeditionary Combat Support System (ECSS) Close CDMAG in FY 2010 Update accounting reports to correctly state CSAG and SMAG-R Working with DFAS to address accounting issues GSD working with DLA to transfer depot level consumable inventory per BRAC legislation Continue improving

24 Our Working Capital Fund Simple Concept... Complex Process Improvements are Generating Benefits Executive-level Commitment Warfighter Support is Paramount! I n t e g r i t y - S e r v i c e - E x c e l l e n c e 24

25 I n t e g r i t y - S e r v i c e - E x c e l l e n c e 25

26 Safety Issues Accident Investigations FAA Requirements System Program Directors Engineering Changes HAF/OSD Policy Funding Decisions Who Can Impact the Fund? WCF TY$M Congress Limitations Oversight Current Events OCO MAJCOMS Deferred Inductions Changing Profiles Supply Chain Managers Strategic Sourcing Diminishing Mfg Sources Depots Production Costs Organic vs Contract Surge Production Multiple I Stakeholders n t e g r i t y - S e r in v i a c Dynamic e - E x c e l lenvironment e c e