The Defense Security Cooperation
Agency (DSCA) directs all Department
of Defense (DoD) security coopera-
tion programs, including the Foreign
Military Sales program—the sale of
military hardware and services to allied
and friendly foreign governments—
and International Military Education
and Training program—the training
of foreign forces by U.S. military per-
sonnel. DSCA’s headquarters is in
Arlington, VA, and it includes satellite
organizations that work in close
collaboration with each military
department.
DSCA needed to develop improved
cost measures that would enable
heightened visibility into the costs of
its core functions across all military
departments (MILDEPs). The agency
hired BearingPoint to implement
enterprisewide costing tools grounded
in activity-based costing and manage-
ment (ABC/M) methodologies. Our
work empowered DSCA to identify
current and projected costs more accu-
rately, justify its budgets to federal reg-
ulatory agencies, and identify areas for
cost savings and process improvement.
UNDER THE GUN TO JUSTIFY
FUNDING REQUESTS
DSCA’s budget faced close scrutiny by
the U.S. Congress, General Accounting
Office (GAO) and Office of Manage-
ment and Budget (OMB), all of which
required cost visibility. Also, DSCA
was interested in providing detailed
cost justification to support its annual
budget.
Consequently, DSCA was intent on
devising better costing and performance-
based processes. The agency recognized
that it needed a shared environment
that integrated the entire security coop-
eration community. Only in this way
STRATEGY, PROCESS & TRANSFORMATION
|
CUSTOMER RELATIONSHIP MANAGEMENT
|
SUPPLY CHAIN MANAGEMENT
ENTERPRISE SOLUTIONS
|
TECHNOLOGY INFRASTRUCTURE & INTEGRATION
|
MANAGED SERVICES
U.S. DEFENSE SECURITY COOPERATION AGENCY
D
EFENDING
B
UDGETS
W
ITH
A
CTIVITY
-B
ASED
C
OSTING AND
M
ANAGEMENT
Case Study:
ENTERPRISE SOLUTIONS
BearingPoint created a costing
system that enabled the Defense
Security Cooperation Agency
and military department security
cooperation organizations to
achieve the following goals:
•Justify budgets with greater
clarity.
•Provide improved cost data
to management.
• Establish a foundation for
performance measurement,
process analysis and planning.
pg_0002
could the agency align its costing
system effectively with government
requirements—for example, the Gov-
ernment Performance Results Act and
the President’s Management Agenda.
DSCA selected BearingPoint to imple-
ment an ABC/M performance-based
costing infrastructure, expecting to
benefit from our extensive ABC/M
expertise, knowledge of military
business processes and challenges, and
ability to lead a complex system
deployment. DSCA was confident
that BearingPoint would ensure inter-
operability throughout the security
cooperation community.
CREATING A FLEXIBLE,
ENTERPRISEWIDE
COSTING MODEL
BearingPoint developed all aspects of
DSCA’s new costing infrastructure,
configuring the ABC/M tools and
integrating them with the agency’s
legacy systems. We developed a com-
prehensive vision for the project and
created a work plan for achieving the
agency’s goals.
We outlined a plan for the integration
of DSCA’s costing models with those
of the MILDEPs. We employed a
methodology that is compliant with
the Capability Maturity Model to
develop a software-based infrastructure
designed around six core security assis-
tance mission areas, using OROS,
MS SQL and COGNOS software. We
also developed and rolled out new
processes throughout DSCA and all
MILDEPs.
We worked closely with senior
MILDEP leadership and staff, as well
as other significant stakeholders, to
tailor the costing models to their
unique processes and legacy systems,
yet kept all the models compatible with
the overall architecture. This top-down
approach resulted in a costing method-
ology that gives DSCA access to neces-
sary MILDEP cost information, while
providing the MILDEPs with enough
?exibility to customize the models to
their own specifications.
Because the new system would require
a cultural shift for many DoD person-
nel, we also developed and delivered
the training necessary to acclimate
personnel to the new processes and
teach them how to operate the new
system.
Previously, DSCA tried
to implement performance-based
budgeting tools and processes.
However, the agency concluded
that to be effective, a costing
system would need to be
developed and standardized
throughout the DoD security
cooperation community.
Interoperability was key to
the success of the initiative.
We not only developed the
overall performance-based
costing infrastructure, but our
approach enabled the individual
military departments to
customize the ABC/M models
to their own specifications.
At the same time, we helped
the organization achieve the
critical cultural changes that
were necessary to institutionalize
the new processes and ensure
successful use of the
ABC/M tools.
pg_0003
POWERFUL TOOLS
REDUCE COSTS
AND IMPROVE PROCESSES
Our experienced professionals helped
the DSCA and the MILDEPs gain a
better understanding of their costs at
both organizational and departmental
levels. This improved awareness of pro-
gram costs gives all DSCA stakeholders
a greater ability to determine present
and future budget needs and provide
explicit data that justifies these budgets
to Congress, the GAO and the OMB.
The new ABC/M performance-based
costing methodologies helped topple
institutional silos, providing leadership
with considerable insight into accurate,
enterprisewide costing information.
The agency is now armed with power-
ful planning tools that enable it to
model the effects that budgeting deci-
sions will have on cost and delivery
time frames. The tools equip DSCA
and the MILDEPs to be far more
responsive to current resource needs.
As a result, they can create budgets that
allocate funds to projects of the highest
priority, as well as identify areas for cost
savings and process improvements.
BUILDING ON
OUR PAST SUCCESS
DSCA’s decision to engage BearingPoint
was based partly on our success in
developing an ABC/M model for the
U.S. Navy’s Naval Inventory Control
Point and providing ABC/M analysis
capability to the Office of the Under
Secretary of the Air Force for Inter-
national Affairs.
DSCA also had direct experience work-
ing with BearingPoint. Previously, we
had developed and implemented a new
performance-based budgeting process
that more closely linked the agency’s
budget to its federal stakeholders.
At that time, we suggested that a
performance-based costing system
using ABC/M methodologies would
be effective in obtaining and analyzing
the costing data and scenarios that
could help DSCA create clear budget
justifications.
We leveraged our knowledge
of DoD operations and
our ABC/M experience to
develop and deploy the ABC/M
methodologies across the DSCA
and military department security
assistance operations—
within the DoD’s budget
and time frame.
DSCA chose BearingPoint because
of our:
•Extensive ABC/M expertise.
• Knowledge of DoD business
processes and challenges.
•Ability to lead the deploy-
ment of its performance-
based system.
pg_0004
BearingPoint
|
1676 International Drive
|
McLean, VA 22102
|
1.866.BRNGPNT
|
www.bearingpoint.com
© 2003 BearingPoint, Inc. All rights reserved. Printed in the United States. C2745-PS-0903-01-USRD345
BUSINESS AND
SYSTEMS ALIGNED.
BUSINESS EMPOWERED.
BearingPoint is a leading global busi-
ness advisor and systems integrator.
Our experienced professionals help
organizations around the world set
direction to reach their goals and create
enterprise value. By aligning their
business processes and information
systems, we empower our clients with
the right business solutions to gain
competitive leadership advantage —
delivering measurable results in an
accelerated time frame. To learn
more, contact us at publicsector@
bearingpoint.net or 1.866.BRNGPNT
(+1.703.747.6748 from outside the
United States and Canada) or visit our
Web site at www.bearingpoint.com/
publicservices.