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 Headquarters U.S. Air Force 1 Jamie Morin SAF/FM ASMC Mini PDI Financial Management in an Uncertain.

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

Headquarters U.S. Air Force

1

Jamie MorinSAF/FM

ASMC “Mini PDI”

Financial Management in an Uncertain Environment

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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

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National Fiscal Environment

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National deficit and debt are risks to national security -Budget Control Act of 2011 mandated DoD to do its part in debt reduction

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Revenues

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-14%

-12%

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-8%

-6%

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2%

4%Federal Budget Surplus/DeficitsRevenues and Outlays

Federal Debt

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100%

Mandatory

Nonde-fense

Defense

Net Interest Federal Outlays

% o

f Fe

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lays

% o

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get

% o

f GD

P%

of G

DP

62 64 66 68 70 72 74 76 78 80 82 84 86 88 90 92 94 96 98 00 02 04 06 08 10 11 12 13 14 15 16 17 180

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AF DoD

FY10 – 18:DoD: -24%/-$178BAF: -22.6%/-$26B

Vietnam

Reagan Buildup

Iraq/AfghanFY13 Dollars in Billions

Vietnam (FY68-74)

DoD: -30%; AF: -38%

Buildup/Cold War (FY 86-98)

DoD: -33%; AF: -47%

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Total Budget Trends(Including supplemental and OCO funding through 2014)

Notional Sequestration Line

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 1710

Air Force 2023…Cost Drivers

What we need to do today to be viable to execute Defense Strategy

■ Rising Personnel Costs■ Total Force E/S decreased 14% - FY90 to FY13■ MILPERS budget grew by 49% - FY90 to FY13

■ Cost to Operate the Fleet■ Largest growth in AF Blue base budget from 1990 to 2013 was in O&M at 92% ■ WSS growing at ~7% per yr above inflation

■ Aging Aircraft Inventory■ TAI: FY90: 9,032; FY00: 6,192; FY13: 5,500 ■ Average a/c age rising

■ Fighters 23 yrs, Bombers 36 yrs, Tankers 48 yrs■ FY14 buy of 50 aircraft = ~110 year Recap Rate

■ Recapitalization Opportunity■ Procurement dropped 49% (constant) - FY90 to FY13■ Implementation of should-cost showed ~2%-3% savings realized in FY12

compared to budget levels.

■ Fiscal Environment■ Topline issue: historical draw downs last 10+ yrs■ Budget uncertainty – CR, BCA of 2011 and sequestration

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

Groundwork for the AF’s FY15 POM (aka 5-year resource plan) ~65 cost assessments,

increased O&S focus

Earlier delivery to shape MAJCOM resource plans

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Shaping Budgets with Analysis

The FY15 POM continues on the path toward acquisition excellence by reducing cost risk in our acquisition portfolios.

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

Investment Cost AssessmentsTrends/Goals

PB 11 PB 12 PB 13 PB 140

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$77B

$90B

$4.7B

42%

$1.3B

64%

$99B$8.1B

61%$60B

$11.9B Cost Risk

33% of RDTE/Proc

$ B

illio

ns

■ High confidence, realistic estimates

■ Protect AF TOA

■ On-cost & on-schedule programs

■ Better prep’d for top-line pressure

■ Improve Gov’t negotiation position

6Making A Difference…% Assessed Up and Cost Risk Down

* “Cost risk” is the difference between valid cost estimate and the available funding

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

Who We Are: FM Professionals

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Financial Stewards

Advisors

Educators

Innovation In Action – Professionals in the Face of Adversity

■ Every Dollar Counts Campaign■ Airmen Powered by

Innovation:■ Over 11,000 submissions ■ Over 500 for SAF/FM

■ Successes■ Automated Personal

Military Compensation Statement

■ Provide Lodging Tax Free Forms at Bases

■ Biggest Single Item:■ Increase awareness to

promote a fiscal responsible culture

Financial Improvement Actions

811Create a Culture Change for Financial Improvement

FIAR: Audit Readiness by 30 Sep 14 Well designed, aggressive path Asserted Funds Distro to Base Asserted on Civilian Pay (GF

$12.2B, WCF $5B) SBIRS Acq Program (not audit

ready – corrective actions to be addressed in MOCAS Contracts AU)

Spare Engines – Qualified (local system not reconciled to accountable record system) ($9.9B)

Missile Motors – Unqualified ($1.6B)

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Audit Readiness Status Accomplishments

Description Due USD(C) Priority Current Status

Budget Authority – Fund Receipt/Distribution 30-Sep-10 SBR Opinion - Sustainment

Fund Balance with Treasury Reconciliation 31-Dec-10 SBR Opinion - Sustainment

Military Equipment, Cruise Missiles, Drones, Aerial Targets

31-Dec-10 Existence & Completeness Under DoDIG Examination (6/30/12)

Fiscal Year 2012 Goals

Uninstalled Missile Motors 30-Mar-12 Existence & Completeness Preparing assertion documentation

Spare Engines 29-Feb-12 Existence & Completeness Asserted

Funds Distribution to Base 31-Mar-12 SBR Preparing assertion documentation (CAPs)

MDAP (SBIRS) 30-Sep-12 SBR In Discovery Stage

Fiscal Year 2013 Goals

Reimbursable Budget Authority (RBA) 31-Dec-12 SBR In Discovery Stage (CAP)

Hire to Retire (Civilian Pay) 31-Dec-12 SBR In Discovery Stage

Hire to Retire (Military Pay) 31-Mar-13 SBR In Discovery Stage

Real Property 30-Jun-13 Existence & Completeness In Discovery Stage

MILSTRIPS 31-Jul-13 SBR Not Started

Vendor Pay 31-Aug-13 SBR Not Started

Fiscal Year 2014 Goals

Reimbursable Work Order (RWO) 31-Dec-13 SBR In Discovery Stage (CAP)

Contracts (MOCAS) 31-Dec-13 SBR In Discovery Stage

Net Outlays 31-Dec-13 SBR In Discovery Stage

Financial Statement & Compilation 31-Dec-13 SBR In Discovery Stage

Spare Parts - AF Managed/AF Possessed 30-Jun-14 Existence & Completeness Not Started

Munitions 30-Jun-14 Existence & Completeness In Discovery Stage

Future Goals

Spare Parts - Ctr Managed/Ctr Possessed 30-Sep-15 Existence & Completeness Not Started

Spare Parts - Ctr Managed/AF Possessed 30-Sep-15 Existence & Completeness Not Started

Inventory (WCF) 31-Dec-15 Existence & Completeness In Discovery Stage

General Equipment 30-Sep-15 Existence & Completeness Not Started

Government Furnished Equipment 31-Mar-16 Existence & Completeness In Discovery Stage

Scarce resources drive need for more disciplined fiscal controls

Summary

■ Sequestration is a FYDP challenge, not just an FY13 challenge

■ Uncertainty for FY14 and beyond…

■ What should the Air Force look like in 2023?■ What capabilities can we afford?

■ What are the long term impacts on our people?

7Your role is critical in this uncertain fiscal environment