Defense IRM

The Pentagon is attempting to modernize materiel management business operations by developing a standard suite of nine separate materiel management systems that will comprise the Materiel Management Standard System. At the end of 1995, the Defense Department (DOD) concluded that this effort would cost much more than the $5.3 billion originally estimated. DOD abandoned its plan to deploy all nine systems as an integrated suite across all inventory controls points and now plans to introduce each system individually as it is developed at a selected site. DOD has also embarked on an accelerated deployment schedule to deliver these systems between now and 1999. GAO cautions that DOD is embarking on the new strategy before taking steps needed to ensure that the additional hundreds of millions of dollars to be spent on materiel management systems, as well as the appropriated funds already being invested, yield positive results. Moreover, DOD is proceeding with deployments under the new strategy without allocating the time needed to thoroughly test the new systems. This greatly increases the risk that DOD will experience problems arising from shifting testing to system users and curtailing normal levels of testing. The upshot is that DOD will likely incur substantial additional costs to operate legacy systems and to correct deficiencies that surface because of delayed testing.

GAO found that: (1) DOD development of nine integrated materiel management systems will cost more than the $5.3 billion originally estimated; (2) DOD plans to deploy each system individually at a selected site; (3) DOD is embarking on a new materiel management strategy to ensure that the additional funds spent on the systems are well invested; (4) DOD has not conducted economic or risk assessments of the new systems, or incorporated efforts to improve, consolidate, and privatize logistics operations; (5) DOD has failed to define the objectives, costs, and risks of its new materiel management strategy, thus denying DOD decisionmakers the opportunity to review the systems before deployment; (6) DOD is proceeding with its scheduled deployments without allocating necessary time for systems testing; (7) this action will increase the likelihood of DOD experiencing problems during systems testing; and (8) DOD will incur significant costs in operating and maintaining the legacy system due to existing deficiencies within the system.

Recommendations

Our recommendations from this work are listed below with a Contact for more information. Status will change from "In process" to "Open," "Closed - implemented," or "Closed - not implemented" based on our follow up work.

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