Resource Management

1 s t Q u a r t e r 2 0 0 5

Army Vision

Relevant and Ready 

Landpower in Service 

to the Nation

PB48-05-1
Resource Management is an official professional Bulletin published 

quarterly and sponsored by the Assistant Secretary of the Army for 

Financial Management and Comptroller. Unless otherwise noted, material may be reprinted provided the author and RM are credited. Views 

expressed herein are those of the authors and not necessarily those of 

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dissemination of material designed 

to keep individuals within the Army 

knowledgeable of current and 

emerging developments within their 

areas of expertise for the purpose of 

professional development. 

By order of the Secretary of 

the Army:

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General, United States Army

Chief of Staff

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the Secretary of the Army

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of the Army

Financial Management

and Comptroller

Valerie Lynn Baldwin

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the Pentagon

Wilett Bunton
1 s t Q u a r t e r 2 0 0 5 1

Contents

Resource Management

1st Quarter 2005 “Professional Development” PB48–05–1 

A Message from The Assistant Secretary of the Army 

(Financial Management and Comptroller), The Honorable Valerie L. Baldwin 2

Reducing the Army’s Requirements-Funding Gap 4

PBD 753: A Budget Strategy or a Budget Tragedy 8

Beyond the Suggestion Box: An Integrated Approach

to Best Practices 10

Implementing Six Sigma in the Army 13

The Army Travel Card: Time for a Change 17

Joint Special Operations Forces Contingency Comptroller Course 19

The Defense Financial Management Course:

A Transformation Success 21

Writing Letters of Recommendation 23

Army Business Initiative Council: The Army BIC is Turning 10! 25

The Canadian Defence Peacekeeping Cost Estimate Process 28
2 1 s t Q u a r t e r 2 0 0 5

Assistant Secretary of the Army

(Financial Management and Comptroller)

The Honorable Valerie L. Baldwin

GFEBS: Paving the Way for Business Transformation 

Army transformation and the transition to 

new warfighting formations and concepts 

are proceeding apace. The Chief of Staff and 

the Secretary are pressing the case with the Office 

of the Secretary of Defense (OSD), the Office of 

Management and Budget and the Congress – and 

are reaping substantial successes. Near-term funding 

for modularity is secure. We are launching a new 

effort to educate the Congress about the Army Force 

Generation Model. The Future Combat Systems 

program is moving forward. And, of course, 

our troops continue to perform superbly in the 

Afghanistan and Iraq theaters. 

We also are making progress in the quest to 

transform the business side of the Army’s house. To 

support the Secretary’s and Chief’s priorities, the 

financial and resource management communities 

must look for ways to shepherd better the 

taxpayers’ money and to uncover hidden savings 

that could be redirected toward transformation 

or improving our Soldiers’ quality of life. It is 

our responsibility to help the Army operate more 

efficiently and effectively.

With this in mind, FM&C is pursuing several 

important projects. By now, everyone should at least 

have a cursory familiarity with the most important 

of them: the General Fund Enterprise Business 

System (GFEBS) and the Financial System Review, 

Analysis, and Categorization (FINSRAC) of our 

information technology. Since the last issue of the 

magazine, I am pleased to say, both of these efforts 

have advanced.

The GFEBS program office released a request for 

quotes for a system integrator and the first portion 

of the commercial-off-the-shelf software solution 

on March 21. The Army is now evaluating the 

various proposals. We expect to award a contract 

by the end of June and to have the first release of 

GFEBS software nine months later. The program 

office already has awarded a program support office 

contract to Binary Consulting. 

The first release of GFEBS entails a demonstration of GFEBS’ full capabilities. We will demonstrate 

general ledger, accounts payable, accounts receivable, cost management, funds control, and reporting 

capabilities in support of real property inventory 

management. The demonstration will enable us 

to determine if GFEBS is capable of meeting the 

Army’s entire general fund financial management 

needs. A successful demonstration will enable the 

program to continue. If the demonstration is not 

successful, we will terminate the program and pursue other alternatives.

We are certain GFEBS will get off the ground 

this year, thanks to approval from Congress for an 

FY 2005 $28 million reprogramming request, which 

R E S O U R C E M A N A G E M E N T
1 s t Q u a r t e r 2 0 0 5 3

OSD recently executed. The Army also expects to 

receive soon from OSD full Milestone A approval, 

which to date has been strictly conditional. We are 

now on the way to achieving full implementation 

of GFEBS by 2010.

Of course, there is a lot to be done between now 

and then, not the least of which is preparing the 

Army psychologically for this monumental reform. 

GFEBS is going to look different and will operate 

differently. It may take some effort to get used to 

it. But, it is essential that we embrace the concept 

of change now so that, when GFEBS arrives, the 

transition is as smooth, painless and immediately 

beneficial as possible. 

The FINSRAC effort is making significant 

progress, as well. FINSRAC provides detailed cost, 

technical and functional information regarding 

the Army’s financial management systems. The 

second iteration of financial system review, analysis 

and categorization, which FM&C completed in 

February, identified 256 total financial systems. 

Preliminary analysis then determined that 65 of 

these systems either belonged to a business area 

other than FM&C or were not truly information 

technology systems. 

Of the 191 systems subsequently left in 

the Army’s financial management inventory, 

FINSRAC has provided detailed cost, technical and 

functional information for 142. These data will 

be incorporated into the Single Army Financial 

Enterprise (SAFE) architecture, which should 

be finished by March 2006. SAFE, in turn, will 

be used to establish functional and technical 

requirements for GFEBS. The ultimate goal is 

to build those requirements into GFEBS’ core 

capability, and thus reduce the total number of 

financial management systems.

So far, our analysis has determined that the 

requirements of 26 financial management systems 

can be met in the core GFEBS capability. The 

remaining 165 systems are under examination. 

We plan to complete this analysis and develop a 

schedule for system elimination by September 2005.

FM&C will be able to retire the 26 systems 

whose capabilities are slated for inclusion into 

GFEBS, which, through reduced operating costs, 

will generate sizeable savings. We are not yet sure 

how much we will gain by removing these 26 

systems but we do know that, in FY 2005, FM&C 

will spend about $250 million on financial systems 

-- and the total bill likely is even greater, for we still 

are compiling data for all of our systems. Without 

a doubt, the cost of running multiple, disparate, 

non-integrated systems is significantly greater than 

operating a single, integrated system like GFEBS.

While GFEBS and FINSRAC constitute major 

steps in the right direction, there certainly exist 

myriad other ways for us to improve financial and 

resource management in the Army. I ask that you 

turn a critical eye on the processes and practices of 

your organization and professional discipline. Please 

tap your creativity to help the Army operate more 

smartly so that we can maximize every dollar we 

receive. We hold a large portion of the responsibility 

for the success of transformation, the Global War 

on Terrorism and maintaining the best all-volunteer 

force in the world. Let’s answer this call to duty.

I would like to thank each of you for your 

outstanding service to the Army and the nation. I 

am very proud to be a member of the Army team 

and excited to take part in one of the broadest and 

most fundamental reforms in the service’s history. 

I hope that you share this enthusiasm and will join 

me in taking the Army into the future.
4 1 s t Q u a r t e r 2 0 0 5

R E S O U R C E M A N A G E M E N T

Reducing the Army’s 

Requirements–Funding Gap

By Jim Anderholm

Disclaimer: The opinions expressed in 

this article are those of the author and do not 

reflect the official positions of Headquarters, 

Department of the Army nor the Department 

of Defense. 

Introduction

In the lead article to this issue of Resource 

Management, Secretary Baldwin outlines 

a set of strategic priorities for the Army’s 

financial management community. Among 

those priorities is the need to reduce the 

gaps between Army requirements and their 

funding. Clearly, she outlines three reasons 

why the Army must reduce the gap: 

• Large unfinanced requirements 

(UFR) divert senior management and 

staff attention.

• Large UFRs raise creditability issues with 

the Office of the Secretary of Defense, 

Office of Management and Budget, and 

Congress.

• Large UFRs perpetuate an expectation 

in the field that funding will 

eventually come.

But just what is the requirements 

funding gap, and why is this strategic 

initiative important to Army resource 

managers? This article hopes to define and 

frame the issue of the requirements funding 

gap, propose that the gap is similar to 

corporate debt, posit how the Army got into 

the predicament it is in, outline preliminary 

steps that are being taken at Headquarters 

Department of the Army (HQDA) to 

modify the requirements validation process 

to lower the Army corporate debt load, and 

finally raise several issues with regard to the 

debt management issue. 

Some Historical Data

Table 1 portrays the corporate Army’s 

requirement and funding trend over the last 

three Presidents Budget positions extended 

through their applicable Future Years 

Defense Program (FYDP) timeframes. 

While the data indicates the average 

yearly unfinanced requirement (UFR) 

decreases 16% from the President’s Budget 

04-05 position to the President’s Budget 

06-07, the Army still carries a substantial 

$20-30 billion per year in UFRs. Given the 

Administration’s goal to reduce the budget 

deficit, the annual funding top line for the 

Army will likely level out at the $100-105 

billion (in constant FY06 dollars) over 

the course of the FYDP. Some foretell a 

decreasing funding line for the outyears. 

Given this state of fiscal affairs, one has 

to question why the Army is willing to 

accept such a sizable annual debt load “on 

the books”. If we think of this debt load 

the way the business world views debt, 

the expectation is this it will be liquidated 

some time in the future. With a corporate 

business model in mind, what does the 

Army do with this heavy load of corporate 

debt on its books?

The Concept of Army Corporate 

“Debt”

In Barron’s Dictionary of Finance and 

Investment Terms1

, debt can be defined 

in two ways:

1. Money, goods, or services that one 

party is obligated to pay to another in 

accordance with an expressed or implied 

agreement. 

2. General name for bonds, notes, 

mortgages and other forms of paper 

evidencing amounts owed and payable 

on specific dates or on demand.

Obviously these definitions for debt 

are structured for the corporate finance 

world. For the purposes of our discussion 

a slight rewriting of the second definition 

would give us a reasonable definition of 

corporate Army debt that we can use for our 

discussion:

Army debt is the general name for 

unfunded validated requirements 

evidencing amounts owed and payable on 

a future date. 

In the corporate business world, a firm 

has several means to reduce its debt. It can:

• Generate additional revenue 

through sales.

• Restructure the debt, e.g., renegotiate the 

debt’s interest rate.

• Divest debt producing operations.

• Sell additional corporate stock.

• Use cash reserves to liquidate the debt.

The Army unfortunately is not given the 

flexibility of all these options. Generally it 

can try to get additional revenue (either by 

internally generating it through efficiencies, 

or from Congress) or it can divest itself of 

the operations generating the debt load. 

Continuing with the corporate business 

analogy, what is the incentive for OSD and 

Congress to provide additional revenue (i.e., 

funding) if the Army is successfully accomplishing its mission within current resourcing constraints? We have somewhat of a 
1 s t Q u a r t e r 2 0 0 5 5

Table 1

($Billions) FY 2004 FY 2005 FY 2006 FY 2007 FY 2008 FY 2009 FY 2010 FY 2011 Average

 UFR per Yr

President’s Budget 2006–2007 Position

UFR $33 $28 $28 $24 $23 $20 $26.0

Funding $99 $110 $116 $120 $123 $126

Requirements $132 $138 $144 $144 $146 $146

President’s Budget 2005 Position

UFR $30 $29 $29 $27 $27 $28.4

Funding $99 $104 $109 $115 $118 

Requirements $129 $133 $138 $142 $144 

President’s Budget 2004–2005 Position

UFR $32 $32 $31 $33 $29 $30 $31.1

Funding $94 $98 $104 $109 $114 $117

Requirements $126 $130 $135 $142 $143 $147

Gordian knot – the Army is “successfully” 

accomplishing its mission within currently 

allocated resources, yet it continues to carry 

these huge debts! So it seems that the only 

means we have to reduce our debt load is to 

look at debt divestiture.

How Does the Army Acquire its 

“Debt” Load?

In the PPBE system Army requirements 

are generated from a number of sources 

both internal and external to the Army.2

Requirements, no matter the source ,once 

they reach HQDA are generally processed 

as follows:

• During the annual PPBE cycle, 

HQDA program evaluation groups 

(PEG) evaluate and validate the 

requirements generated by the Major 

Army Commands (MACOM) and 

other operating agencies (e.g., Program 

Executive Officers (PEO)), combatant 

commanders (COCOM), HQDA staff 

proponents, senior Army leadership 

decisions, OSD decisions (e.g., the last 

round of Program Budget Decisions), 

and congressional legislative actions. 

• The requirements determination and 

validation process/phase of PPBE 

should consider the full spectrum 

of Army operations and functions, 

and address all DOTMLPF domains 

(doctrine, organization, training, 

materiel, leadership and education, 

personnel, and facilities) that may 

be impacted by the requirement. 

Toward this end, HQDA analyzes the 

contribution made by a requirement 

to the overall operational objectives 

of the Army as well as to its joint 

interoperability and affordability. The 

goal of centralizing the requirements 

validation focuses the efforts to 

develop clear value-added capabilities 

matched to future goals at both Joint 

and Army levels. 

• PEGs review the scope, quantity, 

priority, and qualitative nature of 

resource requirements that define 

their portion of the Army program. 

In the process, PEGs review assigned 

Management Decision Packages 

(MDEP). They review command 

and agency requested requirements 

submitted via the commands’ or 

agencies’ POM submissions to HQDA. 

At the same time PEGs review COCOM 

integrated priority lists (IPL) as 

well as resource needs expressed by 

the supporting Army Component 

Command (ACC). 

• Requirements are integrated into a 

MDEP and entered by the PEG into a 

central requirements database repository 

maintained at HQDA. Based on senior 

Army leadership funding guidance, the 

PEG allocates funding and manpower 

resources to its validated requirements. 

Additionally the PEG provides to the G3 

a rank ordering of its validated program 

requirements for integration into an 

Army 1-n priority list of funded and 

unfunded requirements.

As demonstrated in Table 1, there 

is not enough funding to resource all 

requirements, hence the creation of UFRs 

or corporate debt for the Army. Despite the 

major bureaucratic effort that HQDA and 

subordinate agencies execute every year to 

determine and validate requirements and 

subsequently assign a level of resourcing 

to the requirements, the Army consistently 

maintains a debt load of 25-30 percent of its 

funding. Two axioms seem to contribute to 

this continuing debt load level:

1. The unrealistic expectation that if the 

Army has a higher debt level then the 

“bankers” will realize our predicament 

and give us more resources.
6 1 s t Q u a r t e r 2 0 0 5

R E S O U R C E M A N A G E M E N T

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Chart 1. DoD Budget Authority by Service

Constant FY 04 $ Billion

35%

30%

25%

20%

15%

10%

5%

FY 92 FY 93 FY 94 FY 95 FY 96 FY 97 FY 98 FY 99 FY 00 FY 01 FY 02 FY 03 FY 04 FY 05

ARMY NAVY/USMC USAF DEF AGENCY

27%

25% 26% 26% 26% 26% 25% 25% 25% 25% 25%

28%

30%

24%

Chart 2. DoD Budget Authority Percentage by Service

2. The unwillingness to tie realistic 

program requirement levels to 

fund availability. 

To address the first axiom lets look at 

the history of service funding over the last 

14 years.3

 Chart 1 reflects the division of 

service funding using constant FY04 dollars.

Chart 2 reflects Service dollar data as 

percentage of the DoD total.

When no major contingency operation 

are underway, the Army’s percentage of the 

DoD fiscal pie hovers between 24 and 26 

percent.4

 Clearly from the 14-year trend, 

one concludes that maintaining a large debt 

level has made little difference in the Army’s 

ability to obtain additional resources for its 

base non-GWOT programs. So one has to 

ask if this strategy should be changed?

The second axiom also contributes 

mightily to the debt burden. Army plans 

and models used to generate requirements 

take little heed of the budgetary 

environment. For example, in the MDEP 

for military construction where a set 

model/procedure for determining yearly 

construction requirements is used, funding 

for those generated requirements has 

consistently been below 40 percent (see 

Chart 3).5

 Analysis of other investment 

(procurement and construction) related 

MDEPs show similar funding postures.

This must beg the question, why 

not reevaluate the timing of military 

construction projects based on resource 

availability and realistically lower the 

requirement levels so that funding 

approximates say 85 percent of the 

requirement? Using this methodology 

would reduce the requirement funding 

gap by $2.3 billion in FY 07 alone. There 

are other high requirement / low funding 

MDEPs where magnitudes of this level can 

be achieved.
1 s t Q u a r t e r 2 0 0 5 7

75%

60%

45%

30%

15%

0%

FY 03 FY 04 FY 05 FY 06 FY 07 FY 08 FY 09 FY 10 FY 11

POM 06-11 POM 05-09 POM 04-09

11%

8%

12%

35%

39%

64%

Chart 3. MDEP EVRT–Military Construction

Solving the Army’s debt problem 

Two major efforts are underway at HQDA 

to lower the Army’s debt problem. 

The first addresses how requirements 

are dealt with in the PPBE system. Led 

by the Director for Program Analysis and 

Evaluation in coordination with other 

HQDA staff elements, the Lean Six Sigma6

business improvement process is being 

used to evaluate the Army’s PPBE system. 

Specifically, Lean Six Sigma methods are 

being used to redesign the PPBE processes 

associated with the requirements validation 

and resource allocation. The desired 

outcome of these efforts is to create a more 

responsive PPBE system that includes a 

resource-informed, and therefore more 

realistic requirements validation process. 

The second effort I would suggest 

for consideration is directing the PEGs 

to achieve a specified reduction in their 

current validated requirement levels. PEGs 

would be given requirement ceilings, say 

certain percentage above their established 

funding ceilings. The percentage would be 

established so that the Army’s overall UFR 

to funding percentage is much lower than 

the current 20-30 percent figure. Validated 

requirements beyond this ceiling would be 

deleted from the requirements database, 

or reprogrammed to a later period beyond 

the FYDP. This effort could be used to 

accomplish Ms. Baldwin’s strategic goal to 

reduce the Army’s debt.

Some Final Thoughts 

Many will argue that artificially lowering 

the requirement levels in the PPBE system 

will distort the Army’s requirement 

picture and will ask how the Army will be 

able to keep track of what of its needs if 

requirements are eliminated? 

This is a reasonable question, but in 

retort it misses the point central to the 

strategic resourcing of the Army. The Army, 

even in wartime must deal with a limited 

resource stream. Granted, there are many 

“unfunded” portions of programs, or whole 

programs in the Army that are worthy and 

no doubt could contribute in some way 

to accomplishing the Army’s mission if 

there was additional funding. Nevertheless 

unfunded program worthiness is not 

relevant given the nature of the current and 

future funding streams for the Army and 

the priorities it has used for “racking and 

stacking” its programs. 

So I close this article with two rhetorical 

questions:

• Is it not time for the Army, specifically 

HQDA, to perform a “clean sweep” and 

get realistic about programs or portions 

of programs that are never going to see 

a dollar in applied resourcing? 

• Would not the HQDA staff along 

with supporting staffs at subordinate 

organizations better serve their 

leadership by concentrating on emerging 

critical requirements, 

instead of continuing to churn 

requirements that historically have

been under-funded?

End Notes:

1. Downs, John and Jordon Goodman, 

Dictionary of Finance and Investment Terms, 6th 

ed., Baron’s Educational Series Inc, Hauppauge, 

NY, 2003, pg 162.

2. U.S. Army War College, How the Army Runs, 

Carlisle PA, 2004, Chapter 9. This chapter gives a 

very detailed description of the Army’s Planning 

Programming Budgeting and Execution System.

3. Office of the Under Secretary of Defense 

(Comptroller), National Defense Budget 

Estimates for FY 2005, Washington DC, March 

2004, pages 78-79.

4. In FY 03 and FY 04, major supplemental 

appropriations for Global War on Terrorism 

(GWOT) associated operation (e.g., Operation 

Iraqi Freedom) drove the Army’s percentage 

higher. The FY 05 data above only reflects the 

base program for the Services. As of this writing, 

Congress is still working on the FY 05 supplemental appropriations bill. 

5. This is an illustrative example and does not 

encompass all military construction requirements that are reflected in other MDEPs.

6. Lean Six Sigma combines the Lean business 

improvement techniques with that of Six Sigma. 

A good article on the integrated technique can be 

found at the iSix Sigma website: http://www.isixsigma.com/me/lean_manufacturing/ and at the 

Lean enterprise website: http://www.lean.org/

About the Author: 

Jim Anderholm is the Deputy Director of 

Resource Analysis and Business Practices 

in the Office of the Assistant Secretary of 

the Army (Financial Management and 

Comptroller). 
8 1 s t Q u a r t e r 2 0 0 5

R E S O U R C E M A N A G E M E N T

The Army, in contrast to the Navy 

and Air Force, approached this reduction 

by targeting how we do business, not 

what we do in our business. The Army 

reductions went after the processes and 

practices we use to carry out our Title 10 

responsibilities whereas the Navy and Air 

Force took reductions in some of their 

major procurement programs used to 

fulfill their Title 10 responsibilities. The 

Army’s strategy in PBD 753 was to reduce 

input – money – yet maintain the output 

– combat forces. In addition to targeting 

efficiencies, the PBD also embraced 

another more significant Army strategy.

Nothing reflects the priorities of an 

organization more than where it spends 

money. In this time of war, the Army has 

embarked on a strategy to enhance our 

ability to provide combat ready forces to 

the combatant commanders. PBD 753 

actually implemented a two prong strategy 

– become more efficient in our business 

and become more lethal in our combat 

capabilities. Sometimes forgotten in the 

hand wringing over the reductions in 

PBD 753 is the fact that the PBD added 

$5 billion per year beginning in FY 2007 

for the Army Modular Force. Think about 

this for a moment. At a time when the 

President of the United States has directed 

every government agency within the 

Executive Branch to reduce their budget, 

he also agreed to increase the Army’s 

budget by $5 billion per year for the Army 

Modular Force. What more powerful 

endorsement of the Army’s Modular Force 

strategy could there be?

Clearly, PBD 753 approves a strategy 

of enhancing the combat capability 

of the Army by transitioning all the 

components – Active, Guard, and Reserve 

– to a modular force. The PBD also sets 

a concurrent strategy to become more 

efficient in the development, delivery 

and sustainment of those combat forces. 

The two are linked. The former cannot 

succeed without the latter. How is the 

Army achieving these efficiencies and 

will this lead to the second part of the 

question – a tragedy?

On December 23, 2004, the Deputy Secretary of 

Defense approved Program Budget Decision 

(PBD) 753, Other Secretary of Defense Decisions. 

The PBD was the culmination of negotiations between 

the Department of Defense (DoD) and the Office of 

Management and Budget to reduce the DoD topline. 

The term topline is a euphemism for the total amount 

of new budget authority that the Department of 

Defense would request from the Congress for fiscal 

year (FY) 2006. The PBD documented decisions by the 

respective Military Departments to reduce their budget 

guidance in FY 2006 and beyond. 

A Budget Strategy 

or a Budget Tragedy?

By William Campbell

PBD 753
1 s t Q u a r t e r 2 0 0 5 9

and the Army staff has evaluated this 

input. For FY 2006, the staff recommended 

approval of about 75 percent of the 

proposed reductions. The balance of 25 

percent or about $650 million is either 

unacceptable or needs further analysis. 

Where are the acceptable reductions 

applied? Some take up budget slack, the 

elusive yet seemingly ever present “extra” 

money in the budget. Others go after noncore missions. Yet the majority of approved 

reductions focus on contractor support 

in support of research and development, 

maintenance of facilities and equipment, 

as well as base operations. This approach 

would seem counterintuitive given that 

contract operations should be more 

efficient than government operations. Or 

is it that the contractors provide enhancements to the government and contractor 

work can be reduced or eliminated more 

easily without denigrating the governmental function it supports?

The unacceptable reductions or those 

in need of more analysis were in the areas 

of our core missions like direct ground 

and air operating tempo, high visibility 

programs such as Army museums, or the 

reduction was unexecutable because the 

asset proposed was outside the control 

of the Army. In some cases the Army 

headquarters’ staff will find alternative 

sources, but in most cases the submitting 

MACOM or Agency will need to find 

an alternative.

What is of most interest is what is not 

in the list of reductions – the elimination 

of internal processes and functions and 

therefore cuts to Army civilian end strength. 

The FY 2006 reduction of $2.4 billion, if 

applied entirely to civilian end strength, 

would yield a reduction of over 30,000 

civilian workyears. How many workyears 

have we reduced as part of PBD 753? The 

answer, surprisingly, is less than 200. 

We have made substantial progress in 

this first round of PBD 753 reductions, but 

we have more work to do in a relatively 

short time period to prepare for FY 2006 

and FY 2007. We can and will revisit the 

outyears in future program reviews. We will 

struggle through this in a series of fits and 

starts. We will become annoyed with each 

other and frustrated with the bureaucracy. 

We will seek to pin blame on someone else 

for failing to achieve the end result. We’ll 

even make some mistakes.

Yet our leadership has challenged the 

resource management community to tap 

into not only our professional experience, 

but also our creative intellect to find a 

better way to do business. We must expand 

beyond the science of resource management 

and exploit the art of our craft. Unlike a 

business, the government cannot fail. We 

have no choice but to succeed.

Are we on a path to a tragedy? It can be 

if we let it be. It can be if we approach this 

as business as usual. It will be if we ignore 

the realities of an Army at war. The course 

to steer is for you and me to determine. 

Success is up to us to achieve.

About the Author: 

William Campbell is the Deputy Director 

of the Army Budget in the Office of the 

Assistant Secretary of the Army (Financial 

Management and Comptroller). 

The challenge facing the 

resource management 

community is that PBD 753 

provides little in the way 

of guidance to achieve 

efficiencies.

The challenge facing the resource 

management community is that PBD 753 

provides little in the way of guidance to 

achieve efficiencies. The rationale for the 

reductions fell into three broad categories: 

business reengineering, contract savings, 

and a recosting of military to civilian conversions. The Army’s reductions were $2.4 

billion in FY 2006 – about three percent 

of our budget. But when we look at where 

those reductions were initially applied, most 

– almost 94 percent – went to the O&M 

accounts. Operation and Maintenance, 

Army (OMA), for example, took reductions 

in FY06 of $1.8 billion, or just under seven 

percent of the appropriation. How do we 

achieve such savings?

The PBD and subsequent guidance 

give us some hints. In early February, 

General Cody, Vice Chief of Staff, signed a 

memorandum directing his commanders 

to change the way we do business and 

“eliminate non-value added functions and 

processes from all of our commands and 

staffs.” The memorandum further states, 

“...we must divest functions that are no 

longer relevant and reengineer processes to 

provide more effective and efficient support 

to the operating force.” 

Recently, Secretary of the Army, Dr. 

Francis Harvey, released his Army vision. 

Change is a recurring and dominant theme. 

“Leading change ... solving complex 

problems ... transforming ... change to 

create the future Army,” are just some of the 

quotes from his vision. Business as usual is 

not part of the solution.

Since submission of the FY 2006 

President’s Budget, the Director, Program 

Analysis and Evaluation provided 

commands a target that combined the 

categories of reductions within PBD 

753. Commands were given guidance 

to spread the reduction to any program 

and appropriation as a means to achieve 

efficiencies. In keeping with the intent of 

the reductions as expressed in the PBD, 

these targets were distributed to MACOMs 

and Agencies based on personnel costs and 

total budget authority.

Commands came back in a remarkably 

short time with their proposed reductions 
10 1 s t Q u a r t e r 2 0 0 5

Most “best practices” programs are the overblown 

equivalent of a suggestion box. Decentralized 

entities submit practices that are reviewed 

by a central body and approved individually based on 

promised returns. Implementation of the practices is 

usually limited to the submitting entity with universal 

dissemination taking the form of a database of good ideas. 

The Boeing Program Management System is something 

different. The system establishes an enterprise-wide set of 

best practices with common standards of implementation 

for each best practice. The standards are backed by an 

assessment schedule that ensures compliance. Finally, the 

system is owned by a group that has authority to enforce 

standards and change the system. The result is a best 

practices program that is disciplined enough to get results, 

agile enough to stay relevant in the business environment, 

and intelligent enough to evolve with experience. This 

approach to best practices could significantly improve the 

effectiveness and efficiency of business processes within 

the Army and fit well into the Army’s culture. 

At Boeing, the group responsible for best practices 

is the Program Management Process Council. The 

council is charged with providing best practices and the 

assessment process for the practices. To accomplish this, 

the council developed the Boeing Program Management 

System (figure 1).1

 The system starts with a “core” set of 

best practices with underlying supporting practices. The 

best practices focus on the roles of leaders and how they 

manage the program. The supporting practices focus on 

practitioner-level efforts that feed the overall management 

system. The key is that all of the practices are seen as 

an integrated set. Successful program development, 

implementation, and support depend on the mindset that 

one cannot be done without the others. 

The Boeing Program Management System is a 

continuous process. The Program Management Process 

Council assigns subject matter experts to each practice 

that serve as single focal points for the collection and 

Beyond the Suggestion Box 

An Integrated Approach to Best Practices

Capability

Level

Attributes Brief descriptions of the capabilities required to achieve each level.

Process

Tools

Implementation

Cross-practice Integration

Environment

Attributes

Attributes

Attributes

Attributes

Initial

1

Repeatable

2

Defined

3

Managed

4

Optimized

5

Boeing Program Management System

Successful Program

Development, Implementation and Support

Business Offer

Organization

Program Execution

and Control

Create and Review

Business Plan

Supplier Integration

Risk, Issue and 

Independent Reviews

Help Needed and

Independent Reviews

Program

Communication

Based on an Integrated Set of

Program Management Best Practices

Figure 1

Figure 2

By Major Tom Davies
1 s t Q u a r t e r 2 0 0 5 11

dissemination of information. These subject 

matter experts conduct assessments of 

their practices, interact with one another 

to suggest improvements across practices, 

and inform the Program Management 

Process Council. Through this exchange, the 

best practices and underlying supporting 

practices evolve with changes in the 

environment and constant learning. 

Boeing uses a maturity model to guide 

and measure the implementation of best 

practices.2

 The maturity model not only 

clearly defines the standards of each 

practice but also quantifies progress toward 

implementation. The model organizes each 

practice into standard components, defines 

attributes associated with the components, 

and lists the criteria required to achieve a 

specific level of maturity for each attribute 

(Figure 2). The standard components of all 

practices are: process, tools, implementation, 

cross-practice integration, and environment. 

Boeing SME

Assessment

Improvement Plan 

Development

Management

Review PMBP

Self

Assessment

Implementation

Any number of attributes can be assigned 

to each of these components, depending 

on the applicability to and complexity 

of each practice. A framework with five 

levels of capability define each attribute: 

1) initial, 2) repeatable, 3) defined, 4) 

managed, or 5) optimized. With this 

model, implementation can be quantified 

and progress measured within and across 

practices. By dissecting each practice into 

components and using a clearly defined 

set of standards for each, Boeing ensures 

standardized and measurable compliance 

across the enterprise.

Major League Baseball has been 

generating a lot of news lately over steroid 

use by its players. Many contend it is not 

the league’s policy that is lacking but its 

practices of enforcement. The argument 

is that without adequate testing, the rules 

have little significance. The same can be 

said of “best practice” programs that have 

no mechanism to ensure the standards 

associated with the practices are being 

implemented. Boeing assures compliance 

with its best practices through a cyclical 

assessment process. (Figure 3) The process 

is a recurring flow from implementation to 

self-assessment to external assessment to 

management review to improvement plan 

development and back to implementation. 

The intent of this process is to create an 

environment of continuous improvement in 

the implementation of best practices. 

At the core of the assessment process is 

the on-site assessment, an annual three to 

five-day audit of a program’s best practices. 

It starts with an in-brief to the assessment 

team, during which the program’s 

management presents an overview of the 

program, the results of its self-assessment, 

and a review of significant actions since 

the last assessment. From there, the subject 

matter experts for each practice conduct 

“deep dives” with their counterparts on 

the program to measure progress using the 

maturity model. The subject matter experts 

note significant issues with implementation, 

especially any discrepancies with the 

program’s self-assessment. The assessment 

team then assembles their results and briefs 

the program’s management on issues, trends 

and recommended actions. Finally, program 

management responds to the assessment 

team’s findings and directs the development 

improvement plans where appropriate.

The Program Management Assessment 

Tool (PMAT) brings a high degree of 

standardization and data fidelity to the 

assessment process. PMAT is a webbased interface used to input and track 

self-assessments, subject matter expert 

Figure 3 Program Management Best Practices (PMBP)

Assessment/Assist Process
12 1 s t Q u a r t e r 2 0 0 5

R E S O U R C E M A N A G E M E N T

assessments, and implementation metrics. 

The tool is also used to generate the on-site 

assessment out-briefs. However, the real 

power behind the tool is that inputs are 

fed into an Oracle database that allows the 

information to be “sliced” in many different 

ways. Trends in implementation can be 

identified within programs, across practices, 

and aggregated for individual components 

or attributes. This level of fidelity not 

only helps program managers identify 

areas for improvement but also focuses 

attention on enterprise-wide shortcomings 

or opportunities to enhance the overall 

program management system.

Interestingly, the Army Training 

Management Cycle (Figure 4) closely 

resembles the Boeing Program Management 

System. Army Field Manual 7-1, Battle 

Focused Training states, “The systems 

approach to training is an analytical method 

that determines what tasks units are expected 

to perform on the battlefield, under what 

conditions they will perform the tasks, and 

the standard that they must achieve.”3

 As 

any Lieutenant could tell you, this approach 

is not only in place but completely ingrained 

in the Operational Army. Developing a 

Mission Essential Task List (METL) and 

defining the standards of performance 

under specified conditions for these tasks 

are the cornerstones of Army training. 

External evaluations and their resultant after 

action reviews, such as those conducted 

at the Army’s Combat Training Centers, 

ensure standardized implementation across 

the Army and focus commanders on areas 

for improvement. The similarities between 

the Boeing Program Management System 

and the Army Training Management Cycle 

(Figure 5) illustrate that an integrated 

approach to best practices could not only 

be very effective in improving the Army’s 

business practices, but also, fit easily into the 

Army’s culture. 

After working within the Boeing 

Program Management System, the 

following lessons became apparent:

• An integrated set of best practices 

leads to greater gains in organizational 

efficiency and effectiveness than ad-hoc 

or decentralized approaches.

• Implementation of an integrated set of 

best practices can be greatly aided with 

the use of a standard framework such as 

the maturity model.

• A process of enforcement is necessary not 

only to ensure standardized compliance 

with an integrated set of best practices 

but also to foster an environment of 

continuous improvement.

• Powerful tools can bring a degree of 

analysis to an integrated set of best 

practices that is just not possible in 

decentralized or ad-hoc approaches. 

By evaluating best practices individually 

we are not getting beyond a “suggestion 

box” paradigm. Although there are often 

measurable benefits from these programs, 

they are essentially collections of standalone practices that may not serve as 

enterprise-wide solutions. Simply put, 

“bringing a single best practice into a 

process flow is usually not successful.”4

Best practices programs similar to the 

Boeing Program Management System could 

significantly improve the efficiency and 

effectiveness of business processes. 

Footnotes

1. John P. Adrian, Boeing Program Management 

Best Practices: History & Overview, The Boeing 

Company, 2005. 

2. The Boeing maturity model is based on the 

Capability Maturity Model® developed by the 

Carnegie Mellon Software Engineering Institute. 

http://www.sei.cmu.edu/cmm/ 

3. Army Field Manual 7-1, Battle Focused 

Training, Headquarters Department of the 

Army, 15 Sep 2003.

4. Attributable Leo Purschke, Manager, Integrated 

Defense Systems Financial Planning and Analysis, 

during a discussion on 25 Apr 2005.

About the Author:

Major Tom Davies is one of four FA45 

officers participating in the Training With 

Industry program, in his case with the 

Boeing Company.

Wartime Operational Plans

Enduring Combat Capability

Operational Environment

Directed Missions

External Guidance

Establish

Mission

Essential

Task List

Resources

Assess

Pla

n

Execute

Feedback

Program Management System

• Core Set of Best Practices

• Maturity Model

• On-site Assessments

• Assessment Team Out-brief

• Action Plans

Battle Focused Training

• Mission Essential Task List

• Task-Conditions-Standards

• External Evaluations

• After Action Reviews

• Training Plans

Figure 4

Army Training Management Cycle

Figure 5

Similarities of Boeing and Army Processes
1 s t Q u a r t e r 2 0 0 5 13

Six Sigma significantly changes 

corporations and businesses. 

General Electric, Motorola, Xerox, 

Dupont have Six Sigma programs. The 

United States Army is also implementing 

Six Sigma. If Six Sigma succeeds, it will 

significantly change the current Army 

culture. Everyone from the Secretary of the 

Army to the lowest military member and 

civilian will be involved with Six Sigma.

What is Six Sigma?

Ronald D. Snee, author of Six Sigma: 

The Evolution of 100 Years of Business 

Improvement Methodology, defined Six 

Sigma as:

Six-Sigma is a business improvement 

approach that seeks to find and eliminate 

causes of mistakes or defects in business 

processes by focusing on process outputs 

that are of critical importance to customers. 

Six-Sigma projects also often focus on 

improving productivity, process yields, 

production rates and process downtime. As 

a result, process performance is enhanced, 

customer satisfaction is improved, and 

the bottom line is impacted through 

savings and increased revenue. Six-Sigma 

is a strategic approach that works across 

all processes, products and industries. 

Six-Sigma is also a measure of process 

performance. The methodology utilizes 

‘process sigma’ as a measure of process 

capability with a 6-sigma process having 

a defect level of 3.4 parts-per-million 

opportunities (ppm) and a 3-sigma process 

having a defect level of 66,807 ppm1

Total Quality Management and Six 

Sigma seem similar. Six Sigma differs from 

Total Quality Management in four areas:

1. Clear focus on the bottom line;

2. Six Sigma sequences and links 

the improvement tools into an 

overall approach; 

3. The five-phase improvement process; 

Define, Measure, Analyze, Improve, 

Control (DMAIC), sequences and links 

key improvement tools proven to be 

effective in improving processes. In 

the Six-Sigma method, DMAIC creates 

a sense of urgency by emphasizing 

rapid project completion in three 

to six months. Six Sigma builds on 

improvement methods that have 

been shown to be effective and 

integrates the human and process 

elements of improvement;

4. Six-Sigma creates an infrastructure of 

Champions, Master Black Belts (MBB), 

Black Belts (BB) and Green Belts (GB) 

that lead, deploy and implement 

the approach.2

Projects savings are measurable. If there 

are no measurable savings as the project 

progresses, the project ends. Ronald Snee 

believes that no project should be approved 

unless it will generate $175,000 in savings. 

A Black Belt project should generate a 

$1,000,000 in savings.3

The people involved in Six Sigma are 

designated with martial art terms. The 

Champion is a business leader. Champions 

provide the resources and support for 

implementing the process and the projects. 

Working with the Champions are Master 

Black Belts. These are the experts in SixSigma. They know the methodology and 

tools. They are culture changers. Black Belts 

and Green Belts get trained by Master Black 

Belts. The Black Belts were Green Belts. 

Black Belts received additional training and 

experience to earn their Black Belt. Many 

companies have a certification program. 

Generally, Black Belts lead Six Sigma project 

teams. Green Belts carry out Six Sigma 

projects. Green Belt projects are generally 

related to their current job. Green Belts 

have attended at least 40 hours of Six Sigma 

training and have completed at least one 

project under the careful supervision of a 

Black Belt.

When mass production started, 

increasing the quality of goods meant 

more inspections and tests. Inspections 

cost money to perform and increase costs 

by finding defects when the product is 

assembled. Six Sigma catches defects 

at every point. Defects don’t get passed 

along until an inspection. Quality actually 

reduces costs. Quality products result in 

fewer external failures – warranty costs, 

complaint costs and returned materials. 

Internal costs are reduced through 

prevention of defects and having a properly 

planned production process. Defects 

approach zero by using process planning, 

process control and training.

By John Tobakos

Six Sigma 

Implementing

 in the Army
14 1 s t Q u a r t e r 2 0 0 5

R E S O U R C E M A N A G E M E N T

Six Sigma uses the DMAIC method. The 

definition is:

• Define – What is the customer expecting 

from the process?

• Measure – What is the frequency 

of defects?

• Analyze – Why, when and where do 

defects occur?

• Implement – How can we fix 

the process?

• Control – How can we keep the 

process fixed?

Depending on the trainer’s definition of 

DMAIC, the number of subordinate steps 

change. The current GE DMAIC process 

has 12 steps. Some DMAIC maps have 

15 subordinate steps. Both maps achieve 

similar results. An organization picks one 

map and sticks to it.

Benefits don’t come without some costs. 

Training costs money for instructors and 

money for trainee salaries. Everyone in the 

organization needs some level of training. 

Green Belts generally get five days worth of 

training. Black Belts get Green Belt training 

and an additional 10 days of training. The 

Champions (in the Army this could be 

the Secretary, Deputy Secretaries, Chief of 

Staff, Deputy Chiefs of Staff, and General 

Officers) get two days training.

In an organization utilizing SixSigma, many projects are undertaken 

and completed. Full-time Black Belts 

complete 3-5 projects each year and 

Green Belts complete 1-2 projects each 

year. As soon as a project is completed the 

Black Belt or Green Belt selects another 

project from the ‘project hopper’ – the 

list of projects selected, which all have 

been prioritized and are ready to go – and 

begins the improvement work. Six Sigma 

projects are conducted in all parts of the 

organization. To get a sense of the size of 

such an activity, a rule-of-thumb is that an 

organization should have one Black Belt per 

50 professional employees and 10 Green 

Belt per Black Belt. These ratios of course 

vary from organization to organization. 

The point is that the number of Black 

Belts, Green Belts and Six Sigma projects 

can be quite large in large organizations. 

For example, Bank of America recently 

reported that in a little over two years they 

have trained more than 10,000 Champions, 

Black Belts, Green Belts and Master Black 

Belts which have produced more than $2B 

in savings.4

Inherent to any project are the costs of 

doing the project. Once a possible solution 

is selected, there’s the cost of testing 

the solution. The solution test not only 

includes measuring the innovation, but also 

measuring it against the status quo. Two 

sets of independent data get measured and 

analyzed. 

Successful Six Sigma Programs

Motorola developed Six Sigma. It started in 

the mid-1980’s. It created the statistically 

based methodology called Six Sigma to 

improve process performance.

General Electric (GE) started working 

with Six Sigma in January 1996. Six Sigma 

is completely intertwined in the company 

culture. Here are some highlights of Six 

Sigma’s history in GE.

January 1996

• First wave of Six Sigma training initiated 

• Training material came largely 

from Corporate

• Directive to each business was to 

customize the material to fit

April 1998

• Six Sigma training group created

• Training material now “owned” by 

specific people

• Based on feedback received, significant 

improvement in material

February 2001

• Huge variation observed in Six Sigma 

standards across GE

• Conference of all training leaders 

convened at Crotonville

• Decision is made to develop a uniform 

standard for all GE personnel

• Adherence to this standard is to be 

ensured by a corporate test

September 2001

• New standard enacted5

Jack Welch, past Chairman and CEO of 

GE, made the following comments:

... the next CEO of this Company, decades 

down the road, is probably a Six Sigma 

Black Belt or Master Black Belt somewhere 

in GE right now, or on the verge of being 

offered—as all our early-career (three to five 

years) top 20% performers will be—a twoto-three-year Black Belt assignment. The 

generic nature of a Black Belt assignment, in 

addition to its rigorous process discipline and 

relentless customer focus, makes Six Sigma the 

perfect training for growing 21st century GE 

leadership.6

Caterpillar recognized a 2002 increase 

in sales of 12%, and profits rose 38%. At 

the time, Vice Chairman Jim Owens (now 

Chairman) recognized Six Sigma as a major 

contributor to the increase in profits.7

Dupont started their Six Sigma program 

in 1999. By 2001, the company announced 

savings of $600 million in two years.8

Ford Motor Company started using 

Six Sigma in 1997. In 2001, the company 

completed 2,500 Six Sigma projects, at a 

savings of $325 million.9

Six Sigma, in the right corporate culture, 

can significantly reduce expenses and 

improve product quality.

Six Sigma at General Electric 

Transportation

General Electric is made of several 

major businesses, like GE Healthcare, 

GE Commercial Finance, GE Advanced 

Materials, NBC Universal, GE Consumer 

Finance, etc. Each business takes guidance 

from the corporation, just like a Major 

Command in the Army. Just like a Major 

Command, each business operates 

independently of the other Commands. 

Every GE business practices Six Sigma.

The Six Sigma methodology and basic 

tools are standardized across the businesses. 

Just like Army policy, each business starts 

with the methodology and tools. General 

Electric requires Green Belt Training for 

salaried employees. Each business gets 
1 s t Q u a r t e r 2 0 0 5 15

graded on the percentage of salaried 

employees with Green Belt certification. 

General Electric Transportation – Rail 

has a General Manager (the equivalent 

of a General Officer) for Quality. Master 

Black Belts report to the General Manager. 

The Quality General Manager helps other 

General Managers with major Six Sigma 

Projects by providing Black Belts. If a Black 

Belt has problems with a project, the Black 

Belt talks to a Quality Master Black Belt.

Rail introduced a new locomotive this 

year, called the “Evolution.” Rail developed 

this locomotive using Design with Six 

Sigma. The major North American railroads 

are using Evolution locomotives and report 

no major problems in over 4.5 million 

miles of use. The Evolution took less time 

to develop than GE’s previous locomotive, 

the AC4400, released in 1996.10 So far, 

the Evolution is more reliable than the 

introduction of the AC4400.

Implementing Six Sigma in 

the Army

Six Sigma may significantly reduce costs. It 

comes to the Army with certain qualifiers. 

It will drastically change the Army if senior 

leadership accepts Six Sigma’s inherent 

organizational changes. The Army will 

have to decide how successful project team 

members get rewarded, and how to use the 

potential savings.

Studies indicate that 67% of total 

quality initiatives and 80% of reengineering 

efforts have failed to produce their 

promised results.11 How can the Army 

avoid these statistics?

American Express recognized the human 

variable can be the most difficult part of the 

Six Sigma process. The whole organization 

must accept Six Sigma principles. 12American 

Express focused on a systemic approach to 

change – not just how to get it done, but how 

it gets done and the context or environment 

they operate in. Before starting Six Sigma 

projects, the Army should:

• List the major change initiatives 

currently underway in the organization.

• Look at the timing and the population 

affected by the change.

• Ask the business leaders to prioritize the 

Six Sigma initiative relative to the other 

initiatives affecting the same population.

• Have leaders articulate why they believe 

it is critical that Six Sigma be in the 

corporate DNA.

The Army must determine what might 

create resistance among the stakeholders. 

Here’s how American Express looked at 

resistance:

• The impact of change must be predicted 

by asking what has to change for the 

stakeholder to successfully implement 

the project and what are the specific 

issues that will surface as a result of this 

business imperative?

• Create a Vision: Creating a vision is 

not coming up with lofty mission 

statements, but asking why you are 

entering into this change. If you don’t 

have a clear picture in your mind, how 

will you enroll others in your journey? A 

key step is effective communication. Use 

multiple formats of communications.

• Drive Commitment: Develop plans 

to cascade sponsorship downward 

throughout the Army. This is done by 

the senior management’s active communication of its expectations of their 

direct reports in sponsoring Six Sigma.

1. This includes issues dealing with 

surfacing resistance to the changes 

that occur with the implementation 

of Six Sigma.

2. Leaders may resist the reallocation 

of resources that become Black Belts 

or the visibility of defects identified 

in processes they own. Employees 

who are not Black Belts may resent 

the attention and training that the 

Black Belts receive. The first step in 

dealing with resistance is to surface 

it. Two-way communication with the 

Black Belts and Champions is one 

way of surfacing barriers and areas 

of resistance.

3. Attempts to change the environment 

won’t last unless they’re supported 

by formal structures; business 

processes; measurement, appraisal 

and reward systems; selection and 

staffing practices; and the design of 

the organization’s core work.

• Accelerate the Transition: 

1. Broaden the participation in the 

change effort. Offer Green Belt 

training to all employees, enrolling 

them in the change effort.

2. Force Six Sigma into the Army’s 

culture, our corporate DNA. These 

change teams are comprised of Black 

Belts, Green Belts, process owners 

and Champions. The goal of each 

of the teams is to help deepen the 

commitment of the change effort for 

the Army and implement specific 

actions and infrastructure elements 

to reinforce the change effort.

• Sustain Momentum:

1. Celebrate the Successes. This can be 

formal communications around Six 

Sigma success stories or it can be as 

quick as making sure you take time 

for the critical minute speech for key 

Six Sigma participants at every staff 

meeting.

2. Ensure organizational processes 

and reward systems reinforce the 

change. In Six Sigma this is especially 

salient in terms of the retention/

engagement of the Master Belts who 

are the key brain trust in achieving 

the Six Sigma results. A critical DNA 

team can be focused on developing a 

Black Belt engagement strategy, the 

purpose of which is three-fold:

a. Provide a redeployment strategy 

for individuals who develop 

environments that are motivating 

and engage Master Belts to 

work at their optimal level. This 

ensures success in their Six 

Sigma role.

b. Allow Master Belts to return 

to their business after their 18-

month assignment in a manner 

that is fair, equitable and in 

compliance with all HR policies.
16 1 s t Q u a r t e r 2 0 0 5

R E S O U R C E M A N A G E M E N T

c. Provide career enrichment/

retention opportunities for 

individuals who choose to remain 

in the Black Belt role.13

To implement Six Sigma, the Army 

must create a different culture. The culture 

will reward cost and cycle time reductions. 

Eliminating some bureaucracy in the 

long term, means building bureaucracy 

in the short term. A flag officer, or Senior 

Executive Service member, should head 

the implementation effort - not only 

on the Army staff, but also at the Major 

Commands. This person will be the 

Champion for the Master Black Belts 

and Black Belts. The Black Belts, with the 

Champion’s assistance, mentor and reward 

the Green Belts and project participants.

The Army assumes soldiers and 

civilians are motivated by patriotism 

before materialism. Certainly, everyone 

in, or working for, the Army is motivated 

by patriotism. Personal gain and growth 

motivates people too. Corporations reward 

Black Belts by promoting them sooner than 

other co-workers. Project team members get 

money for completing successful projects, 

which saves thousands, if not millions of 

dollars. Black Belts, Green Belts and team 

members should be rewarded with more 

than a plaque and a handshake.

Cost reductions and savings turn into 

corporate profits. Saving several million 

dollars on a project is highly rewarded in 

a corporation or business. If a Command 

saves 10% of its budget through a Six Sigma 

project, what happens to the savings? If 

United States Army Training and Doctrine 

Command (TRADOC) reduces its 

instructors by 10%, how does TRADOC get 

rewarded for that tremendous effort? Will 

Congress and the Department of Defense 

want the entire savings? Will TRADOC 

refuse to tell the Army about the savings, so 

the savings can benefit TRADOC? 

The current Army civilian workforce is 

aging. In the next decade, one half of the 

civilians will be eligible for retirement.14 The 

aging civilian workforce saw Total Quality 

Management (TQM) and re-engineering 

go by the wayside. Both programs realized 

fewer savings than anticipated. The civilian 

workforce saw these program come in, 

promise to change the culture, and go away. 

The challenge for Army leaders is having the 

older Army workforce accept Six Sigma and 

the radical change it promises.

The culture must reward people who 

cut costs and reduce manpower. Everyone 

must feel responsible for reducing cost 

or improving productivity. Improving 

productivity doesn’t just require a civilian to 

learn how to improve Army marksmanship, 

or recruit more soldiers, but must tangibly 

reward people for reducing cost or 

improving productivity.

Numbers must be the guide to keeping 

or removing programs. If the program 

does not generate savings or additional 

productivity, the Army should remove the 

program. Using Six Sigma terminology, 

what are the critical Y’s in driving cost? 

How can these be reduced yet keep the 

productivity?

Successful six sigma implementations 

are driven by committed leaders with ‘edge’ 

... the ability to make tough decisions 

with long-term implications. These 

leaders challenge conventional thinking 

and sometimes recommend unpopular or 

unusual ideas ... to focus the organization 

on change ... like Jack Welch of General 

Electric (GE) and Larry Bossidy of Allied 

Signal [whose] commitment to Six Sigma 

is demonstrated through time, energy, 

resource allocation, and behavior on 

the job.15

Conclusion

Six Sigma is an analytical tool to improve 

process performance and reduce defects. 

The people involved in the process, 

Champions, Master Black Belts, Black 

Belts and Green Belts drive out excess and 

problems in their projects. Six Sigma may 

help the Army improve its processes. With 

committed leaders, integrating Six Sigma 

into the Army’s cultural DNA, providing 

superior rewards for project participants, 

Six Sigma will help the Army.

Footnotes

1. Six-Sigma: the evolution of 100 years of business improvement methodology, Ronald D. 

Snee, In. J. Six Sigma and Competitive Advantage, 

Vol.1, No.1 2004, P.7

2. Ibid,. p.8

3. Ibid.,p.8 

4. Ibid., p. 18

5. Final Thoughts, John F. Welch Jr., Chairman 

and CEO, Six Sigma Forum Magazine, • 

November 2001

6. Ibid.

7. Caterpillar’s Success ., http://www.onesixsigma.com/tools_resources/directories/companies.php

8. DuPont de Nemours & Co., Ibid.

9. Ford Motor Company, Ibid.

10. Facts and History of GE Transportation Rail 

https://www.getransportation.com/general/locomotives/fast_facts.asp

11. “Quality: How to Make it Pay,” Business Week,

Aug. 8, 1994 

12. Driving Performance Results At American 

Express, by Janet Young, Six Sigma Forum 

Magazine, November 2001

13. Ibid. 

14. Congressman Jim Moran, 8th Congressional 

District of Virginia, Rumsfeld Indifferent to 

Concerns About Pay Parity for Department of 

Defense Workers, Feb.12,2004, http://www.

moran.house.gov/issues2.cfm?id=7918

15. Blakeslee, Jerome, How to Achieve Quantum 

Leaps in Quality and Competitiveness, 

baldrigeplus.com, http://www.baldrigeplus.com/

Exhibits/Exhibit%20-%20Six%20Sigma%20by%

20Jerome%20Blakeslee.pdf, p. 5

About the Author:

Mr John Tobakos is an Army civilian 

participating in the Training With Industry 

program at General Electric Transportation 

Systems.
1 s t Q u a r t e r 2 0 0 5 17

The Army 

Travel Card

Time for A Change

T he DoD Travel Card has outlived its 

usefulness and needs to be replaced 

with a less burdensome system. As 

our military radically transforms itself, 

military financial management must do 

the same. The Army Chief of Staff has 

rightly called for business transformation, 

and we must begin taking steps now to 

improve our business operations. DoD 

needs to leverage recent advances in 

banking technology in order to eliminate 

the administrative encumbrances of our 

current travel card. Prepaid spending cards, 

that work like credit cards, may be 

the solution. Switching to a prepaid card 

will reduce management burden and 

increase efficiencies.

The Department of Defense needs to 

quickly move towards a prepaid spending 

card. Because a prepaid card works like 

a credit card without the excessive credit 

limits, it capitalizes on the efficiencies of 

the credit card while virtually eliminating 

delinquency rates. Prepaid travel card 

use is growing rapidly because they are 

easily obtained, easily replaced if lost and 

accepted anywhere credit cards are accepted. 

TowerGroup, the world’s leading financial 

research and consulting firm, forecasts $347 

billion worth of pre-paid spending card 

business by 2007.1

The current DoD travel card is a credit 

card issued through the Bank of America 

to all service members who are considered 

frequent travelers. When the card was 

adopted in 1996, it was the right thing at 

the right time. The travel card capitalized 

on credit automation to alleviate the 

services’ needs to provide cash advances 

for travelers. At the time, it reduced a 

significant overhead structure developed 

to provide advances for travel. It also saved 

many service members time and energy. 

Now, however, the travel card is a constant 

sore spot to the DoD. 

Unfortunately, the travel card 

subsequently created another heavy 

administrative burden--delinquency rate 

management. Travel card administrator 

positions immediately sprang up around 

the Army to handle the challenges of 

managing the delinquent cards and their 

By Lieutenant Colonel Mick Simonelli
18 1 s t Q u a r t e r 2 0 0 5

R E S O U R C E M A N A G E M E N T

payment. Agency Program Coordinators 

and Unit Program Coordinators are now 

present everywhere. The GAO reports, 

“The high delinquency and charge-off rates 

resulted in increased costs...associated with 

the program. Other costs are real but not 

easily measurable, such as the increased 

administrative burden to the Army... For 

example, to effectively manage the travel 

card program, employees with delinquent 

accounts must be identified, counseled, 

disciplined, and closely monitored.”2

Even after a new bureaucracy sprang 

up to manage the cards, the travel card 

problem still ultimately fell on the most 

overworked positions in the services--

commanders. Due to the misuse of travel 

cards, military commanders at all levels 

are forced to waste numerous hours 

tracking delinquent and abused accounts. 

Every command or section from company 

to department-level is burdened with 

travel card misuse tracking. Shouldn’t 

financiers come up with a solution that 

saves the Commanders’ time? As the 

principle advisors to Commanders, should 

comptrollers be happy telling 

them, “Sir, it’s up to you to take corrective 

action.” This answer represents a failure in 

good comptrollership.

Financial managers must find a solution 

for the dilemma without creating a new 

bureaucracy or shouldering Commanders 

with yet another burden. Our current travel 

card is a recurring sore point with both the 

DoD and commanders. GAO and audit 

agencies consistently “ping” the services for 

delinquency rates. While commanders are 

burdened with its management, their young 

troops who are uneducated about credit 

are forced to assume the responsibilities of 

credit lines that they didn’t seek. 

Fortunately, the prepaid spending card 

is a potential solution to this problem. The 

prepaid card has all of the features and 

benefits of a credit card without the credit 

dangers. Some of the useful features of 

prepaid cards are:3

By using prepaid cards, we can eliminate 

the delinquency problems and still maintain 

the convenience of credit. While it would 

require reworking processes required 

for travel, the required changes could be 

managed. Ideally, the prepaid card system 

would be integrated in the Defense 

Travel System so that the estimated travel 

amount is automatically placed on the 

user’s prepaid card. 

The DoD financial world has lots of 

smart people working issues, but we seem 

to be reacting to transformation instead 

of anticipating it. In this technological/

information age, private corporations 

are constantly updating their financial 

processes in order to take advantage of 

the latest technological advances--the 

Department of Defense must do the same. 

Financial managers must quickly use 

current technology with an eye towards 

reducing the friction associated with our 

current processes. The travel card is one 

such area that presents an opportunity 

for improvement through existing 

technologies. By using a prepaid card, 

financial managers can eliminate a sore 

spot for the DoD and our overworked 

Commanders. As General Schoomaker 

put it, “Processes and policies can and will 

change. Systems must adapt to the needs 

of the Soldier, our Nation, and the Joint 

Force.”4

 The DoD is transforming at light 

speed...financial management must do the 

same. 

Footnotes

1. Tower Group Research, “Several Aspects to 

Making Prepaid Cards Successful,” 7 Aug 04, 

http://www.towergroup.com/research/content.

2. GAO Report, “Travel Cards: Control 

Weaknesses Leave Army Vulnerable to Potential 

Fraud and Abuse,” GAO-03-169 October 2002, 

http://www.gao.gov/new.items/d03169.pdf

3. Prepaid card capabilities from conversations 

at USAA with Doug Smock, Ryan Barth, Marty 

Schuh and Rose Urbanczyk during the period 1 

Oct 04 – 20 Dec 04.

 4. “The Way Ahead, Our Army at War: Relevant 

and Ready,” GEN P.J. Schoomaker, 15 Dec 04, 

http://www.army.mil/thewayahead. 

About the Author: 

Lieutenant Colonel Mick Simonelli is one 

of four FA45 officers particpating in the 

Training With Industry program, in his 

case with the United States Automobile 

Association. 

• Overcharging is not possible, so 

delinquency rates are virtually 

eliminated. 

• Cards can be one-time use 

or continuously used (so 

organizations don’t have to 

continue to redefine who needs 

a card).

• Bosses or administrators can 

enable ATM access, set limits, 

and define parameters for each 

card (if that level of control is 

desired or needed).

• Leaders and cardholders are 

able to see what charges have 

occurred and obtain the current 

balance via phone or internet in 

real-time speed.

• Because this is not actual credit, 

use of the card doesn’t impact 

credit ratings or ability to obtain 

loans (not a credit risk to troops)

• Spending limits can be updated 

via phone, internet, or through 

a system (i.e. via Defense Travel 

System). 
1 s t Q u a r t e r 2 0 0 5 19

T he United States Army Special 

Operations Command (USASOC) 

developed and co-hosted with 

United States Special Operations Command 

(USSOCOM), the Joint SOF Contingency 

Comptroller Course (JSCCC) 14-18 March 

2005, at the Special Operations Academic 

Facility, Fort Bragg, North Carolina. The 

course was designed to provide Special 

Operations Forces (SOF) comptrollers with 

the resource management skills required to 

support Joint SOF operations in support of 

the Global War on Terrorism (GWOT). 

The Genesis of JSCCC

A young officer (Finance or FA 45, 

Comptroller) finds himself assigned to a 

Special Forces Group and soon deploys as 

the Combined Joint Special Operations Task 

Force (CJSOTF) J8/Comptroller. This officer 

had the prerequisite training as a qualified 

Finance Officer or Comptroller; however, 

the training he received did not prepare 

him for the reality he experienced. As the 

fund-certifying officer for the CJSOTF, he 

supervised 200 pay agents (PA) and Field 

Ordering Officers (FOOs) with millions of 

dollars in different appropriations to support 

combat operations in Iraqi, Afghanistan, and 

elsewhere in support of GWOT. His office 

processed hundreds of Purchase Requests 

and Commitment (PR&C) documents 

with appropriation fund cites that included 

Commanders Emergency Response Program 

(CERP), Emergency Extraordinary Expense 

(EEE), Overseas Humanitarian Disaster & 

Civic Aid (OHDACA), DeMinimus, Class I 

and Operational Funds (OPFUND). Each 

appropriation had its own unique rules 

and strict limitations of how to use the 

funds. Most of the learning curve was onthe-job-training (OJT). The operators he 

supported were unconcerned about fund 

cites or appropriations; they were focused on 

hunting down insurgents and demanded the 

resources to be successful. This is the current 

environment of DoD comptrollers’ deployed 

around the globe.

Other J8/Comptroller officers are now 

preparing to follow in his footsteps. In 

today’s operational tempo (OPTEMPO), it 

is not uncommon to see new comptrollers 

deployed with extraordinary resource 

management responsibilities. This 

asymmetric situation will not change. They 

will continue to face complex resource 

management challenges. Colonel Phillip 

E. McGhee, the Deputy Chief of Staff, 

Comptroller (DCS, CMP) of the USASOC 

recognized this shortfall in training. In late 

FY 04, he challenged his staff to develop a 

formal training program to equip deploying 

comptrollers. Thus, the concept for JSCCC 

was born.

Program of Instruction.

Over a period of several months, members 

of the USASOC, Deputy Chief of Staff 

(DCS), Comptroller staff and USSOCOM, 

J8 collectively compiled topics for the course. 

The JSCCC was designed as a five-day 

course, starting at a strategic level and progressing down to tactical comptroller tasks. 

DAY 1: Command Relationships.

Topics: World-Wide Conventional & SOF 

Command & Control (C2) Update, CFLCC 

& ARCENT Theater Brief, Department 

of State Operational Brief, CENTCOM J8 

(RM Overview), Small Rewards Program, 

CENTCOM Theater FINCOM Overview.

DAY 2: Resource Management 

Contingency Appropriations.

Topics: Commander’s Emergency Response 

Program (CERP), Humanitarian Relief 

& Reconstruction Funds, OHDACA, 

DeMinimus, Emergency Extraordinary 

Expense (EEE) Authority: Confidential 

Military Purpose Fund (CMPF), Intelligence 

Contingency Funds (ICF), Official 

Representation Funds (ORF), Title XXII 

Funds, Special Clothing (Operation Civilian 

Clothing), Class I - Subsistence Allotment, 

Joint Special Operations Forces 

Contingency Comptroller Course 

By MAJ Chuck Munguia

CJTF-HOA, Comptroller, instructs at the JSCCC 
20 1 s t Q u a r t e r 2 0 0 5

R E S O U R C E M A N A G E M E N T

CFLCC C8 (RM Overview/JARB/CARBs/

CFLCC Spend Plans), MWR, Leaves & 

Passes Funds, SOCCENT Operations & 

RM Overview, SOCOM Forward Deployed 

Comptroller Team

DAY 3: Resource Management Tactics, 

Techniques and Procedures (TTPs). 

Topics: Contracting GWOT Requirements 

in Theater, SOF Unique Contracting 

Requirements,Paying Agent and Ordering 

Officer SOP, Blanket Purchase Agreements 

(BPAs), Horn of Africa (HOA) Operations, 

CJSOTF- A (Afghanistan), CJSOTF 

- AP (Arabian Peninsula), Iraqi Special 

Operations Forces (ISOF ), 

DFAS - Indianapolis 

DAY 4: GWOT

Topics: GWOT/CONOPS Reporting, 

Reconstitution/Reset, Property 

Accountability of GWOT Equipment, 

Acquisition and Cross-Servicing 

Agreement (ACSA), LOGCAP, BASOPS 

Support in Theater, GWOT Supplemental 

Appropriation Act, Mobilization/

Demobilization of Reservists Pay 

Process/Issues

DAY 5: Practical Exercise 

(JSCCC Summary)

Instructors.

Instructors for the JSCCC were selected 

for their subject matter expertise in their 

particular area of concentration. They 

came from a variety of agencies, including 

the State Department. It was the expertise 

of the course instructors in the fields 

of operations, appropriations, resource 

management, contracting and logistics that 

truly made the JSCCC a world-class course. 

Guest Speaker.

Lieutenant General (R) James F. McCall, 

the Executive Director of ASMC, shared his 

expertise of DoD Resource Management 

with the students of the JSCCC. His 

message to the class was very simple but 

straightforward. To paraphrase LTG (R) 

McCall, he stated that during previous wars, 

commanders would ask him for a Resource 

Manager who carried a book of regulations 

in one hand, a bag of gold in the other, a 

bayonet between his teeth, and could speak 

several languages. The value of courses, such 

as the JSCCC, is to bridge the gap between 

inexperienced Comptrollers and the high 

expectations Commanders demand. 

Students.

The target audience for the JSCCC was 

incoming comptrollers scheduled for 

deployment within six months. Many of 

the student population came from the 

resourcing headquarters that support our 

deployed soldiers. A total of 65 students 

representing over 10 organizations attended 

the course. The diverse student base 

brought a wide range of experience to the 

course. Some recently deployed in support 

of Operation Iraqi Freedom or Operation 

Enduring Freedom as comptrollers and 

shared their unique experiences with fellow 

resource managers. 

Course Evaluation. 

The class days were long and the students 

were challenged. At the end of each day 

a test was administered to gauge the 

students comprehension of the subject 

matter. The feedback for the JSCCC from 

the student Evaluation/Critique sheets 

and verbal comments were extremely 

positive. Comments stated the course was 

very beneficial and well worth the time. 

Several students stated the course should 

be conducted annually or semi-annually 

and should be longer. The most positive 

comments pertained to the diversity 

of instructors and their experience; the 

dialogue with other students and sharing 

of experiences with the class; the practical 

exercise; the summarizations of many 

different appropriations/colors of money; 

and the real world up-to-date information 

that was presented. As one student stated, 

“ All the briefings were very informative. 

It provided a greater perspective on what 

issues the folks have to deal with and how 

they handled the issues.” The intent is to 

have the JSCCC conducted once a year and 

the host of the course rotated among the 

USSOCOM service components.

Relevance of JSCCC

Today’s operational environment will 

continue to remain at a high pace and 

challenge all members of DoD. Resource 

Management/Appropriation is a combat 

multiplier in the War on Terrorism. Dollars 

spent in support of operational units, 

in the form of OPFUND, CERP, EEE 

equals operational success. The President 

has indicated this nation will continue 

to provide support to the Global War 

on Terrorism for some time to come. 

The challenges imposed on Resource 

Management to support GWOT will not 

diminish. Courses, such as the JSCCC, 

that proved real world experiences and 

requirements must continue to be taught 

throughout our resource management 

community in order for us to provide 

professional and qualified comptrollers.

About the Author:

Major Chuck Munguia was the course 

manager for the JSCCC. He is a Command 

Analyst for the USASOC and previously 

served as the CJSOTF-A, J8/Comptroller. 

Photograph provided by USASOC Public 

Affairs Office.
1 s t Q u a r t e r 2 0 0 5 21

A Transformation 

Success

By Colonel Mike Outten

People normally associate the 

Department of Defense (DoD) 

Professional Military Comptroller 

School (PMCS) to the capstone course 

educating mid-grade military and civilian 

DoD employees on financial management. 

Dramatic changes occurred with my arrival 

as Director in June 2004. Armed with input 

from DoD representatives, staff observations, and the Air Force skills gap analysis it 

became apparent significant changes were in 

order. In July 2004, Mr. Michael Montelongo, 

Assistant Secretary of the Air Force, Financial 

Management and Comptroller and the executive agent for the course, agreed to forego 

the last class of the fiscal year to provide time 

for curriculum and course transformation. 

This article explains why changes were made, 

the transformation process, and the future 

course construct. 

Why Change? 

Input and observations from people 

involved in managing and executing PMCS 

yielded some valid concerns. First, the 

curriculum required updating because many 

lesson plans were obsolete. The curriculum 

was limited in exposing students to 

leadership concepts (leading teams, leading 

change, conflict management, developing 

a leadership approach), developing career 

skill sets (critical thinking and strategic 

orientation) and providing information on 

the expeditionary environment. Second, the 

course depended heavily on guest speakers. 

The guest speakers provided great financial 

management insights but also taught much 

of the course. Frequent cancellations and 

schedule changes caused the instruction 

areas to lack focus. This significantly 

impacted the learning environment and 

the student takeaways. Next, the faculty 

instructors were more involved in protocol 

activities supporting the guest speakers than 

actual teaching. Further, the course was too 

Air Force centric; more DoD balance was 

required to maintain joint objectives and 

manage the course. Finally, the six week 

course effectively barred many students from 

attending because of commitments to global 

operations. DoD representatives and the 

faculty suggested the course could be reduced 

by eliminating redundancy and placing less 

emphasis on non-core activities. The time 

was ripe for change to make the course more 

current and relevant.

The Transformation

The transformation was an intense, rigorous 

process which included revising the course 

vision, mission, and goals; optimizing 

technology for course delivery and 

management; revising curriculum content, 

establishing a DoD advisory committee, and 

bringing more balance into the course. The 

executive agent provided direction, group 

discussions were conducted with DoD 

representatives, and an outline was established 

with definitive end-state objectives. As a 

result, the faculty revised the curriculum, 

embedded technology improvements in 

the course, and conducted a pilot course. 

Proposed changes were presented to an 

inaugural DoD advisory committee and the 

members formalized a process to manage 

the course in early December 2004. The hard 

work paid dividends with a course designed 

to develop student career skill sets in a future 

leader decision support role. 

The Revised Course Construct

An inaugural DoD advisory committee 

convened in early December with 

representatives from the Army, Navy, 

DFAS, and the Air Force. These individuals 

discussed many issues and provided 

recommendations for approval to the 

executive agent. Approval was received 

from the executive agent in February 2005, 

cementing the future course direction and 

curriculum focus.

The Defense Financial 

Management Course
22 1 s t Q u a r t e r 2 0 0 5

R E S O U R C E M A N A G E M E N T

It was important to establish the course 

focus and the student takeaways. The 

committee members agreed the focus should 

move toward developing student career skill 

sets with less emphasis placed on exposure 

to broad FM concepts. The committee also 

agreed course delivery should be more 

interactive and experiential and less time 

spent on the traditional lecture approach. 

Students sharing experiences and applying 

leadership concepts in the classroom were 

deemed important. Based on the above, 

the vision evolved into preparing graduates 

to advise senior leaders in future strategic 

decision support roles. The vision became 

the bulwark in developing the following 

four overarching goals:

• Broaden awareness of the diverse 

financial management framework 

within DoD

• Understand the impact of the strategic 

environment on the DoD mission

• Enhance leadership and interpersonal skills

• Comprehend contingency operations 

concepts and their impact on financial 

management

The advisory committee also allocated 

time to shape student quotas, course rigor, 

and student selection criteria. The members 

agreed balance was important; therefore 

guideline student quotas were assigned to 

each service and DFAS. In addition, course 

rigor was increased with outside readings 

and more emphasis placed on testing. 

The committee also changed the selection 

criteria so the right types of students were 

chosen that would benefit most from the 

course. The new selection criteria became: 

• 4-year degree or 5 years FM experience

• Written endorsement of at least the 2nd 

level supervisor

• Successful completion of at least 2 FM 

related courses

• Evaluation of self-development activities 

within the last 5 years

• Evaluation of job performance/

recognition within the last 5 years

• Target grades: GS 11 and above; O-4 

and above; E-8s

In addition, the committee recommended the course name be changed to 

further emphasize the sweeping changes, 

make a clean break from the previous 

course, and provide a fresh start for the 

future. The executive agent approved the 

new name, Defense Financial Management 

Course, as one course taught at the 

Professional Military Comptroller School.

What If

The current transformation is needed 

and makes the course current, relevant and 

academically credible. But more can be 

done. The school can offer more to DoD 

senior Comptroller leaders. 

What if...the school had a small 

research staff to investigate and offer 

recommendations to solve issues facing 

DoD Comptrollers. The staff could 

become a center of critical thinking similar 

to the Air Force Doctrine Center and 

CADRE (located at Air University) for the 

functional community. The faculty could 

publish informative articles, tackle critical 

transformation issues, career field issues, 

and offer solutions or ideas to improve 

processes. The staff could become a think 

tank for senior leaders and would add 

academic credibility to the school.

What if...the school offered an executive 

level course for senior DoD officials, 

military and civilian. The old PMCS has 

often been cited as a premier capstone 

course for Comptrollers. In reality, it is a 

premier course but not a capstone course. 

There is a need to educate senior leaders on 

the critical issues facing DoD Comptrollers. 

The course can provide insight on those 

issues, the gameplan and goals of senior 

DoD officials, tie Comptrollers roles to 

mission, provide attendees a strategic 

direction, allow a forum for new ideas and 

foster a culture of critical thinking. The 

attendees would include General Officers 

and SESs, GS-15s and Colonels, and Chief 

Master Sergeants. It is an opportunity for 

career field senior leaders to articulate their 

visions for the attendees to achieve. 

What if...the school name was 

changed from DoD Professional Military 

Comptroller School (PMCS) to Defense 

Comptroller School (DCS). If we are 

going to transform completely then the 

name should also be reviewed. First, the 

name change offers a clean break from the 

past and a fresh perspective to the future. 

Second, the terms professional and military 

are redundant. One can assume individuals 

attending the school are already professional 

so why highlight that fact. Are we saying 

that some people are not professional by 

using the term in the title? Next, DoD 

is comprised of military and civilian 

personnel. Why highlight the military? 

Most students attending the current course 

are civilian (70%). It is time to update 

the name to better reflect the personnel 

demographics, make a clean break from 

the past, and focus on the opportunities 

that lay ahead. 

We are excited to unveil the revised 

financial management course to DoD 

employees. The course is current and 

relevant to the changing global environment 

we now live in. Faculty members deliver a 

quality joint operational-level education 

experience to those attending the course. 

We emphasize sharpening leadership and 

communication skills, exposing students 

to strategic thinking, involving them in 

interactive case studies to learn about the 

budget process, and attaining a better 

understanding of contingency operations 

around the world. We also provide students 

an opportunity to set personal goals and 

use the course as a tool to assist in achieving 

them. We believe this transformation was 

a huge success and a big thanks goes out 

to the committed individuals who made it 

happen. We look forward to developing the 

career skill sets of future decision support 

financial management leaders! We also look 

to future changes that would enhance the 

value of the school to DoD senior leaders.

About the Author: 

Colonel Mike Outten is the Director, 

Professional Military Comptroller School at 

Maxwell AFB, Alabama.
1 s t Q u a r t e r 2 0 0 5 23

Although no general prohibition 

exists with respect to Soldiers and 

civilian employees writing letters 

of recommendation for their friends and 

colleagues, the ethics rules do apply on two 

related issues—May a Soldier or civilian 

employee sign a letter of recommendation 

using his or her official title—May a 

Soldier or civilian employee write a letter of 

recommendation on official stationery of 

the Army? I shall address each of these two 

issues in this article.

You should be aware that 5 CFR (Code 

of Federal Regulations) 2635.702(b), and 

the example that follows it, reads as follows. 

[Nota Bene: You should also be aware that 

this provision, including the example, 

applies to all Army employees.]

(b) Appearance of governmental 

sanction. Except as otherwise provided 

in this part, an employee shall not use or 

permit the use of his Government position 

or title or any authority associated with 

his public office in a manner that could 

reasonably be construed to imply that his 

agency or the Government sanctions or 

endorses his personal activities or those 

of another. When teaching, speaking, or 

writing in a personal capacity, he may 

refer to his official title or position only 

as permitted by Sec. 2635.807(b). He may 

sign a letter of recommendation using his 

official title only in response to a request 

for an employment recommendation or 

character reference based upon personal 

knowledge of the ability or character of an 

individual with whom he has dealt in the 

course of Federal employment or whom he 

is recommending for Federal employment.

Example 1: An employee of the 

Department of the Army who is asked to 

provide a letter of recommendation for 

a former subordinate on his staff may 

provide the recommendation using official 

stationery and may sign the letter using 

his official title. If, however, the request 

Writing Letters of

Recommendation

 By Matt Reres
24 1 s t Q u a r t e r 2 0 0 5

R E S O U R C E M A N A G E M E N T

is for the recommendation of a personal 

friend with whom he has dealt outside 

the Government only, the employee is 

prohibited from using official stationery or 

signing the letter of recommendation with 

his official title, unless the recommendation 

is for Federal employment. In writing the 

letter of recommendation for his personal 

friend, it may be appropriate for the 

employee to refer to his official position in 

the body of the letter.

On July 15, 1999, the Department of 

Defense Standards of Conduct Office 

(DoD SOCO) issued a 45-page document 

entitled “Ethics Issues in GovernmentContractor Teambuilding.” The document is 

on the DoD SOCO website. The following 

guidance is on pages 29 & 30 of the 

document. Some of the information that 

follows has been modified to address Army 

personnel only.

Appearance of Government 

Sanction (Letters of 

Recommendation)

As the author of a character reference 

or recommendation letter, one means 

of adding credence to the statements 

and opinions that are expressed in the 

letter is to include credentials, including 

an official Army position and title. 

Possibly, the beneficiary of a reference or 

recommendation will request the letter 

because of an Army employee’s official 

position and will expect that the Army 

employee will identify his Army position 

and use official letterhead. An Army 

employee may use Army letterhead and 

sign letters of recommendation with his 

official title if he has personal knowledge 

of the individual’s ability or character and 

either: (1) his knowledge is derived from 

dealing with that individual through his 

Federal employment and the letter will be 

used for an employment recommendation; 

or (2) his recommendation will be used 

as part of an application for a Federal 

position. (Note: If the letter pertains 

to a contractor employee on an Army 

contract, the Army employee must first 

coordinate with his ethics counselor and 

the appropriate contracting officer.) It is 

insufficient to base the recommendation 

upon information or personal knowledge 

derived from a third party.

We must remember that while Army 

employees may write letters of recommendation supporting an employment application, they are unauthorized to use their 

official title and position or Army letterhead to endorse either their own personal 

activities, services, or products, or those 

of another. Furthermore, Army employees 

are forbidden to state or to imply that the 

Army or the Federal Government endorses 

or sanctions their personal activities or 

those of another. 

General Rule

Army employees are never authorized to 

use their Army title or position to imply 

Government approval or authority for 

their own or another’s activities outside 

the scope of their official duties. They 

may write a letter of recommendation to 

support an employment application on 

Army letterhead and sign it using their 

official title when: (i) the reference is based 

upon their personal knowledge of the 

ability or character of the individual and 

this knowledge was derived in the course of 

their Federal employment; or (ii) they are 

recommending the individual for Federal 

employment. Modified from 5 C.F.R. 

2635.702(b)

Example 1

A contractor employee with whom a Army 

employee has worked on a project in the 

past requests a letter of recommendation 

in support of a job application with a 

different private sector company. The 

Army employee may write a letter on 

agency letterhead and sign it using his title 

and position. This recommendation, in 

support of an employment application, is 

based on his/her personal knowledge of 

the individual that he gained in the course 

of his Federal employment. He should 

check with the contracting officer before 

sending the reference letter to ensure the 

letter will create no adverse affect on the 

Government’s business relationship with the 

contractor.

Example 2

A member of a team that is led by an Army 

employee asks that the Army employee 

write a recommendation letter for her 

best friend, who is seeking a position with 

the contractor on the project. The Army 

employee has never personally met the 

friend but her subordinate has talked about 

her for so long that the Army employee feels 

as if she knows her. The Army employee 

cannot write the recommendation letter 

on agency letterhead or use her official 

title or position because she lacks personal 

knowledge of the best friend’s character 

or ability. Her knowledge is based on 

information she received from her 

subordinate employee. 

In summary, each of us serving in the 

Army may write letters of recommendations 

for our friends and colleagues. What we 

must avoid is giving the appearance that 

we are officially endorsing an individual 

by using our official Army position in our 

signature block or by using official Army 

stationery when the use of our official Army 

position or the use of Army stationery is 

unauthorized. We should frequently remind 

ourselves of the 8th Principle of Ethical 

Conduct that applies to each us who serves 

the United States in the Executive Branch: 

“Employees shall act impartially and not 

give preferential treatment to any private 

organization or individual.”

About the Author:

Matt Reres is the Deputy General Counsel 

(Ethics & Fiscal) in the Army’s Office of the 

General Counsel.

“Employees shall act 

impartially and not give 

preferential treatment to 

any private organization 

or individual.”
1 s t Q u a r t e r 2 0 0 5 25

Army Business Initiative Council I

t’s been a little while since we published 

an article in the Resource Management 

Journal, so we wanted to bring you up 

to date on a few of the exciting things going 

on in the Army Business Initiative Council 

(ABIC). We’re still working to rapidly 

achieve efficiencies, improve management 

operations, and reduce costs to make funds 

available for high priority Army missions. 

The ABIC accomplishes this by helping 

implement reforms that save time, leverage 

assets, and generate quantifiable monetary 

benefits (QMB). We are as energized as ever 

as we begin to implement our 10th round 

of SECARMY approved initiatives, and are 

greatly looking forward to seeing what new 

initiatives will be submitted in the upcoming year. 

On 4 March 2005, The Honorable Francis 

J. Harvey, Secretary of the Army, chaired his 

first ABIC decision meeting, and approved 

the latest round of initiatives submitted by 

HQDA and the MACOMs for our 10th Cycle 

of implementing business improvements for 

the Army. In the decision memo addressed 

to MACOM commanders and HQDA staff 

principals, Secretary Harvey stated: 

“The ABIC has proven to be an effective 

tool to help transform the Army’s business 

processes and to ingrain transformation in 

everything we do...I encourage each of you to 

submit initiatives that will improve our business processes and make resources available to 

higher-priority missions.” 

To facilitate the Business Initiative process, the ABIC has six Process Functional 

Boards that are key to the development 

and implementation of ABIC initiatives. 

Adjustments were made to the boards to better align with organizational responsibilities 

at Army Headquarters. The ABIC Process 

Functional Boards are now Acquisition 

and Logistics, Installations, Manpower and 

Personnel, Test and Evaluation, Information 

Technology, and Resource Management. 

Additionally, several of the Process 

Functional Boards have new Chairs. 

The Acquisition and Logistics Process 

Functional Board will now be directed by 

the Acting DASA for Plans, Programs, and 

Resources from ASA(ALT). The ACSIM 

Director for Facilities and Housing will 

chair the Installations Process Functional 

The Army BIC is 

Turning 10! (well, sort of)
26 1 s t Q u a r t e r 2 0 0 5

R E S O U R C E M A N A G E M E N T

Board for ACSIM. The Manpower and 

Personnel Process Functional Board 

will be chaired by the Director of Plans 

and Resources in G-1, and the Test and 

Evaluation Process Functional Board is now 

under the guidance of the Deputy Director, 

TEMA for Resources. 

In the past year, to respond to customer 

and stakeholder suggestions, we have made 

significant improvements to the ABIC 

submission website (www.biccollaboration.

com). It is now easier to submit initiatives, 

and easier for MACOM and HQDA points 

of contact to enter and review comments 

during the staffing of initiatives. We are in 

the process of a website rework that will 

allow all users to check the status of any 

initiative at any time, with immediate access 

to appropriate points of contact. We also 

have added substantial information about 

the ABIC on the ASA(FM&C) website at 

http://www.asafm.army.mil/bic.asp. 

Army BIC initiatives continue to 

support Army transformation and 

improve business practices. Sometimes 

successful implementation requires efforts 

that go beyond the Army community. 

In those instances the Army BIC teams 

with organizations from the Office of the 

Secretary of Defense, other services, State 

Department, private industry, or wherever 

needed. Here are just a few examples of 

recent Army BIC success stories. 

An Enterprise Solution for Reverse 

Auctioning

This initiative has enabled the Army 

to obtain a perpetual license for reverse 

auctioning software that will enable us 

to provide this capability to all DoD 

customers. The first auction conducted 

was for notebook computers; the auction 

resulted in a price reduction of 53% 

from the prices on the Army and GSA 

Information Technology (IT) contracts. 

Through September 2004, the initiative 

has delivered monetary benefits of nearly 

$14.5M to Army, Air Force, and Marine 

Corps customers. Total projected QMB: 

$52.6 million! 

Army Knowledge Online (AKO) 

Interface with Defense Enrollment 

Eligibility Reporting System (DEERS)

This initiative will provide AKO 

users the ability to authenticate their 

family members as well as provide basic 

information related to entitlements and 

benefits to Army personnel and their 

families through the DEERS database. A 

Memorandum of Understanding recently 

was signed to finalize the initial phase of 

the AKO interface with DEERS. Soldiers 

may now access DEERS dependent status 

and related information directly from AKO 

without any additional sign-on procedures. 

The next phase of the initiative includes 

plans to allow a spouse access to DEERS 

eligibility information for family members. 

Designated Source for Commercial 

Information Technology

The Army Small Computer Program 

(ASCP) has established fully competed contracts for IT volume buying and discounted 

prices. This initiative was submitted in Cycle 

4 and at that time, the use of ASCP was 

optional. This initiative sought to increase 

ASCP use, with the goal of making purchasing more efficient, resulting in Army-side 

cost avoidances when purchasing computer 

hardware. 

On 11 March 2005, the CIO/G-6 

endorsed the Army Small Computer 

Program (ASCP) strategy for consolidating 

Army purchases of desktop and notebook 

computers. ASCP, in coordination with 

NETCOM and the Information Technology 

and Electronic Commerce Commercial 

Contracting Center (ITEC4), is developing negotiated bulk purchase pricing 

through its Army Desktop and Mobile 

Computing (ADMC) Blanket Purchase 

Agreements. ADMC vendors provide all the 

major original equipment manufacturer 

desktop and notebook computers. The 

first semi-annual bulk purchase period is 

scheduled for fourth quarter FY05. A CIO/

G-6 policy mandating the consolidation 

of all conforming desktop and notebook 

requirements through ASCP is in process. 

Implementing instructions will be posted 

to the ASCP “IT e-mart” website at https://

ascp.monmouth.army.mil/. 

Total projected QMB: over $1.2B! 

Develop a Prototype that Aligns Faces 

to Spaces 

Currently, there is no single Army-wide 

system to integrate and edit all necessary 

information from authorized manpower, 

personnel, and budget sources that can 

subsequently produce a report that aligns 

faces to spaces. This initiative proposes 

developing a prototype that links existing 

databases and edits inventory to align 

personnel against authorized manpower 

end-strength and work-year authorizations 

as adjusted by Major Commands or 

installations. The pilot program is ongoing, 

and a prototype should be ready for Armywide implementation this fall. 

Document Contracted Manpower

This initiative establishes a contractor 

manpower reporting system that will collect 

critical information on Army contracts. 

The collection and analysis of this data will 

provide improved visibility over contract 

resources in the programming/budget 

process, improve the audit trail and 

validation of manpower requirements, and 

ensure that manpower and force allocation 

decisions are more credible and auditable. 

The SECARMY recently signed a memo 

directing implementation of this reporting 

requirement for all new contracts issued 

on/after 7 March 2005 (including bilateral 

modifications of existing contracts). 

An organization’s compliance with this 

requirement will be a factor considered in 

assessing that organization’s justification 

of its current resources, or requests for 

additional resources in departmental 

decisions. By 15 November 15 2005, a 

manpower baseline report will be generated 

for use in documentation. 

Forms Content Management 

Program (FCMP)

This initiative establishes an Army 

enterprise IT infrastructure that will 

automate all current manual, form-based 

processes to create a framework for a 

paperless office. Currently, the Army has 

over 100,000 forms, 95% of which are 

for local use and are duplicative of what 

could be a standardized process. FCMP 
1 s t Q u a r t e r 2 0 0 5 27

will streamline a significant amount of 

military paperwork – that means less 

time spent filling out things like supply 

requests, personnel evaluations, award 

recommendations, and more! The initial 

web-based application is scheduled for 

Army-wide deployment by September 2005. 

On a side note, Accenture and MIT recently 

selected the Army’s FCMP program as the 

2005 winner of their Digital Government 

Pilot/Prototype Innovator Award. The 

Accenture and MIT Digital Government 

Awards are presented by Accenture (a major 

U.S. business management and consulting 

company) and MIT to showcase high 

performers in government innovation. Total 

projected QMB: $821 million! 

Implement Battle Command 

Knowledge System (BCKS)

This initiative seeks to establish a 

networked system of Structured Professional 

Forums (SPFs) providing agile dominant 

learning, teaching and battle command 

capabilities to produce high performing and 

adaptive Commander/Leader Teams (CLTs). 

BCKS is currently in Block 1 development 

to field a network of SPFs supporting 

the areas of lessons learned, doctrine 

development, training support, leader 

development, advanced distributed learning, 

advanced concept demonstration and 

experimentation, knowledge representation, 

and battle command. 

Military Training Service Support

When soldiers attend Army schools in 

temporary duty status, they require support 

for such services as dining, lodging, and 

local transportation. For several years, the 

Army had a significant dollar shortfall in 

covering these costs. In the past, HQDA 

provided the funding to the MACOMs that 

sent soldiers to school, while the actual 

costs were incurred by the installations 

where the training was conducted. The 

sending MACOMs did not know if there 

was sufficient capacity for the soldier to 

stay in on-post lodging or eat in the dining 

facility. Under this initiative, a policy 

decision was made to send the funds directly 

to the installation where the costs were 

incurred. With the training installation now 

responsible for both providing support and 

funding it, an incentive was created for the 

responsible organization to manage lodging 

and dining inventory to reduce costs. The 

initiative is being implemented at all training 

installations, with implementation scheduled 

for completion by the end of FY05. The 

results to date have been excellent. The 

initiative is projected to generate a cost 

avoidance of more than $230M through 

FY11, and has resulted in improved support 

to soldiers at the training locations. 

Sharing of Practices Between Military 

and Civilian Education Programs

This initiative proposes reviewing 

practices, procedures, and policies within 

the DA civilian and military education 

programs, with the objective of sharing best 

practices between the two programs. It is 

expected that this will result in enhanced 

benefits for students and cost savings for the 

Army. In addition, the initiative encourages 

civilian and military personnel to research 

and apply for scholarships and grants while 

attending Army-funded civilian schooling 

decreasing costs paid by the government. 

Streamline Army Best Practices

This initiative seeks to establish a 

formal process for capturing, sharing, 

and enabling the adoption of Army Best 

Practices at an enterprise level by creating 

a vetting process on AKO. The traditional 

process of satisfying MACOM requests 

for information on Army Best Practices 

is carried out in an ad hoc manner (via 

phonecon, email, and memo). This 

initiative seeks to reduce the time it takes to 

communicate this information by aligning 

the task with technology. By using a new 

computerized information-sharing system, 

MACOMs will be able to access a website 

that provides easier access to information 

on best practices. The objective is to 

build a more stable operating structure, 

maintain consistency of information, and 

provide MACOMs quicker access to new 

institutional business practices that support 

Army Transformation. 

DoD Passport Application Process

Under this initiative, the DoD Passport 

Office worked with the State Department to 

adopt emerging business practices to significantly streamline the process for acquiring 

an official passport. Four sites (MacDill AFB; 

Fort Bragg; the Navy Yard in Washington, 

D.C.; and the Pentagon) are currently testing 

the application. The pilot program is meeting set objectives and program requirements. 

As this issue of Resource Management goes 

to press in May 2005, the program is nearing 

a major decision point. If the pilot program 

continues to be successful, the new procedures will soon be applied throughout DoD. 

Explore the Benefits of Technologically 

Connected Homes

This initiative enables the Army to 

partner with academia and private industry 

to take advantage of all the products and 

services emerging from the information 

revolution for use in privatized military 

housing. Services such as telemedicine, 

security, distance learning, the Internet and 

many others would be incorporated into 

a three-year pilot project in 450 privatized 

military homes. 

A complete list of approved Army 

initiatives and information regarding 

the Army BIC process can be found at 

http://www.asafm.army.mil/bic.asp Visit 

the website to learn how you can help 

transform the Army by contributing an 

initiative to the ABIC. 

About the Author:

Article was co-written by Ms. Monica Malia 

and Mr. Jon Wise. Ms. Malia managed the 

Army Business Initiative Council Program in 

the Resource Analysis & Business Practices 

Division (ASA-FM&C) from Jan 2004-April 

2005. Mr. Jon Wise was her primary deputy.
R E S O U R C E M A N A G E M E N T

The Canadian Defence Peacekeeping 

Cost Estimate Process

By Lieutenant Colonel Ross Fetterly

Canadian Forces (CF) personnel have 

actively participated in peacekeeping 

activities, instituted by the United 

Nations during the Suez Crisis in 1956 

through the establishment of the United 

Nations Emergency Force (UNEF). Since 

that date, peacekeeping has continued to 

be an activity that employs a significant 

number of CF personnel on an annual basis. 

The cost to fund peacekeeping operations, 

particularly since fiscal year 1991-92, has 

been significant and is monitored closely 

by Assistant Deputy Minister (Finance 

and Corporate Services) staff at National 

Defence Headquarters.

The decision to deploy troops outside 

the country in a peacekeeping, or peacemaking operation is made by the Federal 

Cabinet. Support to international peace 

and security has been an enduring 

cornerstone of Canadian foreign policy for 

the past half-century. Canadian interests 

are embedded in collective western defence, 

and this is not likely to change in the near 

future. Consequently, analysts forecast that 

Canadian Forces personnel will continue to 

contribute a high percentage of personnel to 

peacekeeping or peace-making operations 

well into the next decade.1

 The military 

advice provided by the Chief of Defence 

Staff to government includes a cost estimate 

of the operation. This cost estimate then 

forms the basis for incremental federal 

funding to the Department of National 

Defence (DND) for that particular 

operation.

This article will describe the 

peacekeeping cost estimate process 

within DND. This article will begin with 

a description of the senior positions at 

National Defence Headquarters in Ottawa 

that are involved in the peacekeeping 

cost estimate process. An overview of 

the peacekeeping cost estimate template 

follows, with a subsequent discussion of 

the mission factors that can affect this 

template. A summary of the difference in 

cost between the United Nations (UN), the 

North Atlantic Treaty Organisation (NATO) 

and coalition peacekeeping missions is 

then provided to illustrate cost differences 

between different types of missions. The 

paper concludes by highlighting the use 

of the information developed through the 

peacekeeping cost estimate process, and 

its implications for the management of 

28 1 s t Q u a r t e r 2 0 0 5
1 s t Q u a r t e r 2 0 0 5 29

defence in Canada. In this article, the term 

peacekeeping encompasses traditional 

peacekeeping, peace making, and peace 

support operations.

The Canadian cost estimate process 

starts when the Joint Staff at National 

Defence Headquarters begin looking 

at options for a potential peacekeeping 

mission or other deployed operations. At 

National Defence Headquarters, a Joint 

Staff organised along functional lines is 

responsible to the Chief of the Defence 

Staff.2

 This Joint Staff includes Branches 

responsible for administration, intelligence, 

operations, logistics, strategic plans, 

communications, operational plans, and 

finance. The J3 Operations staff, within the 

Deputy Chief of Defence Staff organisation, 

co-ordinate with the J8 Financial 

Coordination Centre. The J8 Financial 

Coordination Centre is a component of J8 

Financial Operations, which is one element 

of the Assistant Deputy Minister (Finance 

and Corporate Services) organisation. 

With the information obtained from 

the J3 Operations staff, the J8 Financial 

Coordination Centre develops a preliminary 

cost estimate for each option under 

consideration by the Chief of Defence 

Staff. At this point, the cost estimate only 

provides a rough order of magnitude of 

expected costs. This is refined, as more 

detailed information on each of the options 

become available to planning staff.

Cost Estimate Development

The Directorate of Strategic Finance and 

Costing within Assistant Deputy Minister 

(Finance and Corporate Services) is 

mandated to provide strategic assessment of 

the cost ramifications of all Departmental 

initiatives, to ensure, that the costs 

presented are reasonable, and to develop 

standard costing methodology. Among 

tools Directorate of Strategic Finance 

and Costing staff provide to the financial 

community is the annual publication of the 

Cost Factors Manual – designed to provide 

a common basis for the estimation of DND 

personnel, equipment, and facility costs, 

and the Defence Personnel, Operations 

& Maintenance Model – a standard cost 

model that estimates the full cost of 

consumption at all DND/CF units. Costing 

expertise is resident in the costing section of 

Director of Strategic Finance and Costing. 

This Directorate of Strategic Finance and 

Costing section provides a military finance 

Captain to the J8 Financial Coordination 

Centre to develop cost estimates for 

deployed operations. These estimates are 

based on a deployed operations template, 

developed and refined over the past decade. 

The cost estimate process receives extensive 

senior management oversight. Prior to 

distribution of the cost estimate within 

National Defence Headquarters the estimate 

is reviewed and approved by the Director 

General Financial Management3

 and the 

Assistant Deputy Minister (Finance and 

Corporate Services). Once the cost estimate 

is complete, the Director General Financial 

Management provides the Chief of Staff of 

the J3 organization with a written copy of 

the estimate.

Prior to 1992, National Defence 

Headquarters Assistant Deputy Minister 

(Finance and Corporate Services) staff 

updated the cost estimates for Canadian 

participation in the United Nations 

Peacekeeping Force in Cyprus (UNFICYP) 

and the United Nations Disengagement 

Observer Force (UNDOF) on an annual 

basis. Cost estimates for other peacekeeping 

missions, such as Canada might participate 

in from time to time, were done on an as 

required basis. However, starting in 1992, 

with the advent of significant Canadian 

participation in the United Nations 

Protection Force (UNPROFOR) in the 

Former Republic of Yugoslavia, a more 

formal cost spreadsheet was developed to 

estimate incremental costs more accurately, 

and to be able to cost multiple options 

during mission planning in great detail.

Deployed operations occur in a number 

of clearly defined and sequential stages. The 

cost estimate template is designed to capture 

costs in each of these stages and is built to 

accommodate a wide variety of deployed 

operations and duration of missions. 

The mission phases include preparatory, 

deployment, employment, rotation and 

redeployment. Notwithstanding the mission 

in question, the cost drivers remain fairly 

constant and differ only by degree. Cost 

drivers consist, in general, of numbers of 

personnel and quantities of major capital 

equipment. The cost factors for personnel, 

aircraft, ship and vehicle costs in the cost 

estimate template are taken from the DND 

Cost Factors Manual 2004-2005. These cost 

factors are standard costs. 

Labour costs are the primary expense 

in any deployed operation. Although 

funding for the pay of Regular Force 

military personnel is already included in 

the defence budget, funding for Reserve 

Force military personnel employed in 

deployed operations is not. It is noteworthy 

that reservists generally account for 10-20 

percent of deployed Canadian contingents. 

As a consequence, Reserve Force salary costs 

on deployed operations are incremental 

expenses to the defence budget.

The effectiveness of military forces 

is directly related to their training. Each 

deployed operation is different, and as 

a result, different skill sets are required. 

Consequently, the most effective military 

forces are those that train specifically to the 

anticipated requirements of their mission. 

It is assumed, however, that Canadian 

Forces personnel deployed overseas will 

be already trained in a broad spectrum 

of military capabilities, depending on 

their trade or classification. Combat 

skills are a fundamental building block 

for Canadian Forces personnel deployed 

overseas. The value added that Canadian 

military personnel provide to peace 

support operations is that they train and 

develop the skills that are expected to be 

used in the mission. To accomplish this, 

pre-deployment training is generally three 

months in duration. Costs of this training 

period include salary costs for reservists, 

vehicle and equipment operating costs, 

fuel, rations field operations allowance and 

ammunition. It should be noted that much 

of these training costs exceed that which 

the unit would have incurred on a normal 

training cycle in Canada.

When Canadian military personnel 

deploy outside Canada, the Canadian 
30 1 s t Q u a r t e r 2 0 0 5

R E S O U R C E M A N A G E M E N T

Forces are responsible for their “care and 

feeding.” This includes the provision of 

military camps with living and eating 

facilities, power generation, workshops, 

supply warehouses, as well as office and 

communications facilities. In addition, 

rations must be procured for consumption 

by the troops. Medical support in the form 

of innoculations against diseases is required 

prior to deployment, along with ongoing 

medical support during the mission and 

at times post-deployment medical care is 

also required.

Although the fact that all deployed forces 

will require rations is evident, their cost 

can vary widely and is dependent largely 

on their geographical location and mission 

circumstances. This is influenced by the 

overall concept of operations designed 

by national level planners. Options for 

feeding deployed troops include shipment 

of Individual Meal Packages from the 

Canadian Forces Supply System, shipment 

of fresh rations from Canada or a third 

country by regular resupply flights, 

obtaining rations from local sources, or 

a combination of all of the above. Based 

on the overall concept of operations and 

information obtained by the Canadian 

Forces reconnaissance team, costs of the 

option selected can be determined with 

considerable accuracy by the cost analyst.

The cost of living quarters for deployed 

military personnel are dependent on a 

number of variables. First is climate, second 

is the availability of facilities already intheatre, third is the possibility of facilities 

provided through host nation support, 

fourth is the potential for combined multinational facilities under a lead nation 

concept, and finally the expected duration 

of the mission also impacts on the option 

selected. Accommodation can be tentage, 

such as with the peacekeeping mission 

in Haiti during the mid-1990s, or hard 

standing prefabricated structures, as were 

used by a number of Canadian Forces 

military personnel in Bosnia. Tentage can 

be used to accommodate troops and is often 

the primary solution on initial deployment 

to austere areas. Missions planned for a 

considerable duration will generally move 

to hard standing facilities over time. This 

is a priority on missions with cold winter 

climates. On missions where contingents 

are disbursed over wide geographical areas, 

accommodation can be a mix of options 

depending on circumstances and the 

operational mission.

Equipment performing their primary 

function under normal conditions in 

Canada generates considerable operations 

and maintenance expenses. However, 

the operating cost of vehicles is generally 

significantly higher on deployed operations 

due to their increased daily usage. Given 

their more intense use, often under harsh 

operating conditions, a vehicle operating 

surcharge is added to vehicle operating 

costs to augment the standard perkilometre vehicle cost specified in the 

DND Cost Factors Manual 2004-2005. Cost 

elements of the vehicle operating costs 

include petroleum, oil and lubricants, 

spare parts, repair and overhaul, in-service 

maintenance and amortization. The usage 

rate of vehicles is estimated based on the 

roles and tasks assigned to the Canadian 

contingent, the geographical area in which 

they will be operating, and the anticipated 

activity rate. Of note, in-theatre petroleum 

costs can be significantly higher than in 

Canada and the analyst will factor this 

information into the cost estimate if 

petroleum costs are available.

Transportation costs can be a significant 

portion of incremental mission costs. This 

can include either the use of Canadian 

Forces aircraft, the rental of aircraft to 

move personnel and equipment, or the 

rental of ships to move equipment. The 

cost of Canadian Forces aircraft is based 

on standard costs. Use of Canadian Forces 

aircraft within the established Yearly Flying 

Rate will result in most costs being incurred 

under existing DND funding. Flights that 

are scheduled in excess of the Yearly Flying 

Rate would result in most costs being 

incremental to the mission, except salary 

costs. Rental of aircraft to move equipment 

in-theatre is very expensive and where 

sufficient notice is provided shipment of 

equipment by sea is the preferred option. 

Transportation rental costs used in the cost 

estimate template are obtained directly 

from the J4 Logistics National Defence 

Movement Coordination Centre, and are 

not based on standard costs. J4 Movement 

staff obtains quotations from airlines, air 

freight organisations or brokers for expected 

air transport requirements. Estimates for 

the cost of ship rentals are handled in a 

similar manner.

The Canadian Forces has a multi-billion 

dollar inventory of Capital equipment, 

however, at times the demands of particular 

missions are such that occasionally new 

Capital equipment is needed due to 

operational requirements of individual 

missions. For example, several Sperwer 

Tactical Unmanned Aerial Vehicles were 

purchased in 2003 to support Operation 

Athena in Afghanistan. Although in this 

particular case the purchase was scheduled 

in the Defence Services Program, the actual 

purchase was accelerated due to operational 

requirements. 

The cost estimate template requires 

several different types of data to input. 

Specifically it requires the number of 

military personnel, quantities of major 

equipment by type, anticipated activity rate 

and mission duration. In the initial phase of 

the decision-making process, which centres 

on the decision whether to participate on 

not in a mission, only a rough order of 

magnitude estimate is possible. However, 

the Canadian Forces Operational Planning 

Process4

 defines these factors, and as 

a result, the data provided by the J3 

Operations staff over time becomes more 

precise. The major organizational document 

prepared by planning staff is the Table of 

...the cost of NATO 

missions–compared to 

UN missions - is 

significantly greater. 
1 s t Q u a r t e r 2 0 0 5 31

Organization and Establishment (TO&E). 

This document details the Canadian 

Contingent through a list of positions by 

rank, trade or classification, their required 

qualifications and allocation of vehicles, 

by type, to specific individual personnel 

positions. This list is then used by the 

Deputy Chief of the Defence Staff to initiate 

the generation of forces for the contingent 

through the Chiefs of Staff of the Naval, 

Land and Air staffs. In actual practice, 

existing Canadian Forces units will fill the 

majority of these positions, but due to the 

unique characteristics of specific missions, 

existing units may need to be augmented 

with either additional capabilities or 

quantities of personnel.

The embedded spreadsheet data in 

the peacekeeping cost estimate template 

is updated annually, concurrently with 

each annual edition of the DND Cost 

Factors Manual. Costs in the spreadsheet 

are separated by fiscal year. This is very 

important, as peacekeeping missions often 

span more than one fiscal year. Repair & 

overhaul costs for major equipment is 

included in the DND Cost Factors Manual 

as part of the five-year average cost of each 

equipment type. The peacekeeping cost 

estimate template includes a repair and 

overhaul surcharge on all vehicles. The 

vehicle usage surcharge in the spreadsheet 

is included in recognition of the higher 

repair and overhaul costs resulting from 

equipment usage on deployed operations. 

Repair and overhaul surcharge costs 

are credited to the fiscal year when the 

equipment is expected to return to Canada. 

Differences in Costs Due to Type 

of Peacekeeping Mission

The significant increase in annual 

incremental peacekeeping costs to the 

Canadian defence budget from 1991-92 

through to 2003-04 is to a large extent due 

to the shift in Canadian Forces participation 

in UN peacekeeping missions to NATO 

peacekeeping missions, and in the greater 

complexity of the missions in which 

Canadian military personnel now serve. 

The increase in the number of deployed 

personnel did have some impact, however, 

the cost of NATO missions – compared 

to UN missions - is significantly greater. 

This is due to the fact that the UN assumes 

responsibility for the “care and feeding” 

of contingents deployed to their missions, 

in addition to many of their operating 

costs. Consequently, this results in the UN 

provision of camp facilities, rations, fuel and 

other costs of the operation. In addition, 

Troop Contributing Nations negotiate with 

the UN for the provision of Contingent 

Owned Equipment to the UN in return for 

monthly standard reimbursement rates, 

or alternatively the use of UN Owned 

Equipment. The general practice is that 

developed countries provide Contingent 

Owned Equipment and developing nations 

use UN Owned Equipment. The value of 

the monthly reimbursement varies by the 

equipment type and the rates that have been 

agreed to by the United Nations General 

Assembly.5

 The reimbursement rates do not 

cover the full cost of using CF equipment, 

but reflect the outcome of negotiated rates 

between all UN member states. In this 

regard, the rates are a compromise between 

the developed nations that largely fund UN 

peacekeeping missions through allocated 

cost shares and developing nations who 

need sufficient reimbursement to fund the 

cost of using their equipment.

United Nations reimbursement to 

Canada for the use of Contingent Owned 

Equipment is a source of revenue for the 

Government of Canada. This revenue is 

retained by DND. This retention of revenue 

is a reflection of the impact of the intensive 

use this equipment incurs and the adverse 

climatic conditions in which the equipment 

generally operates. The equipment receives 

much more intensive use while deployed, 

which increases the cost to the department 

of spare parts and subsequent repair 

and overhaul expenses. Retention of this 

revenue is intended to assist the department 

in offsetting some of these costs. Although 

the UN has the responsibility to reimburse 

nations on a monthly basis for the use of 

Contingent Owned Equipment, it is only 

able to do so when cash is available from 

contributions to that mission by member 

states. Depending on the mission, this can 

result in delays of significantly greater than 

one year.

In addition to reimbursement for 

equipment, the UN provides Troop 

Contributing Nations a monthly troop 

reimbursement rate of US$988 per soldier, 

as well as US$70 per contingent member 

for the cost of personnel equipment, 

clothing and ammunition directly to 

the contributing government.6

 This rate 

does not fully cover the cost of salaries 

paid to soldiers from developed countries 

such as the United States, Norway, Great 

Britain, Australia or Canada. However, it 

exceeds the salaries paid to soldiers from a 

number of large troop contributing lesserdeveloped countries. The rate, therefore, is 

a compromise agreed to by UN member 

states. UN reimbursement for the provision 

of troops is paid directly to DND. Troop 

reimbursement revenue is credited by 

DND to general government revenue 

in accordance with Canadian Treasury 

Board direction. The department does 

not retain this revenue, as the government 

already funds the department for Canadian 

Forces salaries. The department incurs 

significant monthly personnel related 

incremental expenses such as foreign duty 

allowances, hardship allowances and leave 

travel allowance. These costs are generally 

reimbursed to the department through the 

annual federal government Supplementary 

Estimates funding process as incremental 

mission costs. 

In the case of NATO, the alliance 

operates under the principle of cost sharing 

for items in which common funding is 

accepted. As a consequence “all member 

countries contribute to financing the 

expenditures of the International Staff, 

the International Military Staff, and 

Military Committee agencies and to the 

common-funded elements of Peace Support 

Operations and Partnership for Peace 

activities.”7

 The cost sharing formula is 

based on “ability to pay.” Calculation of a 

national “ability to pay” is derived from a 

combination of the size of national Gross 

Domestic Product, political considerations, 

and the ability of each nation to negotiate a 

favourable cost share.
32 1 s t Q u a r t e r 2 0 0 5

R E S O U R C E M A N A G E M E N T

Canada, as with other alliance members, 

does not receive any reimbursement 

from NATO for participation in NATO 

peacekeeping missions. Canada pays for all 

mission costs of the Canadian contingent 

on NATO missions. Indeed, this comes at an 

additional cost to Canada, when compared 

to our European allies, which operate 

with the benefit of short supply lines from 

NATO operations in Eastern Europe. NATO 

contingents operating within boundaries 

of alliance members normally receive Host 

Nation Support, which allows deployed 

contingents to reduce their support 

personnel. This is not the case; however, 

for NATO peacekeeping or peace-making 

operations, which operate outside the 

borders of NATO members. Nevertheless, 

peacekeeping costs in NATO missions can 

be marginally reduced when lead nations 

take responsibility for different types of 

support services or supply. For example, 

one nation may assume the responsibility 

for procuring, transporting and supplying 

petrol for alliance military vehicles in 

a theatre of operations, subject to cost 

reimbursement. 

Coalition peacekeeping mission financial 

arrangements among participating nations 

are dependant on the type of mission 

and the nations involved. Nevertheless, in 

general, Canadian participation in coalition 

operations is at the full cost to Canada. In 

this regard, the cost to Canada is similar 

in coalition operations to that of NATO 

peacekeeping missions. 

The Peacekeeping Cost Estimate 

and Defence Management

The Canadian peacekeeping cost estimate 

provides valuable management information 

to the government, Parliament, DND, 

Canadian Forces, central agencies and to 

the Canadian public. A quarterly summary 

spreadsheet is published by the J8 Financial 

Coordination Centre and circulated 

internally within the department and 

to government officials. This document 

lists all the full and incremental costs of 

peacekeeping, as well as, any domestic 

aid of the civil power operations. The 

information in this spreadsheet is used for 

several different purposes. First, it assists 

senior defence public officials and military 

officers understand the costs to defence 

of peacekeeping in that fiscal year and the 

impact that it will have on the defence 

budget. Second, it provides a basis to discuss 

incremental in-year supplementary funding 

with federal Treasury Board Secretariat 

officials. Third, it provides defence planners 

with a source of detailed estimates on the 

cost of peacekeeping to centrally managed 

support budgets, such as for spare parts 

or vehicle maintenance. This information 

can then be used to mitigate the effect of 

incremental peacekeeping costs through 

the re-allocation of funding within the 

defence budget. Finally, the summary 

spreadsheet provides the DND Public 

Affairs Branch with a consistent source 

of financial information to provide in 

response to media or public inquiries on 

defence peacekeeping costs. The quarterly 

peacekeeping cost estimate summary 

spreadsheet is a catalyst for examining 

and understanding the impact of defence 

expenditures in the defence budget. Indeed, 

the utility of the summary spreadsheet to 

the Department of National Defence and 

Canadian Forces is that defence planners 

and decision-makers can use it at both the 

strategic and operational levels.

This article has provided an overview 

of the Canadian defence peacekeeping cost 

estimate process. The important linkage 

that this process has in the administration 

of government funding from approval 

of participation to funding has been 

highlighted. The Canadian Forces have 

participated in peacekeeping missions for 

the past half-century. Continued Canadian 

military participation in peacekeeping 

missions is likely to continue at a high rate 

at least through late into the next decade. 

Therefore, the peacekeeping cost estimate 

process will continue to be an important 

source of information for decision-making 

within the Department of National Defence 

and the Canadian Forces.

About the Author:

Lieutenant Colonel Ross Fetterly is the 

Director, Strategic Finance and Costing for 

the National Defence Headquarters, Ottawa, 

Ontario, Canada. He can be reached at Tel: 

(613) 992-8615/E-mail: Fetterly.ER@forces.

gc.ca

Footnotes

1. Douglas L. Bland and Sean M. Maloney, 

Campaigns for International Security (Montreal, 

McGill-Queen’s Press; 2004).

2. Garnett, G.L., “The Evolution of the Canadian 

Approach to Joint and Combined Operations at 

the Strategic and Operational Level” Canadian 

Military Journal (Winter 2002-2003), 3-8.

3. The Director General Financial Management 

is a Logistics (Finance) Major General position 

and is also the Departmental Senior Full-Time 

Finance Officer.

4. DND, CF Operational Planning Process 

Publication Number B-GJ-005-500/FP-000, 

(Ottawa: DND, 2003)

5. United Nations, “Reform of the procedures for 

determining reimbursement to Member States 

for contingent-owned equipment.” UN General 

Assembly Resolution A/RES/50/222 dated 11 

April 1996.

6. United Nations, “Reform of the procedures 

for determining reimbursement to Member 

States for contingent-owned equipment.” United 

Nations General Assembly document A/55/887 

dated 4 April 2001.

7. NATO, NATO Handbook (Brussels: NATO 

Office of Information and Press, 2001), 203-204.

In general, Canadian 

participation in coalition 

operations is at the full 

cost to Canada. 

Comptroller Proponency Office

Office of the Assistant Secretary of the Army 

(Financial Management and Comptroller)

Resource Management

Professional development bulletin

ISSN 0893–1828

ATTN: SAFM–PO, 109 Army Pentagon, 

Washington, DC 20310–0109.

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