Lean  Government
                            Office of the Chief Financial Officer (OCFO)
                         Superfund State Contract (SSC) Accrual Process
                                        Lean Event Case Study
Summary

EPA's Office of the Chief Financial Officer (OCFO) conducted a Lean value stream mapping (VSM) event in December 2010 to
improve the efficiency and accuracy of its Superfund State Contracts (SSC) accrual process. A SSC is a legally binding
contract between EPA and a state, and is required before EPA can fund or take remedial action at any Superfund site within
the state.

The event's objective was to create a consistent agency-wide approach for the SSC accrual process that would result in
accurate data for the production of quarterly accruals for financial statement reporting. The team hoped to accomplish this
objective by simplifying and standardizing the process, automating it where possible, and  providing direction for EPA policy.

During the five-day event, the team mapped out current-state and "immediate future state" process maps, identifying areas
where the process could be simplified and improved. Once the immediate future state has been fully implemented, the
time to produce an accrual will be reduced by more than 50 percent. The team also developed a "future state II," which will
require calculating accrual at the aggregate level, and an "ideal future state," which will involve a comprehensive integrated
financial management system.
  Results
  The Lean team identified improvements that will allow for greater efficiency and accuracy in the SSC accrual process. The
  improvements will result in a reduction in the time to produce an accrual from 15 hours to 7 hours. Duplication of effort
  will be reduced, as multiple spreadsheets will be replaced by one spreadsheet.

  The event resulted in several benefits beyond the improvements identified in the process itself. These benefits included
  the following:

             The event allowed the team to gain an understanding and appreciation of the role the regions play in
              preparing financial statements

             The event enabled participants to gain a clearer understanding of the importance of both improved accu-
              racy of the accrual and clearly defined roles and responsibilities

             The event provided a venue to discuss the reports and information that would significantly help in the
              overall management of the program

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Background

Participating Agencies: Participants in the event included: EPA Office of Budget, EPA OCFO, EPA Office of Financial
Management, EPA Office of Financial Services, EPA Region 1, EPA Region 2, EPA Region 3, EPA Region 5, EPA Region 8, EPA
Region 9, EPA Office of Superfund Remediation and Technology Innovation (OSRTI)

Method Implemented: Value Stream Mapping (5-day event)

When Conducted: December 2010
Consultant Support: Ultimate Lean, Inc.


Scope of the Lean Project

Project Scope: The SSC process, beginning when the SSC agreement is signed and ending with the completion of the entry.

Goals of the Lean Event: The goals of the event included:
             Reduce time to produce accounting estimates
             Increase accuracy of accounting estimates
             Reduce audit findings, with zero material findings
             Reduce duplication of effort
             Increase reliability of data
             Create a consistent agency-wide approach to reflect accurate data for the production of quarterly accruals
              for financial statement reporting
             Provide comprehensive process information for new software being prepared by the Office of
              Environmental Information

Process Changes and Improvements

After mapping the current state process, the team observed the following inefficiencies and areas for improvement:
             No clear way to ensure that all state credits, amendments and new  SSCs are entered into the quarterly
              accrual
             Data entry into spreadsheets by both the regions and by CFC is redundant
             Errors in "interpretation" of data
             Inconsistency across regions in listing SSCs (site ID, multiple lines, etc.)
             Some expenses exceed billing or contract value
             Difficult to differentiate between expenditures with multiple lines
             Lack of standardized business processes
             SSCs can be closed out administratively but not necessarily financially, causing the auditors to question
              program management
             Variability in contract terms of SSCs causes accounting  difficulties

The team identified the following improvements which will be implemented in the immediate future state:
             A new database will be developed, containing information on site names, site identification, contract
              amount, credits, new amendments and state share
             SSCs will be posted in the database as they occur
             Improved clarity in document identification and routing in the regions
             CFC will enter only two adjusted vouchers (AV) transactions
             Increased clarity of the importance of the data and its utility will increase ownership and responsibility

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Processes will be instituted across the regions that will alert the SSC coordinator at the point when amendments,
letters, and new contracts are signed. This process will correct the information deficiency that affected missing
information on the accrual spreadsheets.  In addition to the immediate alerts and triggers, any changes in data that
affect credits, contract values, or percentage of cost share will be updated when received so that when the quarterly
data are uploaded, the data will have already been recorded. This will also eliminate the need for spreadsheets to be
sent back and forth for multiple data entries. The necessary data fields will be entered and populated as required by
CFCto generate the quarterly accrual. The data fields requiring updates will be displayed on the electronic form (i.e.
site name, site ID, contract amount, cost share, and credit). This will eliminate mistakes and reduce the amount of data
that are not used during this phase of the  process.

Implementation

The team developed the following table of implementation milestones to ensure that the efficiencies and
improvements identified during the event will become reality during the months following the event.
Milestone Activity
Develop distribution list and method
to ensure receipt of all new SSCs, let-
ters and amendments. Regions con-
firm points of contact for SSC informa-
tion.
Group issues by regions (instead of
sending multiple emails)
Communicate the SSC Lean results to
the regions and DIG
Share best practice across regions
Design/Develop SSC control forms to
capture SSC contract information and
explore InfoPath, Lotus notes, and
other database systems to import data
Develop SSC reports in FDW/ ORBIT
Clarify credit issues, removal actions,
in-kind service credits, and coopera-
tive agreements
Feasibility study on calculating accru-
als at an agency level
Explore SSC accrual integration, new
accounting models, and billing process
Purpose
Improve communications
Improve communications
Share results of the SSC Lean
event & improve communica-
tions
Bring consistency across re-
gions
Increase completeness and ac-
curacy of the SSC accrual
Standardize "SSC Available Bal-
ance Report" to manage SSCs
Standardize procedures for
consistency
Reduce the time to produce the
accrual
Automate the SSC accrual proc-
ess and reduce the time to pro-
duce the accrual
Timeframe
January 2011
December 2010-January
2011
December 2010-February
2011
February 2011
January-June 2011
January-July 2011
January - August 2011
January - September 2011
January - September -
2012

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         For More
       Information:
                         Lean Event Contact:
                         Vickie Spencer, EPA Office of Financial Management, (202) 564-9851,
                         spencer.vickie@epa.gov


                         EPA Lean Government Initiative:
                         Kimberly Green-Goldsborough, EPA Office of Policy, (202) 566-2355, green-
                         goldsborough.kimberly@epa.gov


                         http://www.epa.gov/lean/government
United States
Environmental Protection
Agency
Office of Policy
   (1807T)
 December 2010
EPA-100-F-11-021

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