Proper Execution Alignment

Audit Readiness Training SymposiumJune 2012

Agenda

• Overview

• Background

• Areas of Concern

• Execution Monitoring Guidelines

• Discussion

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Overview• Context: Reporting Requirements and

Audit Readiness necessitate accuracy and precision

• Purpose: Understanding the connection between proper execution alignment and defending our resources

• Outcome: Participants will understand their role in improving Navy Medicine’s financial reporting

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Background

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MTF awards Provider ContractEnters data into STARSFlows to SMART

M83 pulls execution data from SMART to populate OP32

OP32 submitted to OSD(C) via TMA

Congress reviews OP32 dataUses data to determine policy and write legislation

Appropriation and Authorization bills establish funding and program controls based on OP32

Reductions directly impact our ability to provide quality care

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Background

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Execution Baseline Reviews (FY09 - FY11)

Congressional & OSD (C) Requirements and Guidance

Audit Readiness

Unfinanced Requirements & POM Issues

Key Drivers

Improved Execution Tracking

& Financial ReportingQuarterly Execution Reviews

BackgroundIssues Impacting Navy Medicine’s BudgetExecution Baseline Position (EBP) Review

• TMA continues to review Navy Medicine’s budget at the PE level

• Variance to PE controls creates “trade-space” – opportunity for TMA to reduce Navy’s budget

President’s order to reduce travel, printing and conferences

• SECDEF Memo to reduce travel, printing expenses by 20% from FY10 level

• Conferences continue to draw additional scrutiny

• OSD monitors compliance via semi-annual data calls

Service Support Contractor reductions

• SECDEF Memo in Summer FY10 mandated targeted cuts to Contractor Support Services (CSS)

• Cuts would accumulate at 10% per year for FY11-13 and carry forward

• OSD monitors compliance via semi-annual data calls

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Areas of Concern

Object Class 25 – Contracts Codes and Definition from OMB’s A-11

• 25.1 – Advisory and Assistance Services

• 25.2 – Other services from non-Federal sources

• 25.3 – Other services from Federal sources

• 25.4 – Operation and Maintenance of Facilities

• 25.5 – Research and development contracts

• 25.6 – Medical Care

• 25.7 – Operation and Maintenance of equipment

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Areas of Concern

SMART Execution Data for Object Class 25

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Object ClassFY 2007 Certified

FY 2008 Certified

FY 2009 Certified

FY 2010 Certified

FY 2011 Certified

FY 2012 (as of

5/15/12)

250-Consult & Other Services [Q] 447,243,000 419,883,086 498,412,508 258,924,528 (20,443,083) (113,338)

250-Other Costs [X]         (133,508)

250-Service Transfer Funded [Z] (71,042,107) (77,760,859) (86,941,017) (60,492,957) (57,362,453) (27,985,323)

251-Advisory & Assist Srvcs [Q] 231,948 1,587,176 9,823,859 2,190,337 13,572,372 1,609,640

252-Other Services [Q] 639,822,426 649,460,165 683,630,124 709,944,171 590,943,844 117,286,111

253-Purch Goods/SVCS From Gov [Q]

111,287,011 113,407,485 124,607,849 180,393,701 298,382,610 117,776,519

254-Oper& Maint-Facilities [Q] 28,143,145 51,261,514 825,721 1,906,713 35,436,038 34,488,887

255-R&D Contracts [Q] 482,211 284,391 133,064 757,772 598,055 2,126,220

256-Medical Care [Q] 526,953 494,704 523,926 617,420 377,930,074 426,343,528

257-Purch Maint of Equip (DOD) [D]

128,094 159,235 81,143 117,971 82,372 75,136

257-Purch Maint of Equip (COM) [P]

21,542,972 22,215,779 21,959,685 47,408,564 44,205,241 50,538,489

Areas of Concern

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Object Class Code (OCC) 25 Discussion

• 25.0 – Not a valid object class per OMB A-11. Do not use this object class when reporting obligations

• 25.1 – Data reported here should be consistent with that in the Service Support Contractor reporting to TMA. ***OSD requires that these Contract Services decrease by 10% each year***

• 25.2 – Activities should continue to scrub their books and move contracts to other codes as applicable. Do not assume this OCC is correct because it was always used -- review the contract to determine the appropriate OCC to use. ***OSD requires that these Contract Services decrease by 10% each year***

• 25.5 – Activities should review contracts coded as R&D and move to the correct OCC

• 25.6 – Contracts for medical providers should be reported in this OCC

Areas of Concern

SMART Execution Data for Invalid Object Class

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BAG Object ClassExpense Element

FY 2011 FY 2012

Total BAG

Invalid Total EE 96,693,598 70,357,505

Invalid M-Utilities/Rent 97,206,801 70,357,505

Invalid Z-Service Transfer Funded

(513,203)  

1-In House Care

Invalid Total EE 5,541,721 3,355,605

Invalid M-Utilities/Rent 6,009,582 3,358,319

Invalid Z-Service Transfer Funded

(467,861) (2,714)

3-Consolidated Health Support

Invalid Total EE 132,029 98,227

Invalid M-Utilities/Rent 132,029 95,513

Invalid Z-Service Transfer Funded

  2,714

4-Information Management

Invalid Total EE 79,446  

Invalid M-Utilities/Rent 79,446  

6-Education and Training

Invalid Total EE 3,735 1,728

Invalid M-Utilities/Rent 3,735 1,728

7-Base Ops/ Communications

Invalid Total EE 90,936,667 66,901,945

Invalid M-Utilities/Rent 90,982,009 66,901,945

Invalid Z-Service Transfer Funded

(45,341)  

• The law requires the President’s Budget to present obligations by object class. Therefore, Invalid Object Class is not a correct option

• Object Class 23 is for Rent, Communications, and Utilities. These costs should be transferred from Invalid to OCC 23

23.1 - Rental payments to GSA

23.2 - Rental payments to others

23.3 – Communications, utilities, and miscellaneous charges

Areas of Concern

SMART Execution Data for Pharmaceuticals

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• Obligations for pharmaceuticals should not be reported outside of PE 0807701 / 0807901 and Expense Element 4.

• Pharmaceuticals PEs should not include costs for supplies, salaries, travel, equipment or contracts.

• Navy’s pharmacy budget has been cut in each of the last EBP rounds due to incorrect coding of pharmacy obligations.

Expense Element807701

Pharmaceuticals - CONUS

807901Pharmaceuticals -

OCONUSTotal

4-Pharmaceutical Supplies

233,375,258 15,206,337 248,581,595

P-Equip Maint (Commercial)

(276)   (276)

Q-Other 2,166 0 2,166 T-Supplies 18,525 3,830 22,355 U-Civilian Personnel (150) 14,596 14,446 W-Equipment 97   97 Y-Printing/Reproduction 0 120 120 Z-Service Transfer Funded

(749)   (749)

Total-EE 233,394,872 15,224,883 248,619,755

Program Element Expense ElementFY12

(as of May 21, 2012)

807901-Pharmaceuticals – OCONUS4-Pharmaceutical

Supplies15,206,337

807701-Pharmaceuticals – CONUS4-Pharmaceutical

Supplies233,375,258

807705-Mil Public Hlth/Occ Health4-Pharmaceutical

Supplies732

807715-Dental Care Activities – CONUS4-Pharmaceutical

Supplies60

807724-Mil Unique Rqmts - Other Med - Hlth Care

4-Pharmaceutical Supplies

661

807756-Environmental Compliance4-Pharmaceutical

Supplies(355)

807900-Def Md Ctrs, Stn Hsps & Md Clns – OCONUS

4-Pharmaceutical Supplies

13,756

807700-Def Med Ctrs, Stn Hsps & Clns – CONUS

4-Pharmaceutical Supplies

385,877

807915-Dental Care Activities - OCONUS4-Pharmaceutical

Supplies362

Execution Monitoring

• M83 relies on SMART data for external reporting to higher level agencies, so accuracy is key

• Drill down to a lower level (go beyond the AGSAG/PE review) – Track execution across all available measures in the CAD/LOA Understand ALL of the execution measures being reported for

your activity Validate your execution by the following data elements (at a

minimum):o Function/Subfunction (FSF)o Expense Element (EE)o Object Class Code (OCC)o Cost Account Code (CAC)

• Track execution against plan and authority with variance explanations/corrective action plans prepared

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Execution Monitoring

• Establish a recurring execution review schedule Activities should pull STARS and SMART report and review

execution across all data elements to ensure accuracy and compliance with guidance

• Reach out to M83 and let us know if you require further guidance We rely on the activities to be the first line of review and they

should report problems/areas of concerns to the regions and on to HQ for guidance/clarification

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Discussion• What are your concerns?

• How can we work together to surmount these challenges?

• How can HQ do a better job of communicating with you?

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