The next Katrina: a new proces for reimburse: a new process created by the United States Northern Command should increase the likelihood of control and distribution of reimbursable budget authority.

Over the past year, many articles have been written, in both this publication and others, depicting the heroism from members of each military service and the Coast Guard in operations following Hurricane Katrina. Taken together, these operations undoubtedly will be recorded in history as one of the most extraordinary challenges facing Department of Defense (DoD) and Coast Guard forces operating within the United States.

What hasn't been told is how reimbursing units for their part of this event still is continuing today Financial managers in DoD continue their efforts to collect costs and process reimbursements through the Federal Emergency Management Agency (FEMA) more than a year after Katrina brought devastation to the Gulf region.

Financial personnel at the United States Northern, Command (US-NORTHCOM) have been involved heavily in helping DoD activities seek reimbursement for operations during Hurricane Katrina Out of these efforts was born a Concept of Operations (CONOPS) designed to assist in obtaining, tracking, and monitoring reimbursable budget authority, and ultimately reimbursement for such operations (which are known formally as Defense Support of Civil Authorities (DSCA)). This article provides a brief description of the new DSCA financial management process.

Birth of the DSCA Financial Management Process

In the aftermath of Katrina, USNORTHCOM financial personnel were involved heavily in supporting DoD units, helping them to link their performance to FEMA mission assignments and clear their path to reimbursement for associated outlays. We saw firsthand the need to develop a process that would alleviate many of the headaches that financial managers were experiencing while determining how much they would be reimbursed and how to get those funds restored to their activities. In addition to our firsthand experience, we scoured numerous audit reports, after-action reports, and lessons learned. With all this in mind, we set out to turn "lessons observed" into "lessons learned," thereby ensuring that the DoD financial management community did not make the same mistakes in future DSCA events.

How did we accomplish this task? A small team of USNORTHCOM financial managers formed to "work" DSCA-related issues. First, we organized and hosted a DSCA financial workshop in March 2006. Attendees included more than 50 personnel from across the Department. The discussions and recommendations captured during the workshop were briefed to Ms. Teresa McKay, then-Deputy Chief Financial Officer, Office of the Under Secretary of Defense (Comptroller). She, in turn, tasked us to develop a new process for use during the upcoming hurricane season.

An iterative development process followed, resulting in a revised process documented in a CONOPS dated 1 June 2006. USNORTHCOM received direction to oversee and conduct a beta test of the process for the 2006 hurricane season.

Who Does What?

This DSCA financial management process seeks to suballocate and track the reimbursable budget authority provided by a primary federal agency--such as FEMA--to compensate DoD for its support. This process does not apply to direct budget authority. The primary federal agency request can be made under the authority of either the Economy Act or the Stafford Act.

Two teams will manage this process: a Financial Management Oversight (FMO) Team and a Financial Management Augmentation Team (FMAT). The FMO Team (to be determined by the Office of the Secretary of Defense) will guide the FMAT and provide senior leader updates and reports. The FMAT will suballocate, track, and adjust reimbursable budget authority destined for DoD units tasked to provide mission support. The military services still must collect cost information, bill a primary federal agency such as FEMA, and provide reports. For DSCA missions during 2006 and 2007, the USNORTHCOM comptroller will act as the FMO and provide oversight to the FMAT.

In June 2006, all DoD services and major Defense agencies were tasked to identify representatives to serve as members of the FMAT. These members serve as the primary liaison between the FMO Team, the Defense coordinating officer/element (DCO/E, Figure 1), and units performing missions under the orders of a primary federal agency. The FMAT will ensure that participating DoD components have issued appropriate guidance for accounting code structures, reimbursable guidance, and other requirements. The FMAT also must ensure that all requirements for reimbursable budget authority are identified immediately, with follow-through provided until completion of the operational and fiscal mission.

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The FMAT may co-locate at USNORTHCOM headquarters during major crises but may operate from members' home stations (in a virtual manner) during smaller contingencies. What constitutes major versus minor crises still needs to be worked out; however, it is a safe bet that FMAT members will deploy if there is a projected landfall of a Category 3 or higher hurricane. During such an event, the FMAT has a high probability of standing up at USNORTHCOM headquarters or other locations as designated by USNORTHCOM.

Four Subprocesses

There are four subprocesses in this newly developed and still untested DSCA financial management process:

* Activate Financial Management Augmentation Team, or FMAT

* Distribute reimbursable budget authority

* Monitor reimbursable budget authority

* Conduct fiscal closure

Figure 1 provides an operational view of the DSCA financial management process.

Subprocess 1.0--Activate Financial Management Augmentation Team

To determine if the FMAT should be activated, three elements should exist: a request or an order from a primary federal agency (PFA, Figure 1), such as FEMA; an execution order or a deployment order from USNORTHCOM; and approval for reimbursement. (There are occasions where reimbursement is waived, in which case there would be no need to activate the FMAT.)

Once the three elements are in place, Subprocess 1.0 may begin. At this time, the size, location, and estimated duration of the FMAT will be decided based on the event and its anticipated magnitude. This decision will be made after collaboration between the FMO, the Defense coordinating officer, and the U.S. Army North's Deputy Chief of Staff for Resource Management (ARNORTH G8--USNORTHCOM's Army component). To provide a scalable financial management response to the event, there are several criteria that must be considered. These criteria will define the makeup of the FMAT and may result in different FMAT structures, depending on the nature of the event and the financial management support required.

Funding language in the USNORTHCOM execution order directs the financial management point of contact for tasked units to contact the FMAT for reimbursable budget authority (RBA, Figure 1). The FMAT will issue reimbursable authority based on a validated/approved request. Once approved, the unit will load the reimbursable authority into its service's financial management system. The goal is to ensure that reimbursable budget authority is suballocated according to tasks assigned in a deployment order.

Note that each DoD component determines the definition of a unit for FMAT purposes. This definition will be known in advance to assist the FMAT in the suballocation process. The unit contact should be the person or organization that has fiscal responsibility for the unit.

Subprocess 2.0--Distribute Reimbursable Budget Authority

Once tasked, the unit will contact the FMAT in accordance with the funding guidance in the USNORTHCOM execution order. The unit will report various data including requesting unit information (name, address, phone and fax numbers, e-mail address); contact information for the financial management point of contact; date/time/group of the deployment order; and the cost estimate for tasking. The unit also will report the primary federal agency's mission assignment or number as identified in the deployment order as the funding authority for the tasking. The FMAT receives the request and documents the information.

When a tasked unit submits a request for reimbursable budget authority, the FMAT will assess the request. If the request is valid and sufficient funding remains available on the primary federal agency's mission assignment or order, the FMAT will approve the request and issue reimbursable authority on a DSCA Reimbursable Authority Document (D-RAD, Figure 1). Use of this document precludes the confusion that was identified as a major problem last year when, for example, five units were assigned to a mission assignment code containing $1 million in funding, and all five units assumed they each had $1 million to spend. This new document should make clear who is using the mission assignment code and how much is allocated to each performing unit.

After the unit receives the D-RAD tasking document, it will load the reimbursable budget authority into the respective service's financial management system using its standard procedures for funds control and event-specific financial coding. For example, in the Air Force, reimbursable budget authority requires that a sales code and a job order number be loaded to identify the authority as associated with a particular primary federal agency. DoD components should provide procedural guidance prior to the event.

Subprocess 3.0--Monitor Reimbursable Budget Authority

Once the reimbursable budget authority has been issued to the unit and loaded into the appropriate financial system, the new DSCA financial management process moves into the monitoring phase. Under Subprocess 3.0, units monitor the reimbursable budget authority until all reimbursements are received and reported. The unit continually reviews actual expenses in light of remaining or anticipated expenses for each assigned task and compares them to the amount issued on the D-RAD tasking document that contained the authority. When appropriate, the unit either requests an adjustment to the reimbursable authority or provides a weekly update of its status. The FMAT assesses the reports or requests and determines whether to adjust the reimbursable authority or to seek additional funds from the primary federal agency. At the end of Subprocess 3.0, the operational mission should be complete.

Subprocess 4.0--Conduct Fiscal Closure

Subprocess 4.0 begins when the tasked unit determines that the primary federal agency-directed mission has been completed (that is, all personnel and equipment have returned home). In Subprocess 4.0, units determine final estimates of expenses, properly complete the billing process, and close all orders from the primary federal agency.

Tasked units provide their final reimbursable status to the FMAT. The FMAT uses the unit's final estimate to determine if an adjustment to the reimbursable budget authority is needed.

Units will use the following inputs to complete the billing process: applicable guidance from their component, guidance from DoD or the Defense Finance and Accounting Service (DFAS), guidance from the primary federal agency, and supporting documentation as required by billing instructions. After preparing bills, units will submit billing documents and supporting documents as prescribed. After DFAS processes the bill and the primary federal agency accepts it, units will complete a closure certification form and provide this form to the FMAT.

The FMAT will use the closure certification forms from tasked units to verify that the primary federal agency's order can be closed and will make necessary annotations in a control log and related files. Ultimately, the FMAT will contact the Defense coordinating officer to coordinate closure of the primary federal agency's order.

Benefits of the New Process

The 2006 hurricane season will provide the beta test for this new process. After the season--and associated adjustments based on lessons learned--we believe that the new process will have produced a much-improved system for tracking DSCA-related reimbursable budget authority and associated transactions. Additionally, we expect that this new process and the up-front investment of resources (in the form of FMO and FMAT members) will eliminate the need to establish ad hoc organizations like FM Katrina. The new process also should reduce the use of direct dollars to finance reimbursable DSCA missions.

(Special recognition to the FMAT team for their hard work in developing the DSCA CONOPS: Mrs. Susan Hirst, Mrs. Deb Weaver, Major Susan Temmer, Mrs. Christina Brims, Mr. Jon Hetzog, Mrs. Pam Sagert, Mrs. Lee Anne Tailaferro, and Captain Laurie Lanpher)

Lieutenant Colonel Dennis Bay, CDFM;

Lieutenant Colonel Andrew J. Smith, CDFM;

and Lisa Potvin, CDFM