Military Personnel
DFAS Has Not Met All Information Technology Requirements for Its New Pay System Gao ID: GAO-04-149R October 20, 2003In early January 2003, we initiated a review of the Defense Integrated Military Human Resource System (DIMHRS) to get an understanding of the program, its goals, its present status, and the problems it is designed to resolve. During this review, we became aware that in April 2003 the Department of Defense (DOD) authorized the Defense Finance and Accounting Service (DFAS) to initiate a pilot project to demonstrate its ability to develop an interim military pay system, called Forward Compatible Military Pay, before DIMHRS is fully operational. DFAS maintains that an interim system should be developed as soon as possible for two reasons: (1) the planned personnel and pay system that DOD is currently developing as part of the larger DIMHRS will be implemented later than its projected target date of December 2006 and (2) the current military pay system--the Defense Joint Military Pay System--is aging, unresponsive, and fragile and has become a major impediment to efficient and high quality customer service. It is estimated that the Forward Compatible Military Pay system could be operational by March 2006 at a design and development cost ranging from about $17 million to $30 million. Since the planned interim Forward Compatible Military Pay system is considered an information technology acquisition program under DOD Acquisition Regulations, DFAS must comply with specific legal and administrative requirements before moving forward with the development of this project. In this regard, DFAS must comply with requirements contained in the Bob Stump National Defense Authorization Act for Fiscal Year 2003, Office of the Under Secretary of Defense (Comptroller) Memorandum, and the Clinger-Cohen Act of 1996.
In moving forward with the development of the Forward Compatible Military Pay system, DFAS has not complied with specific legal and administrative requirements applicable to DOD's information technology investments. It did complete cost and benefit, return on investment, and break-even point analyses as required by the Comptroller's memorandum. However, DFAS has not submitted the forward pay proposal to the responsible domain to determine its compliance with DOD's Business Enterprise Architecture, which guides DOD's investments in financial systems. Because DFAS has not submitted the proposal to the responsible domain, the DOD Comptroller has not met its responsibility under the authorization act to ensure compliance with the Business Enterprise Architecture. Further, DFAS has not completed the necessary documents to support compliance with the Clinger-Cohen Act. For example, DFAS has not completed the Acquisition Strategy or the Acquisition Program Baseline document, as required by DOD Acquisition Regulations. By failing to complete all required studies and analyses, DOD lacks assurance that it is meeting its goal of making quality information technology investments, as required. We are recommending that DFAS complete all required steps before proceeding with the Forward Compatible Military Pay project.
RecommendationsOur 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.
Director: Team: Phone:GAO-04-149R, Military Personnel: DFAS Has Not Met All Information Technology Requirements for Its New Pay System
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Report to the United States General Accounting Office:
GAO:
Military Personnel:
GAO-04-149R:
United States General Accounting Office:
Washington, DC 20548:
October 20, 2003:
The Honorable Donald H. Rumsfeld The Secretary of Defense:
Subject: Military Personnel: DFAS Has Not Met All Information
Technology Requirements for Its New Pay System:
In early January 2003, we initiated a review of the Defense Integrated
Military Human Resource System (DIMHRS) to get an understanding of the
program, its goals, its present status, and the problems it is designed
to resolve. During this review, we became aware that in April 2003 the
Department of Defense (DOD) authorized the Defense Finance and
Accounting Service (DFAS) to initiate a pilot project to demonstrate
its ability to develop an interim military pay system, called Forward
Compatible Military Pay, before DIMHRS is fully operational. DFAS
maintains that an interim system should be developed as soon as
possible for two reasons: (1) the planned personnel and pay system that
DOD is currently developing as part of the larger DIMHRS[Footnote 1]
will be implemented later than its projected target date of
December 2006 and (2) the current military pay system--the Defense
Joint Military Pay System--is aging, unresponsive, and fragile and has
become a major impediment to efficient and high quality customer
service. It is estimated that the Forward Compatible Military Pay
system could be operational by March 2006 at a design and development
cost ranging from about $17 million to $30 million.[Footnote 2]
Since the planned interim Forward Compatible Military Pay system is
considered an information technology acquisition program under DOD
Acquisition Regulations, DFAS must comply with specific legal and
administrative requirements before moving forward with the development
of this project. In this regard, DFAS must comply with requirements
contained in:
* the Bob Stump National Defense Authorization Act for Fiscal Year
2003;[Footnote 3]
* Office of the Under Secretary of Defense (Comptroller)
Memorandum;[Footnote 4] and:
* the Clinger-Cohen Act of 1996.[Footnote 5]
We reviewed DFAS's development of the Forward Compatible Military Pay
system pilot project to determine whether DFAS had complied with the
above requirements. We did not evaluate the cost and benefit, return on
investment, or break-even point analyses that were prepared by DFAS.
We conducted our review from June 6, 2003, to September 15, 2003, in
accordance with generally accepted government auditing standards.
Results in Brief:
In moving forward with the development of the Forward Compatible
Military Pay system, DFAS has not complied with specific legal and
administrative requirements applicable to DOD's information technology
investments. It did complete cost and benefit, return on investment,
and break-even point analyses as required by the Comptroller's
memorandum. However, DFAS has not submitted the forward pay proposal to
the responsible domain to determine its compliance with DOD's Business
Enterprise Architecture,[Footnote 6] which guides DOD's investments in
financial systems. Because DFAS has not submitted the proposal to the
responsible domain, the DOD Comptroller has not met its responsibility
under the authorization act to ensure compliance with the Business
Enterprise Architecture. Further, DFAS has not completed the necessary
documents to support compliance with the Clinger-Cohen Act. For
example, DFAS has not completed the Acquisition Strategy or the
Acquisition Program Baseline document, as required by DOD Acquisition
Regulations. By failing to complete all required studies and analyses,
DOD lacks assurance that it is meeting its goal of making quality
information technology investments, as required. We are recommending
that DFAS complete all required steps before proceeding with the
Forward Compatible Military Pay project.
Background:
By the end of fiscal year 2003, DOD estimates that it will have spent
about $360 million to conceptualize and plan a major new departmentwide
integrated military pay and personnel system, known as DIMHRS. In 2002,
DOD estimated that DIMHRS would be fully deployed by fiscal year 2007
at a development cost of about $427 million. However, our review of the
fiscal year 2004 information-technology budget request shows the
amounts required for fiscal years 2004 and 2005 are $122 million for
2004 and $95 million for 2005. (When added to the amount spent through
fiscal 2003, the amounts round to a total of $577 million.) DOD further
estimates that it would cost about $1.5 billion to operate and maintain
DIMHRS through fiscal year 2017. However, DOD expects that the winning
contractor will revise the deployment schedule and cost estimates by
early 2004. Although the development of DIMHRS has not yet begun, the
original schedule has already slipped by about 15 months. Among its
various components, DIMHRS will include a military pay component. As a
result of the schedule slippage, DFAS has decided that an interim
military pay system is needed to meet its short-term needs until the
DIMHRS' military pay component is available, which is projected for
calendar year 2006 or 2007.
The development of the interim military pay system--the Forward
Compatible Military Pay system--is considered an information technology
acquisition program, according to DOD acquisition policy. Congress
enacted laws to govern DOD's information technology investments,
e.g., Section 1004 of Bob Stump National Defense Authorization Act for
Fiscal Year 2003 and the Clinger-Cohen Act of 1996. In addition to
these laws, DOD's acquisition policy also mandates sound information
technology investment decisions.
DFAS Has Not Completed All Required Documentation nor Obtained
Necessary Approval for Forward Compatible Military Pay System:
In moving forward with the development of the interim military pay
system, DFAS has not complied with the Bob Stump National Defense
Authorization Act for Fiscal Year 2003, the Comptroller Memorandum, and
the Clinger-Cohen Act requirements. GAO reported in March 2003[Footnote
7] that DFAS failed to complete the required documentation for four
other systems undergoing modernization. In that report we recommended
that all remaining DFAS information technology projects be evaluated to
ensure they are being implemented at acceptable cost and within
reasonable time frames.
National Defense Authorization Act for Fiscal Year 2003 and the
Comptroller Memorandum:
The Bob Stump National Defense Authorization Act for Fiscal Year
2003 requires that any investment in excess of $1 million to improve a
defense financial system be consistent with DOD's Business Enterprise
Architecture,[Footnote 8] which lays out a frame of reference governing
information technology management. The DOD Comptroller's March 2003
memorandum details how compliance with the authorization act will be
determined. Specifically, the memorandum requires several analyses to
demonstrate the costs and benefits; return on investment; break-even
point; and overall compliance with the enterprise architecture for any
initiative in excess of $1 million. The Comptroller's administrative
requirements do not preclude or eliminate any other required approvals
or processes within DOD.
DFAS has not fully complied with the Comptroller's March 7, 2003,
memorandum. While DFAS briefed a cost and benefit, return on
investment, and break-even point analysis to the DOD Comptroller's
Office, the briefing did not include a determination that the Forward
Compatible Military Pay initiative is in compliance with the enterprise
architecture. Such a determination has not been made because, to date,
DFAS has not submitted the proposal to the domain[Footnote 9] owner for
its evaluation of compliance with the architecture. By determining
compliance with the architecture DOD can be sure that the Forward
Compatible Military Pay initiative will not result in a system that
performs the same tasks or stores the same data as existing systems,
cannot communicate with other DOD systems, and is costly to operate
and maintain.
In addition, the Secretary of Defense's Office of Program Analysis and
Evaluation raised concerns over the accuracy of the information in the
presentation. Specific areas of concern included cost, schedule, and
the underlying assumptions made in support of the initiative.
Clinger-Cohen Act and DOD Acquisition Regulations:
The Clinger-Cohen Act of 1996 requires agencies to establish a process
to maximize value and assess and manage the risks of information
technology investments, including specific quantitative and
qualitative criteria for comparing and prioritizing alternative
information technology projects. The primary objective of DOD's
acquisition-implementing policy is to acquire quality products that
satisfy user needs and contain measurable improvements to mission
capability and operational support, in a timely manner and at a fair
and reasonable price.
DFAS has not met all of the requirements of the Clinger-Cohen Act
applicable to its forward compatible pay initiative. The act requires a
variety of actions, and DOD, in its acquisition regulations, requires
evidence that the actions have been completed. For example, the act
requires clearly established measures and accountability for program
progress. Documents such as the Acquisition Strategy and Acquisition
Program Baseline documents would contain this information.
Conclusion:
DFAS has not complied with each of the Bob Stump National Defense
Act, Clinger-Cohen, and administrative requirements for information
technology investments. As a result, DOD lacks assurance that it is
meeting its goal of making quality information technology investments.
Further, the Forward Compatible Military Pay system proposal has
not been reviewed for compliance with DOD's Business Enterprise
Architecture. As a result, the system may duplicate the functions of
existing systems, may not be able to communicate with other DOD
systems, and may add to overall operating and maintenance costs.
Recommendations for Executive Action:
To ensure that the proposed investment in the Forward Compatible
Military Pay system is a prudent business decision for DOD, you
should direct:
* DFAS to submit its Forward Compatible Military Pay system proposal
to the domain owner for determination that it is in compliance with
DOD's Business Enterprise Architecture;
* the DOD Comptroller to meet its responsibility under the Bob
Stump National Defense Authorization Act for Fiscal Year 2003,
Public Law 107-314, to determine compliance with the Business
Enterprise Architecture; and:
* the DOD Comptroller to require DFAS to demonstrate that it has
complied with its responsibilities under the Clinger-Cohen Act of 1996,
Public Law 104-106.
The DOD Comptroller and DFAS should complete these steps before the
final decision is made to invest in the Forward Compatible Military Pay
system.
As you know, 31 U.S.C. 720 requires the head of a federal agency to
submit a written statement of the actions taken on our recommendations
to the Senate Committee on Governmental Affairs and the House Committee
on Government Reform not later than 60 days after the date of this
report. A written statement must also be sent to the House and Senate
Committees on Appropriations within 60 days after the date of this
report.
Agency Comments:
DOD provided official comments on a draft of this letter. The Principal
Deputy and Deputy Under Secretary of Defense (Management Reform)
concurred with the letter and recommendations. DOD stated that if the
decision is made to pursue the Forward Compatible Military Pay system,
DFAS will finalize the appropriate documentation to satisfy
requirements of the Clinger-Cohen Act of 1996, the DOD Business
Enterprise Architecture, the DOD acquisition lifecycle management
process, and provisions of current governing legislation. The Forward
Compatible Military Pay system then will be reviewed through the
Business Management Modernization Program process. DOD's comments
appear in their entirety in enclosure I.
We are sending copies of this report to the appropriate congressional
committees. We will place a copy of this letter on GAO's Web site at
http://www.gao.gov. If you have any questions concerning the
information provided, please call me on (202) 512-5559 or Donald C.
Snyder on (202) 512-7204.
Sincerely yours,
Derek B. Stewart
Director, Defense Capabilities and Management:
Signed by Derek B. Stewart
Enclosure:
[End of section]
Enclosure I: Comments from the Department of Defense:
UNDER SECRETARY OF DEFENSE:
1100 DEFENSE PENTAGON WASHINGTON, DC 20301-1100:
OCT 1-2003:
COMPTROLLER:
Mr. Derek B. Stewart:
Director, Defense Capabilities and Management U.S. General Accounting
Office:
Washington, D.C. 20548:
Dear Mr. Stewart:
This is the Department of Defense (DoD) response to the GAO draft
report, GAO-03-1163R, "MILITARY PERSONNEL: DFAS Has Not Met All
Information Technology Requirements for Its New Pay System," dated
September 24, 2003, (GAO Code 350295).
The Forward Compatible Payroll (FCP) is a replacement of the aging
Defense Joint Military Pay System (DJMS), which currently services all
active, reserve, and guard members of the Departments of Army, Navy,
and Air Force. The FCP will replace DJMS with a modern, technologically
efficient integrated active/reserve/guard payroll capability, until
the fully integrated (military personnel and pay) DIMHRS is developed
and deployed. The FCP will utilize the same Commercial Off-The-Shelf
foundation software (PeopleSoft) as DIMHRS and, indeed, will use the
DoD enterprise software license for PeopleSoft that the DIMHRS Program
has acquired.
Consistent with the GAO request, enclosed is our written response to
the draft report. In general, we concur with the report and
recommendations. The report indicates DFAS has not complied with
specific information technology reporting requirements. If the decision
is made to pursue FCP, DFAS will finalize the appropriate documentation
to satisfy requirements of the Clinger-Cohen Act of 1996, the DoD
Business Enterprise Architecture, the DoD acquisition lifecycle
management process, and provisions of current governing legislation.
The FCP then will be reviewed through the Business Management
Modernization Program process.
In summary, DFAS is in the process of completing the documentation and
review requirements to establish whether the FCP initiative is a viable
information technology investment. The primary action officer is Mr.
Edward Grysavage, 703-607-5032:
Sincerely,
Signed by:
Lawrence J. Lanzillotta:
Principal Deputy and Deputy Under Secretary of Defense (Management
Reform):
Enclosure: As stated:
GAO CODE 350295/GAO-03-1163R:
"MILITARY PERSONNEL: DFAS HAS NOT MET ALL INFORMATION TECHNOLOGY
REQUIREMENTS FOR ITS NEW PAY SYSTEM":
DEPARTMENT OF DEFENSE COMMENTS TO THE RECOMMENDATIONS:
RECOMMENDATION 1: The GAO recommended that the Secretary of Defense
direct the DFAS to submit its Forward Compatible Military Pay system
proposal to the domain owner for determination that it is in compliance
with DoD's Business Enterprise Architecture. (Page 6/Draft Report):
DoD RESPONSE: Concur. As discussed with GAO staff on several occasions,
DFAS is in the process of submitting the FCP system initiative through
the BMMP domain review process. Currently, Life-Cycle Management
documents are in the review and coordination phase.
RECOMMENDATION 2: The GAO recommended that the Secretary of Defense
direct the DoD Comptroller to meet its responsibility under the Bob
Stump National Defense Authorization Act for Fiscal Year 2003, Public
Law 107-314, to determine compliance with the Business Enterprise
Architecture. (Page 6/Draft Report):
DoD RESPONSE: Concur. As discussed with GAO staff, DFAS will report to
the appropriate entities to show compliance with the Business
Enterprise Architecture.
RECOMMENDATION 3: The GAO recommended that the Secretary of Defense
direct the DoD Comptroller to require DFAS to demonstrate that it has
complied with its responsibilities under the "Clinger-Cohen Act of
1996," Public Law 104-106. (Page 6/Draft Report):
DoD RESPONSE: Concur. As discussed with GAO staff, DFAS has drafted and
is finalizing program documentation that demonstrates compliance with
the "Clinger-Cohen Act of 1996.":
RECOMMENDATION 4: The GAO recommended that the DoD Comptroller and DFAS
should complete recommendations 1, 2, and 3 before the final decision
is made to invest in Forward Compatible Pay. (Page 6/Draft Report):
DoD RESPONSE: Concur. As discussed with GAO staff, DFAS will submit the
FCP initiative through the BMMP domain process. Acquisition program
life-cycle documentation will also be developed.
Note: Report number was changed to GAO-04-149R.
Note: Page numbers in the draft report may differ from those in this
report.
FOOTNOTES
[1] DOD is currently developing the DIMHRS that is designed to provide
DOD and the services one integrated, standardized personnel and pay
system that will track service members and their dependents.
[2] DFAS program officials estimate the cost at $16.8 million, but a
Program Analysis and Evaluation estimate came in at $29.9 million
because it included costs that had been left out of the program
officials' estimate.
[3] Public Law 107-314 (Dec.2, 2002), section 1004, Development and
Implementation of Financial Management Enterprise Architecture, which
requires that the investment in excess of $1 million to improve a
defense financial system be consistent with DOD's enterprise
architecture, among other things.
[4] The memorandum (dated Mar. 7, 2003) provides additional information
on how DOD will determine compliance with section 1004 of the Bob Stump
National Defense Authorization Act.
[5] The Federal Acquisition Reform Act of 1996 (FARA) and the
Information Technology Management Reform Act of 1996 (ITMRA) were
renamed the Clinger-Cohen Act of 1996 by the 1997 Omnibus Consolidated
Appropriations Act P.L. 104-208 (Sept. 30, 1996). Both the FARA and the
ITMRA were passed as sections D and E in the National Defense
Authorization Act for Fiscal Year 1996, P.L. 104-106 (Feb. 10, 1996),
which requires federal agencies to maximize the value and assess and
manage the risks associated with investments in information technology.
[6] In May 2003, the DOD Comptroller changed the architecture name from
the Financial Management Enterprise Architecture to the Business
Enterprise Architecture to reflect the transformation of departmentwide
business operations and supporting systems. The Business Enterprise
Architecture is a "blueprint" to guide and constrain DOD's investments
in financial management operations and systems.
[7] U.S. General Accounting Office, DOD Business Systems Modernization:
Continued Investment in Key Accounting Systems Needs to be Justified,
GAO-03-465 (Washington, D.C.: Mar. 28, 2003).
[8] GAO reported in September 2003 that DOD's initial version of the
Business Enterprise Architecture does not adequately address all the
requirements in the National Defense Authorization Act for Fiscal Year
2003. Further, DOD has not yet defined and implemented an effective
approach to select and control business systems investments for
obligations exceeding $1 million while the architecture is being
developed and after it is completed. See U.S. General Accounting
Office, DOD Business Systems Modernization: Important Progress Made to
Develop Business Enterprise Architecture, but Much Work Remains, GAO-
03-1018 (Washington, D.C.: Sept. 19, 2003).
[9] As outlined in DOD's Business Management Modernization Program
governance guidance, domains are based on existing functional business
lines. The 7 domains are: (1) Acquisition; (2) Finance, Accounting
Operations and Financial Management; (3) Human Resource Management; (4)
Installations and Environment; (5) Logistics; (6) Strategic Planning
and Budgeting; and (7) Technical Infrastructure. Domain owners have the
authority, responsibility, and accountability for business
transformation, implementation of the Business Enterprise
Architecture, and portfolio management within their domains. Owners'
responsibilities include: leading business transformation;
establishing and maintaining a domain governance process; performing
system reviews and approving initiative funding; assisting in the
extension of the architecture; enforcing compliance with the
architecture; guiding implementation activities; and representing the
domain on cross-domain issues.
