DOD Business Systems Modernization
Continued Investment in Key Accounting Systems Needs to be Justified Gao ID: GAO-03-465 March 28, 2003The Department of Defense's (DOD) long-standing financial management and business systems modernization problems result in a lack of information needed to make sound decisions, hinder the efficiency of operations, and leave the department vulnerable to fraud, waste, and abuse. Such problems led us in 1995 to put financial management and business systems modernization at DOD on our list of high risk areas in the federal government, a designation that continues today. GAO was asked to (1) provide information on the number and cost of DOD's current business systems and (2) determine if DOD is effectively managing and overseeing selected accounting system investments.
DOD estimated that it had 1,731 business systems for its day-to-day operations as of October 2002. As GAO previously reported, these systems have evolved over time into the overly complex, error prone, duplicative, stovepiped environment that exists today. To support the operation, maintenance, and modernization of its business systems, the department requested approximately $18 billion for fiscal year 2003. Funding is only part of the solution to improving DOD's current system environment. A key ingredient to success is effectively managing and overseeing these investments. DOD has invested approximately $316 million in four key Defense Finance and Accounting Service (DFAS) projects. However, DOD has not demonstrated that this substantial investment will markedly improve DOD financial management information needed for decision-making and financial reporting purposes. In fact, the DOD Comptroller terminated one project in December 2002, after an investment of over $126 million, citing poor program performance and increasing costs. Continued investment in the other three projects has not been justified because requisite analyses of the costs, benefits, and risks of each one do not reflect cost increases and/or schedule delays. DOD oversight of the four DFAS projects has not been effective. Collectively, DFAS, the DOD Comptroller, and the DOD Chief Information Officer share investment management responsibility for these four projects. However, these DOD oversight entities have not questioned the impact of the cost increases and schedule delays and allowed the projects to proceed absent the requisite analytical justification.
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-03-465, DOD Business Systems Modernization: Continued Investment in Key Accounting Systems Needs to be Justified
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Report to the Chairman, Subcommittee on National Security, Emerging
Threats, and International Relations, Committee on Government Reform,
House of Representatives:
March 2003:
DOD Business Systems Modernization:
Continued Investment in Key Accounting Systems Needs to be Justified:
GAO-03-465:
GAO Highlights:
Highlights of GAO-03-465, a report to the Chairman, Subcommittee on
National Security, Emerging Threats, and International Relations,
Committee on Government Reform, House of Representatives
Why GAO Did This Study:
The Department of Defense‘s (DOD) long-standing financial management
and business systems modernization problems result in a lack of
information needed to make sound decisions, hinder the efficiency of
operations, and leave the department vulnerable to fraud, waste, and
abuse. Such problems led us in 1995 to put financial management and
business systems modernization at DOD on our list of high-risk areas
in the federal government, a designation that continues today. GAO was
asked to (1) provide information on the number and cost of DOD‘s
current business systems and (2) determine if DOD is effectively
managing and overseeing selected accounting system investments.
What GAO Found:
DOD estimated that it had 1,731 business systems for its day-to-day
operations as of October 2002. As GAO previously reported, these
systems have evolved over time into the overly complex, error prone,
duplicative, stovepiped environment that exists today. To support the
operation, maintenance, and modernization of its business systems, the
department requested approximately $18 billion for fiscal year 2003.
Funding is only part of the solution to improving DOD‘s current system
environment. A key ingredient to success is effectively managing and
overseeing these investments.
DOD has invested approximately $316 million in four key Defense Finance
and Accounting Service (DFAS) projects. However, DOD has not
demonstrated that this substantial investment will markedly improve DOD
financial management information needed for decision-making and
financial reporting purposes. In fact, the DOD Comptroller terminated
one project in December 2002, after an investment of over $126 million,
citing poor program performance and increasing costs. Continued
investment in the other three projects has not been justified because
requisite analyses of the costs, benefits, and risks of each one do not
reflect cost increases and/or schedule delays.
[See PDF for image]
[End of table]
DOD oversight of the four DFAS projects has not been effective.
Collectively, DFAS, the DOD Comptroller, and the DOD Chief Information
Officer share investment management responsibility for these four
projects. However, these DOD oversight entities have not questioned the
impact of the cost increases and schedule delays and allowed the
projects to proceed absent the requisite analytical justification.
What GAO Recommends:
March 2003
This report recommends that the Secretary of Defense limit future
investments by the Defense Finance and Accounting Service (DFAS) in
three ongoing system projects we reviewed until each has been
adequately justified. The report also recommends that all other DFAS
information technology projects be evaluated to ensure they are being
implemented at acceptable costs and within reasonable time frames.
DOD concurred with our recommendations and described efforts to address
them.
www.gao.gov/cgi-bin/getrpt?GAO-03-465.
To view the full report, including the scope
and methodology, click on the link above.
For more information, contact Gregory Kutz,
(202) 512-9095 (kutzg@gao.gov) or
Randolph Hite (202) 512-3439
(hiter@gao.gov).
[End of section]
Letter:
Results in Brief:
Background:
DOD Is Investing Billions of Dollars Annually to Operate, Maintain, and
Modernize Its Business Systems:
Investment Management and Oversight of Key DFAS Accounting Systems Has
Not Been Effective:
Conclusions:
Recommendations for Executive Action:
Agency Comments and Our Evaluation:
Appendixes:
Appendix I: Scope and Methodology:
Appendix II: Comments from the Under Secretary of Defense:
Appendix III: GAO Contacts and Staff Acknowledgments:
Tables:
Table 1: DFAS Fiscal Year 2002 Financial Operations:
Table 2: Reported DOD Business Systems by Functional Area:
Table 3: Proposed Allocation of DOD‘s Fiscal Year 2003 IT Budget:
Table 4: Reported Cost Increases and Schedule Delays for the Four DFAS
Projects Reviewed:
Table 5: Reported Investment in DPPS, DDRS, and DSDS:
Figures:
Figure 1: Intended Interrelationship of the Four DFAS Projects:
Figure 2: Distribution of DOD‘s Fiscal Year 2003 $26 Billion IT Budget
Request (dollars in billions):
Figure 3: DCD/DCW Schedule Slippages and Cost Increases:
Figure 4: DPPS Schedule Slippages and Cost Increases:
Figure 5: DDRS Cost Increases and Schedule Delays:
Figure 6: DSDS Schedule Delays:
Figure 7: ITIM Stages of Maturity:
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Letter March 28, 2003:
The Honorable Christopher Shays
Chairman
Subcommittee on National Defense, Emerging Threats,
and International Relations
Committee on Government Reform
House of Representatives:
Dear Mr. Chairman:
The Department of Defense‘s (DOD) long-standing financial management
and business systems[Footnote 1] modernization problems result in a
lack of information needed to make sound decisions, hinder the
efficiency of operations, and leave the department vulnerable to fraud,
waste, and abuse. Such problems led us in 1995 to put financial
management and business systems modernization at DOD on our list of
high-risk areas[Footnote 2] in the federal government, a designation
that continues today.[Footnote 3] DOD‘s financial management problems
are the result of challenges in the area of human capital, processes
(internal controls), and its inability to effectively modernize its
business systems.
The President has made financial management and the use of technology
integral to his fiscal year 2002 Management Agenda for making the
federal government more focused on results. The President‘s Management
Agenda states, ’Without accurate and timely information it is not
possible to accomplish the President‘s agenda to secure the best
performance and the highest measure of accountability for the American
people.“ Additionally, in September 2002, the Secretary of Defense
identified the modernization of DOD‘s financial management and business
operations as one of his top 10 priorities.
This report responds to your request for information about DOD‘s
current and planned business systems environment and its management of
certain key accounting system projects. As agreed with your office, our
objectives were to (1) identify the number of existing business systems
and the estimated cost to operate, maintain, and modernize systems and
(2) determine if DOD is effectively overseeing selected business system
investments made by the Defense Finance and Accounting Service (DFAS)-
-the centralized accounting agency for DOD.
To evaluate the effectiveness of information technology (IT) investment
management and oversight practices, we selected four DFAS system
acquisition projects as case studies. We selected these projects
because all four were intended to benefit the entire department by
addressing DOD‘s financial management weaknesses in the areas of data
accuracy, financial reporting, and problem disbursements. In reviewing
these four system projects, we relied on documentation, including cost
estimates, provided by DFAS. We did not verify the accuracy and
completeness of the cost information provided by DFAS. Our work was
performed from November 2001 to January 2003 in accordance with U.S.
generally accepted government auditing standards. Details on our scope
and methodology are included in appendix I. We requested comments on a
draft of this report from the Secretary of Defense or his designee.
Written comments from the Under Secretary of Defense (Comptroller) are
reprinted in appendix II.
Results in Brief:
As part of its ongoing business systems modernization program, DOD is
creating a repository of information about its existing systems
environment. As of October 2002, DOD reported that its current business
system environment consisted of 1,731 DOD systems and system
acquisition projects. DOD officials said they believe the inventory is
fairly comprehensive, given the in-depth work the department has
undertaken over the past 18 months to develop this information, but
acknowledge that it likely does not include all systems. More
importantly, as we testified before this Subcommittee,[Footnote 4]
these systems are acknowledged by DOD to be error prone, duplicative,
and stovepiped. To support its existing business systems environment,
the department requested approximately $18 billion for fiscal year
2003. However, funding alone is not the solution to improving DOD‘s
current systems environment. A key to success is effectively managing
and overseeing its investments in systems.
DOD has not effectively managed and overseen its planned investment of
over $1 billion in four DFAS system modernization efforts.
Specifically, one project did not have an economic analysis, and the
other three did not have approved economic analyses that reflected the
fact that expected project costs had increased, while in some cases the
benefits had decreased. One project‘s estimated cost had increased by
as much as $274 million, while the schedule slipped by almost 4 years.
Such analyses provide the requisite justification for decision makers
to use in determining whether to invest additional resources in
anticipation of receiving commensurate benefits and mission value. For
each of these projects, DOD oversight entities--DFAS, the DOD
Comptroller, and the DOD Chief Information Officer (CIO)--could not
provide documentation that indicated they questioned the impact of the
cost increases and schedule delays, and allowed the projects to proceed
in the absence of the requisite analytical justification. For example,
in one case, they allowed a $270 million project to proceed without an
economic analysis. In another case, they allowed a project to continue
despite known concerns with the validity of the project‘s economic
analysis. After spending over $126 million as of September 2002, the
DOD Comptroller terminated the latter project in December 2002, citing
poor program performance and increasing costs.
This report recommends that the Secretary of Defense limit future
investments in the remaining three DFAS system projects until such
investments have been adequately justified. Additionally, we are
recommending that all remaining DFAS IT projects be evaluated to ensure
they are being implemented at acceptable cost and within reasonable
time frames. In its comments on a draft of this report, DOD agreed with
our recommendations and briefly outlined its actions for addressing
them.
Background:
DFAS, as DOD‘s central accounting agency, is responsible for recording
and processing accounting transactions; paying vendors, contractors,
and military and civilian employees; preparing reports used by DOD
managers and by the Congress; and preparing DOD-wide and service-
specific financial statements required by the Chief Financial Officers
Act. Organizationally, DFAS is under the direction of the Under
Secretary of Defense (Comptroller). Table 1 illustrates the enormous
scope and importance of DFAS‘s reported fiscal year 2002 financial
operations.
Table 1: DFAS Fiscal Year 2002 Financial Operations:
Type of activity: Accounting transactions; Volume of activity: 124
million.
Type of activity: Disbursements made; Volume of activity: $346.6
billion.
Type of activity: Invoices paid; Volume of activity: 11.2 million.
Type of activity: Military and civilian employees, retirees, and
annuitants paid; Volume of activity: 5.7 million.
Type of activity: Active DOD appropriations; Volume of activity: 267.
Source: DFAS:
[End of table]
DFAS‘s fiscal year 2003 IT budgetary request was approximately $494
million.[Footnote 5] Of that amount, $353 million relates to the
operation and maintenance of existing DFAS systems and the remaining
$141 million is for the modernization of systems. The purpose of each
DFAS project we reviewed is highlighted below.
DFAS Corporate Database/DFAS Corporate Warehouse (DCD/DCW). DCD and DCW
were originally separate initiatives. DCD was initiated in October
1998, and was to be the single DFAS database, meaning it was to contain
all DOD financial information required by DFAS systems and would be the
central point for all shared data within DFAS. To accomplish this goal,
DCD would crosswalk[Footnote 6] detailed transaction data from
nonstandard finance and feeder[Footnote 7] systems into a standard
format. Further, once the department implemented standard systems, the
need to perform these crosswalks would be eliminated. In February 2001,
the project‘s scope was revised after DFAS realized that crosswalks of
detail transaction data were cumbersome and cost prohibitive. DFAS is
planning to crosswalk detailed transaction data only when information
from multiple systems must be aggregated to satisfy a cross-service
need such as the working capital fund activities.
DCW was initiated in July 2000 to provide a historical database to
store and manage official DFAS information for analysis and generation
of operational reports and queries. In November 2000, the DFAS CIO
combined DCD/DCW into one program. In March 2001, DCD/DCW was
designated as a major automated information system.[Footnote 8]
Defense Procurement Payment System (DPPS). DFAS determined the need for
DPPS in April 1995. DPPS was intended to be the standard, automated
information system for contract and vendor pay authorization and
addressing deficiencies associated with overpayments, negative
unliquidated obligations,[Footnote 9] and unmatched
disbursements[Footnote 10]--all of which are long-standing problems in
DOD. DPPS also was to incrementally replace eight contract and vendor
systems. In October 1995, the DFAS Director approved proceeding with
defining and evaluating the feasibility of alternative concepts and
assessing the relative merits of these concepts. In November 1996, the
Office of the Assistant Secretary of Defense (Command, Control,
Communications, and Intelligence)--DOD‘s CIO--designated DPPS a major
automated information system. DFAS awarded a contract in June 1998 for
the acquisition of a system that was intended to address DOD‘s contract
and vendor pay deficiencies.
Defense Standard Disbursing System (DSDS). Disbursing activities for
DOD are largely accomplished through systems that were designed 15-20
years ago. In 1997, DFAS launched DSDS to be the single, standard DFAS
automated information system for collecting, processing, recording, and
reporting disbursement data and transactions for the military services
and defense agencies. These disbursing functions are currently being
provided by multiple automated information systems and manual
activities at various DFAS locations.
Defense Departmental Reporting System (DDRS). In April 1997, DFAS
initiated DDRS to be the standardized departmental reporting system.
DDRS has two phases. The first phase--DDRS-AFS (Audited Financial
Statements)--is intended to be a departmentwide financial reporting
system. The second phase--DDRS-Budgetary--is intended to establish a
departmentwide budgetary reporting system. Among other things, DDRS is
intended to reduce the number of departmental reporting systems and
standardize departmental general ledger processes.
These four projects are part of the DFAS Corporate Information
Infrastructure (DCII) program. According to DFAS, DCII is intended to
facilitate cross-functional, integrated processes; promote
standardized data and reporting; facilitate standardized business
practices; reduce cost of operations; and provide timely information
for decision making. Figure 1 depicts a high-level view of the
interrelationships among these four system projects.
Figure 1: Intended Interrelationship of the Four DFAS Projects:
[See PDF for image]
[A] Feeder systems are outside the direct control of DFAS. These are
the systems used by DOD‘s various functional areas such as acquisition,
logistics, and personnel. DOD has estimated that 80 percent of the
department‘s financial management data comes from the feeder systems
controlled by the military services and defense agencies.
[B] Electronic commerce/electronic data interchange. Electronic
commerce is the interchange and processing of information using
electronic techniques for accomplishing business. Electronic data
interchange is the computer-to-computer exchange of business data in a
standardized format between entities.
[End of figure]
Overview of DFAS and DOD System Acquisition Management and Oversight
Process:
DOD and DFAS have an established acquisition management and oversight
process for acquiring, operating, and maintaining business systems.
Among other things, this process requires project managers to provide
cost, schedule, and performance data to the DFAS Chief Information
Officers/Business Integration Executive (CIO/BIE) Council--DFAS‘s IT
investment board--prior to scheduled milestone[Footnote 11] reviews.
These milestones are intended to be decision points for determining
whether a project should continue in the current phase of the system
life-cycle, proceed to the next phase, be modified, or be terminated.
The results of these reviews are to be set forth in a system decision
memorandum which is to be signed by the milestone decision authority.
The milestone decision authority for DSDS and DDRS is the Director,
DFAS. The DOD CIO is the milestone decision authority for DCD/DCW and
DPPS.
Prior Reviews Have Identified Problems With DOD‘s Management and
Oversight of System Acquisitions:
We and the DOD Inspector General have continued to report on a variety
of long-standing management problems for modernizing DOD‘s IT systems.
Three recent system endeavors that have fallen short of their intended
goals illustrate these problems. They are the Standard Procurement
System, the Defense Travel System, and the Defense Joint Accounting
System. These efforts were aimed at improving the department‘s
financial management and related business operations. Significant
resources--in terms of dollars, time, and people--have been invested in
these three efforts.
Standard Procurement System (SPS). In November 1994, DOD began the SPS
program to acquire and deploy a single automated system to perform all
contract management-related functions within DOD‘s procurement process
for all DOD organizations and activities. The laudable goal of SPS was
to replace 76 existing procurement systems with a single departmental
system. DOD estimated that SPS had a life-cycle cost of approximately
$3 billion over a 10-year period. According to DOD, SPS was to support
about 43,000 users at over 1,000 sites worldwide and was to interface
with key financial management functions, such as payment processing.
Additionally, SPS was intended to replace the contract administration
functions currently performed by the Mechanization of Contract
Administration Services, a system implemented in 1968. Our July 2001
report[Footnote 12] and February 2002 testimony[Footnote 13] identified
weaknesses in the department‘s management of its investment in SPS.
Specifically:
* The department had not economically justified its investment in the
program because its latest (January 2000) analysis of costs and
benefits was not credible. Further, this analysis showed that the
system, as defined, was not a cost-beneficial investment.
* The department had not effectively addressed the inherent risks
associated with investing in a program as large and lengthy as SPS
because it had not divided the program into incremental investment
decisions that coincided with incremental releases of system
capabilities.
* Although the department committed to fully implementing the system by
March 31, 2000, this target date had slipped by over 3 ½ years to
September 30, 2003, and program officials have recently stated that
this date will also not be met.
Defense Travel System (DTS). In July 2002,[Footnote 14] the DOD
Inspector General raised concerns that DTS remained a program at high
risk of not being an effective solution in streamlining the DOD travel
management process. The report stated that ’The Defense Travel System
was being substantially developed without the requisite requirements,
cost, performance, and schedule documents and analyses needed as the
foundation for assessing the effectiveness of the system and its return
on investment.“ The report further noted there was increased risk that
the $114.8 million and 6 years of effort already invested will not
fully realize all goals to reengineer temporary duty travel, make
better use of IT, and provide an integrated travel system.
Additionally, the DOD Inspector General reported that DTS was to cost
approximately $491.9 million (approximately 87 percent more than the
original contract cost of $263.7 million) and DOD estimates that
deployment will not be completed until fiscal year 2006, approximately
4 years behind schedule.
Defense Joint Accounting System (DJAS). In 1997, DOD selected
DJAS[Footnote 15] to be one of three general fund accounting systems.
The other two general fund systems were the Standard Accounting and
Reporting System and the Standard Accounting and Budgetary Reporting
System. As originally envisioned, DJAS would perform the accounting for
the Army and the Air Force as well as the DOD transportation and
security assistance areas. Subsequently, in February 1998, DFAS decided
that the Air Force could withdraw from using DJAS, because either the
Air Force processes or the DJAS processes would need significant
reengineering to permit use of a joint accounting system. As a result,
the Air Force started its own general fund accounting system--General
Fund and Finance System--which resulted in the development of a fourth
general fund accounting system.
In June 2000, the DOD Inspector General reported[Footnote 16] that DFAS
was developing DJAS at an estimated life-cycle cost of about $700
million without demonstrating that the program was the most cost-
effective alternative for providing a portion of DOD‘s general fund
accounting. More specifically, the report stated that DFAS had not
developed a complete or fully supportable feasibility study, analysis
of alternatives, economic analysis, acquisition program baseline, or
performance measures, and had not reengineered business processes.
DOD Is Investing Billions of Dollars Annually to Operate, Maintain, and
Modernize Its Business Systems:
As part of its ongoing business systems modernization program, and
consistent with our past recommendation,[Footnote 17] DOD is creating a
repository of information about its existing systems environment. As of
October 2002, DOD reported that its current business systems
environment consisted of 1,731 systems and system acquisition projects.
In particular, DOD reported that it had 374 systems to support civilian
and military personnel matters, 335 systems to perform finance and
accounting functions, and 310 systems that produce information for
management decision making. Table 2 presents the composition of DOD
business systems by functional area.
Table 2: Reported DOD Business Systems by Functional Area:
Functional area: Personnel; Army: 266; Navy: 49; Air Force: 13; DFAS:
19; DLA: 0; Other: 27; Total: 374.
Functional area: Finance and accounting; Army: 79; Navy: 61; Air Force:
27; DFAS: 131; DLA: 9; Other: 28; Total: 335.
Functional area: Management information; Army: 156; Navy: 40; Air
Force: 50; DFAS: 14; DLA: 4; Other: 46; Total: 310.
Functional area: Inventory; Army: 98; Navy: 53; Air Force: 40; DFAS: 7;
DLA: 7; Other: 17; Total: 222.
Functional area: Acquisition; Army: 18; Navy: 10; Air Force: 22; DFAS:
0; DLA: 5; Other: 19; Total: 74.
Functional area: Budget formulation; Army: 25; Navy: 18; Air Force: 10;
DFAS: 5; DLA: 0; Other: 10; Total: 68.
Functional area: Cost; Army: 19; Navy: 29; Air Force: 8; DFAS: 0; DLA:
1; Other: 4; Total: 61.
Functional area: Logistics; Army: 12; Navy: 6; Air Force: 22; DFAS: 3;
DLA: 7; Other: 5; Total: 55.
Functional area: National defense property management; Army: 5; Navy:
12; Air Force: 25; DFAS: 1; DLA: 2; Other: 1; Total: 46.
Functional area: Travel; Army: 9; Navy: 13; Air Force: 3; DFAS: 2; DLA:
0; Other: 5; Total: 32.
Functional area: Real property management; Army: 17; Navy: 4; Air
Force: 6; DFAS: 0; DLA: 0; Other: 1; Total: 28.
Functional area: Time and attendance; Army: 3; Navy: 14; Air Force: 2;
DFAS: 2; DLA: 3; Other: 1; Total: 25.
Functional area: Budget execution; Army: 6; Navy: 4; Air Force: 2;
DFAS: 7; DLA: 0; Other: 3; Total: 22.
Functional area: Personal property management; Army: 3; Navy: 7; Air
Force: 7; DFAS: 0; DLA: 0; Other: 4; Total: 21.
Functional area: Procurement; Army: 7; Navy: 5; Air Force: 1; DFAS: 0;
DLA: 3; Other: 4; Total: 20.
Functional area: Vendor payment; Army: 3; Navy: 3; Air Force: 1; DFAS:
7; DLA: 0; Other: 4; Total: 18.
Functional area: Transportation; Army: 5; Navy: 1; Air Force: 4; DFAS:
0; DLA: 0; Other: 2; Total: 12.
Functional area: Other functions combined; Army: 12; Navy: 7; Air
Force: 6; DFAS: 3; DLA: 0; Other: 9; Total: 37.
Functional area: Total; Army: 743; Navy: 336; Air Force: 249; DFAS:
201; DLA: 41; Other: 190; Total: 1,760[A].
Source: DOD Business Modernization Systems Integration Office.
[A] There are 29 reported duplications within the DOD database (e.g.,
systems shown in multiple functional areas). Taking this duplication
into account provides the reported 1,731 business systems.
[End of table]
As we have previously reported,[Footnote 18] these numerous systems
have evolved into the overly complex and error prone operation that
exists today, including (1) little standardization across DOD
components, (2) multiple systems performing the same tasks, (3) the
same data stored in multiple systems, (4) manual data entry into
multiple systems, and (5) a large number of data translations and
interfaces that combine to exacerbate problems with data integrity. The
department has recognized the uncontrolled proliferation of systems and
the need to eliminate as many systems as possible and integrate and
standardize those that remain. In fact, three of the four DFAS projects
we reviewed were intended to reduce the number of systems or eliminate
a portion of different systems that perform the same function. For
example,
* DPPS was intended to consolidate eight contract and vendor pay
systems;
* DDRS is intended to reduce the number of departmental reporting
systems from seven to one; and:
* DSDS is intended to eliminate four different disbursing systems.
Similarly, DTS is intended to be the DOD-wide travel system. According
to data reported by DOD, currently there are 32 travel systems
operating within the department.
For fiscal year 2003, DOD has requested approximately $26 billion in IT
funding to support a wide range of military operations as well as DOD
business system operations. As shown in figure 2, the $26 billion is
spread across the military services and defense agencies. Each receives
its own funding for IT investments.
Figure 2: Distribution of DOD‘s Fiscal Year 2003 $26 Billion IT Budget
Request (dollars in billions):
[See PDF for image]
[A] Defense Logistics Agency is DOD‘s logistics manager for all
consumable and some repair items; its primary business function is
providing supply support to sustain military operations and readiness.
[B] Other DOD components include entities such as DFAS and the Defense
Commissary Agency.
[C] Defense Information Systems Agency provides DOD and other
organizations a wide range of information services such as data
processing, telecommunication services, and database management.
[End of figure]
The $26 billion supports three categories of IT--business systems,
business systems infrastructure, and national security systems (NSS)--
the first two of which comprise the 1,731 business systems. DOD defines
these three categories as follows:
* Business systems--used to record the events associated with DOD‘s
functional areas. Such areas include finance, logistics, personnel, and
transportation.
* Business systems infrastructure--represents the costs associated with
the operations of the department‘s business systems. Such costs would
include transmission lines, network management, and information
security.
* National Security System (NSS)--intelligence systems, cryptologic
activities related to national security, military command and control
systems, and equipment that is an integral part of a weapon or weapons
system, or is critical to the direct fulfillment of military or
intelligence mission.
As shown in table 3, approximately $18 billion--the nearly $5.2 billion
for business systems and the $12.8 billion for business systems
infrastructure--relates to the operation, maintenance, and
modernization of DOD‘s 1,731 business systems.
Table 3: Proposed Allocation of DOD‘s Fiscal Year 2003 IT Budget:
Dollars in millions.
Air Force; Business systems: $578; Business system infrastructure:
$3,178; NSS: $2,674; Total: $6,430.
Navy; Business systems: 1,397; Business system infrastructure: 2,674;
NSS: 1,444; Total: 5,515.
Army; Business systems: 1,122; Business system infrastructure: 2,223;
NSS: 1,823; Total: 5,168.
DISA; Business systems: 45; Business system infrastructure: 3,190; NSS:
648; Total: 3,884.
Tricare; Business systems: 444; Business system infrastructure: 452;
NSS: 15; Total: 911.
DLA; Business systems: 434; Business system infrastructure: 407; NSS:
24; Total: 865.
Other DOD components; Business systems: 1,135; Business system
infrastructure: 676; NSS: 1,843; Total: 3,653.
Total; Business systems: $5,155; Business system infrastructure:
$12,800; NSS: $8,471; Total: $26,426.
Source: GAO analysis based on DOD‘s fiscal year 2003 IT budget request:
[End of table]
As we have reported,[Footnote 19] while DOD plans to invest billions of
dollars in modernizing its financial management and other business
support systems, it does not yet have an overall blueprint--or
enterprise architecture--in place to guide and direct these
investments. Our review of practices at leading organizations showed
they were able to provide reasonable assurance that their business
systems addressed corporate--rather than individual business units--
objectives by using enterprise architectures to guide and constrain
investments.[Footnote 20]
Consistent with our recommendation,[Footnote 21] DOD is now working to
develop a financial management enterprise architecture, which is a
positive step. Further, Section 1004 of the National Defense
Authorization Act for Fiscal Year 2003[Footnote 22] directs DOD to
develop an enterprise architecture not later than May 1, 2003, and that
a transition plan accompany the architecture that delineates how the
architecture will be implemented. The act also directs that we provide
an assessment to the congressional defense committees as to whether DOD
has complied with the provisions of Section 1004.
Investment Management and Oversight of Key DFAS Accounting Systems Has
Not Been Effective:
DOD management and oversight authorities for the four case study
projects are DFAS, the DOD Comptroller, and the DOD CIO. They permitted
each project to proceed despite the absence of the requisite analysis
to demonstrate that the projects will produce value commensurate with
the costs being incurred. For example, an economic analysis has yet to
be prepared for DCD/DCW and the other three projects did not have
economic analyses that reflected the fact that project costs,
schedules, and/or expected benefits had changed materially. Table 4
highlights these cost increases and schedule delays.
Table 4: Reported Cost Increases and Schedule Delays for the Four DFAS
Projects Reviewed:
Dollars in millions.
DCD/DCW[B]; Original cost estimate: $229; Current
cost estimate: $270; Original planned date (fiscal year) of full
operational capability[A]: 2001; Current planned date (fiscal year) of
full operational capability: 2005.
DPPS; Original cost estimate: $278; Current cost
estimate: $552; Original planned date (fiscal year) of full operational
capability[A]: 2002; Current planned date (fiscal year) of full
operational capability: 2006.
DDRS; Original cost estimate: $ 52; Current cost
estimate: $170; Original planned date (fiscal year) of full operational
capability[A]: 1999; Current planned date (fiscal year) of full
operational capability: 2004.
DSDS; Original cost estimate: $151[C]; Current
cost estimate: $151; Original planned date (fiscal year) of full
operational capability[A]: 2002; Current planned date (fiscal year) of
full operational capability: 2006.
Total; Original cost estimate: $710; Current cost
estimate: $1,143; Original planned date (fiscal year) of full
operational capability[A]: [Empty]; Current planned date (fiscal year)
of full operational capability: [Empty].
Source: GAO based upon information provided by DFAS.
[A] Full operational capability means the system is deployed and
operating at all intended locations.
[B] When DFAS initiated the DCW in July 2000, a full operational
capability date was not established. The current full operational
capability date applies to both DCD and DCW since they were combined
into one program in November 2000.
[C] DSDS began in 1997; however, a cost estimate was not developed
until September 2000, and this estimate has not been updated.
[End of table]
In the case of DPPS, the estimated costs had increased by $274 million
and the schedule had slipped by almost 4 years. In December 2002,
following our discussions with DOD Comptroller officials, the DOD
Comptroller terminated DPPS after 7 years of effort and an investment
of over $126 million. In making this decision, the DOD Comptroller
noted that the project was being terminated due to poor program
performance and increasing costs.
The Clinger-Cohen Act of 1996 and Office of Management and Budget (OMB)
guidance provide an effective framework for IT investment
management.[Footnote 23] They emphasize the need to have investment
management processes and information to help ensure that IT projects
are being implemented at acceptable costs and within reasonable and
expected time frames and that they are contributing to tangible,
observable improvements in mission performance. DOD policy also
reflects these investment principles by requiring that investments be
justified by an economic analysis.[Footnote 24] More specifically, the
policy states that the economic analysis is to reflect both the life-
cycle cost and benefit estimates, including a return-on-investment
calculation, to demonstrate that the proposed investment is
economically justified before it is made.
DCD/DCW Has Not Been Economically Justified:
After 4 years of effort and an investment of approximately $93 million,
DOD has yet to economically justify that its investment in DCD/DCW will
result in tangible improvement in DOD financial management operations.
Consistent with the Clinger-Cohen Act, DOD and DFAS systems acquisition
guidance[Footnote 25] requires that certain documentation be prepared
at each milestone within the system life-cycle. This documentation is
intended to provide relevant information for management oversight and
in making decisions as to whether the investment of resources is cost
beneficial.
A key piece of information--the economic analysis--was never completed
for the DCD/DCW project. In May 2000, the Director, DFAS, granted
approval to continue with development of DCD with a condition that a
cost benefit analysis be completed by June 2000. DFAS completed a draft
cost benefit analysis for DCD in October 2000. This document was not
finalized and in November 2000, DCD/DCW were combined into one program.
Since that time, DCD/DCW has continued without a valid, well-supported
economic justification to support continued investment in DCD/DCW. DCD
project management officials stated that the economic analysis has not
been finalized because they were unable to agree on how to compute the
return on investment and demonstrate that benefits exceeded costs.
In March 2001, DCD/DCW was designated a Major Automated Information
System, and as such, DOD‘s Office of Program Analysis and Evaluation
(PA&E) is required to assess the economic analysis and provide any
recommendations to the DOD CIO. However, after approximately 2 years,
the economic analysis still has not been developed and PA&E officials
stated that it did not anticipate receiving the economic analysis until
May 2003. At the same time, as highlighted in figure 3, the cost and
schedule of this project have continued to increase over the years.
Figure 3: DCD/DCW Schedule Slippages and Cost Increases:
[See PDF for image]
[End of figure]
Additionally, the planned functionality of DCD has been drastically
reduced since the original concept was set forth. Originally, DCD was
to contain all DOD financial information required by DFAS systems,
making it the central point for all shared data within DFAS. To
accomplish this goal, DCD was to crosswalk[Footnote 26] detailed
transactions from nonstandard finance and feeder systems into a
standard format, pending the acquisition and implementation of standard
feeder systems. In February 2001, the scope of the DCD project was
revised after DFAS realized, through testing of Air Force detailed
transactions from feeder systems, that the planned crosswalks were
cumbersome and cost prohibitive. Currently, DFAS is planning to
crosswalk detailed transaction data only when information from multiple
systems must be aggregated to satisfy a cross-service need such as the
working capital fund activities. This will result in the originally
envisioned capability not being provided. Additionally, DCD/DCW will
continue to rely on the error-plagued data in the feeder systems and
will not produce financial records that are traceable to transaction-
level data. According to the DOD Inspector General, DCD was a high-risk
effort because there was no assurance that DCD and other financial
management systems would standardize DOD business processes; reduce the
number of finance, accounting, and feeder systems; reduce costs; and
produce accurate and auditable financial information.[Footnote 27]
Until the economic analysis is finalized, DOD does not know if its
investment in DCD/DCW is justified and the decision to move to the next
milestone will continue to be delayed. Nevertheless, DOD continues to
spend funds to perform tasks in anticipation of milestone approval
being received. In fiscal year 2002, according to DFAS officials,
approximately $36 million was spent on DCD/DCW.
Economic Justification for the Other Three Projects Is Not Current:
DOD had developed an economic analysis for each of the remaining three
projects. However, these analyses had not been updated to reflect
schedule delays, cost increases, and changes in scope that have
occurred--each of which has an impact on the projected benefits that
were originally justified. Nevertheless, as shown in table 5,
investment in each project continues.
Table 5: Reported Investment in DPPS, DDRS, and DSDS:
Dollars in millions.
DPPS; Date of the economic analysis: February
1998; Fiscal year 2002 investment: $20; Total investment as of
September 2002: $126.5.
DDRS; Date of the economic analysis: October 1998;
Fiscal year 2002 investment: $10; Total investment as of September
2002: $57.5.
DSDS; Date of the economic analysis: September
2000; Fiscal year 2002 investment: $7; Total investment as of September
2002: $39.
Total; Date of the economic analysis: [Empty];
Fiscal year 2002 investment: $37; Total investment as of September
2002: $223.
Source: GAO based on information provided by DFAS:
[End of table]
The investment of resources in a system project should be conditional
upon analytical justification that the proposed investment will produce
commensurate value. As called for in OMB guidance,[Footnote 28]
analyses of investment costs, benefits, and risks should be (1) updated
throughout a project‘s life cycle to reflect material changes in
project scope and estimates and (2) used as a basis for ongoing
investment selection and control decisions. To do less presents the
risk of continued investment in projects on the basis of outdated and
invalid economic justification.
In the case of DPPS, PA&E questioned the validity of the economic
analysis developed by DFAS. Since DPPS is classified as a major
automated information system, the economic analysis is to be reviewed
by PA&E. In its May 1998 assessment of the economic analysis, PA&E
questioned areas such as the validity of the estimated savings and the
ability to implement DPPS within the original estimated cost and
schedule. According to DOD officials, these issues were resolved, but
they could not provide any documentation to substantiate their
position. The DOD CIO subsequently granted permission to continue the
project.
Over the years, as shown in figure 4, the DPPS effort has been marked
by significant increases in cost and schedule delays.
Figure 4: DPPS Schedule Slippages and Cost Increases:
[See PDF for image]
[End of figure]
The original full operational capability date of April 2002 slipped to
December 2005--a delay of almost 4 years--with the estimated cost
almost doubling to $552 million. In December 2002, following our
discussion with DOD Comptroller officials of DPPS cost increases and
schedule slippages, the DOD Comptroller terminated DPPS. In making this
decision, the DOD Comptroller noted that the project was being
terminated due to poor program performance and increasing costs.
With regard to DDRS, the economic analysis used to justify this
initiative was developed in October 1998--over 4 years ago. At that
time, it was estimated that DDRS would cost $111 million and be fully
operational by April 2000. However, based upon information provided by
DFAS, and as shown in figure 5, DDRS has experienced increased cost and
schedule delays. However, the economic analysis has not been updated to
reflect the known changes in the project‘s costs and schedule.
Figure 5: DDRS Cost Increases and Schedule Delays:
[See PDF for image]
[End of figure]
Moreover, the intended capability of DDRS as originally envisioned has
been reduced. For example, DDRS is no longer intended to provide the
capability to build an audit trail so that financial data can be
tracked back to its transaction-based support, as originally planned.
The Federal Financial Management Improvement Act of 1996[Footnote 29]
requires that agency financial management systems comply with federal
financial management systems requirements, applicable federal
accounting standards, and the U.S. Government Standard General Ledger
at the transaction level. Systems meeting these requirements should be
able to produce auditable financial statements and otherwise have audit
trail capability. However, DDRS system users will have to rely on the
audit trail capabilities of feeder systems in order to trace individual
transactions to their source documents. As we have previously
reported,[Footnote 30] the data from the feeder systems, which are
outside the control of DFAS and provide approximately 80 percent of the
data that DOD needs for financial reporting purposes, are not reliable.
Additionally, until DCD is operational, DDRS will be receiving data
from the feeder systems in order to prepare the department‘s financial
reports on the results of its operations. Therefore, DOD‘s financial
reports produced by DDRS will (1) continue to be incomplete and
inaccurate and thus not useful for decision-making purposes and (2)
remain unable to withstand the scrutiny of a financial audit.
For DSDS, an economic analysis was prepared in September 2000. However,
it has not been updated to reflect material changes in the project. For
example, as shown in figure 6, the full operational capability (FOC)
date[Footnote 31] at the time the economic analysis was prepared was
February 2003. However, according to information provided by DFAS, the
current FOC date is December 2005--a schedule slippage of almost 3
years.[Footnote 32] Such delays postpone the delivery of promised
benefits. DFAS has stated that the cost information is being updated to
support a Milestone C decision, which they anticipate will occur in
early fiscal year 2004.
Figure 6: DSDS Schedule Delays:
[See PDF for image]
[End of figure]
Additionally, DSDS delivery of promised benefits depends upon the DCD/
DCW being implemented on time. However, as previously discussed, DCD/
DCW implementation has been fraught with difficulties, which has a
corresponding adverse effect on DSDS schedule delays. For example, DCD/
DCW project management officials are in the process of addressing 102
requests for requirement changes. According to the DCD/DCW program
manager, the date for resolving these changes and approving the
Operational Requirements Document is November 2003. Until this process
is completed, affected systems integration testing for other DCD/DCW
dependent systems, such as DSDS, cannot be finalized. Further,
according to DFAS officials, the continued operation of existing legacy
systems may result in an increase to the DSDS life-cycle cost estimate
by approximately $14 million for each 6-month delay. This would quickly
erode the savings of $171 million that DFAS estimated in September
2000, and reconfirmed in January 2003.
Without an updated economic analysis to justify continued investment in
DDRS and DSDS, DOD does not have reasonable assurance that continued
investment will result in commensurate improvement in the financial
management operations of the department.
DOD Oversight of DFAS IT Projects Has Not Been Effective:
DOD‘s oversight over the four DFAS projects we reviewed has been
ineffective. Investment management responsibility for the four projects
rests with DFAS, the DOD Comptroller, and the DOD CIO. In discharging
this responsibility, each has allowed project investments to continue
year after year, even though the projects have been marked by cost
increases, schedule slippages, and capability changes. As a result, DOD
has invested approximately $316 million in the four projects without
adequately knowing if these efforts will resolve some of DOD‘s
financial management difficulties--the rationale upon which each
initiative was undertaken. In fact, as previously noted, after an
investment of over $126 million and 7 years of effort, the DOD
Comptroller terminated DPPS in December 2002.
GAO‘s Information Technology Investment Management (ITIM) maturity
framework[Footnote 33] defines critical processes pertaining to IT
investment management and oversight. Among other things these processes
provide for establishing investment decision-making bodies responsible
for selecting and controlling IT investments by (1) understanding, for
example, each project‘s expected return on investment and associated
costs, schedule, and performance commitments, (2) regularly determining
each project‘s progress toward these expectations and commitments, and
(3) taking corrective actions to address deviations. Additionally, the
Clinger-Cohen Act and OMB guidance similarly emphasize the need to have
investment management processes and information to help ensure that IT
projects are being implemented at acceptable costs and within
reasonable and expected time frames and that they are contributing to
tangible, observable improvements in mission performance (i.e., that
projects are meeting the cost, schedule, and performance commitments
upon which their approval was justified).
Organizationally, within DOD, the Comptroller has overall management
and oversight responsibility for DFAS‘s activities--including system
investments. However, DOD Comptroller officials told us that they were
unaware of the cost increases and schedule slippages on the projects
until we brought them to their attention. Further, these officials said
that they do not review DFAS‘s system investments to ensure that they
are meeting cost, schedule, and performance commitments, stating that
DFAS is responsible for ensuring that projects stay on target in terms
of cost, schedule, and performance. Additionally, they told us that
their review is limited to a review of budgetary information and budget
exhibits, and that they compare the current year budget request to the
previous year‘s request to determine if any significant funding
increases are being requested for the coming fiscal year. If the budget
request is generally consistent from year to year, they said that they
do not raise questions about the project. According to these officials,
the review of DFAS‘s fiscal year 2003 budget did not result in the
identification of issues that warranted further review.
While the DOD Comptroller is the responsible authority for DFAS
activities, DFAS is also responsible for ensuring that its proposed
investments will result in systems that are implemented at acceptable
costs and within reasonable and expected time frames. To fulfill this
responsibility, DFAS established the CIO/BIE Council to oversee system
investments. As outlined in the CIO/BIE Council charter, members of the
council are responsible for, among other things, advising the
Leadership Council--DFAS‘s senior decision-making body--on IT
investment decisions. The CIO/BIE Council membership includes
representatives of DFAS‘s business lines, such as accounting services
and commercial pay, as well as IT management.
In order to assure that the roles, responsibilities, and authorities of
the IT investment board are well defined and that board processes are
clear, the ITIM Framework states that an IT investment process guide
should be created to direct IT investment board operations. While DFAS
has endeavored to give the CIO/BIE a role in the acquisition management
and oversight process, it has not provided clear, consistent guidance
to describe that role and the associated operating procedure. Though
the council charter does mention the CIO/BIE Council‘s
responsibilities, it does not adequately describe them, address the
council‘s authority, or describe how the council is to fulfill its
responsibilities. The DFAS 8000 series also addresses CIO/BIE
responsibilities (DFAS 8000.1-R, Part C). However, the 8000 series does
not describe how the CIO/BIE is expected to execute its
responsibilities, including providing corporate oversight and
reviewing capital budget proposals. The lack of clear definition of
responsibilities and authority limits the council‘s ability to
effectively perform oversight-related activities. For the four IT
investment projects we reviewed, we found no evidence that the CIO/BIE
effectively monitored the cost, schedule, or performance goals of the
four projects.
As previously noted, the DOD CIO is responsible for overseeing major
automated information systems. As such, this office is responsible for
ensuring that the investments being made in DCD/DCW and DPPS are
justified. However, the DOD CIO did not effectively exercise this
authority. In regard to DPPS, the DOD CIO was designated the milestone
decision authority in November 1996. While DOD CIO officials told us
that they were aware of the problems with DPPS, they were unable to
provide any documentation that indicated they had raised concerns with
the DPPS effort.
DCD/DCW was not brought under the purview of the DOD CIO until March
2001--approximately 2½ years after the project began. DOD CIO officials
expressed concerns about the viability of DCD/DCW and questioned DFAS‘s
decision to move forward absent an economic analysis. However, they
were unable to provide us with documentation that indicated they had
carried out their oversight responsibilities and independently
determined whether DCD/DCW was a viable investment.
According to DOD CIO officials, despite being the milestone decision
authority for major projects, they have little practical authority in
influencing component agency IT projects. As such, they said they try
to work with the program managers to ensure that all of the required
documentation for passing the next milestone is prepared, but the
department‘s culture, which rests organizational authority and funding
control with the components, precludes them from exercising effective
IT investment oversight. The comments of the DOD CIO officials support
the fact that the current stovepiped, parochial management of DOD‘s IT
investments has led to the previously discussed proliferation of
business systems. As we previously reported,[Footnote 34] DOD‘s
organizational structure and embedded culture have made it difficult to
implement departmentwide oversight or visibility over information
resources.
Similarly, we recently reported[Footnote 35] that DOD does not yet have
the departmental investment governance structure and process controls
needed to adequately align ongoing investments with DOD‘s architectural
goals and direction. Instead, DOD continues to allow its component
organizations to make their own investment decisions, following
different approaches and criteria. We reported that this stovepiped
decision-making process has contributed to the department‘s current
complex, error prone environment of over 1,700 systems. In particular,
DOD has not yet established and applied common investment criteria to
its ongoing IT system projects using a hierarchy of investment review
and funding decision-making bodies, each composed of representatives
from across the department. DOD also has not yet conducted a
comprehensive review of its ongoing IT investments to ensure that they
are consistent with its architecture development efforts. Until it does
these things, DOD will likely continue to lack effective control over
the billions of dollars it is currently spending on IT projects. To
address this problem we recommended that DOD establish a series of
investment review boards, each responsible and accountable for
selecting and controlling investments that meet defined threshold
criteria, and each composed of the appropriate level of executive
representatives, depending on the threshold criteria, from across the
department. We also reiterated our open recommendations governing
limitations in business system investments pending development of the
architecture.[Footnote 36]
Conclusions:
DOD is investing billions of dollars annually in hundreds of systems
that perform the same function spread across numerous DOD components.
As we have previously reported, this proliferation of systems has
resulted in part because DOD‘s embedded culture and parochial
operations have permitted each of the military services and DOD
agencies to manage and oversee their IT investments apart from one
another. It has also occurred because DOD has not effectively managed
its investments in IT business systems, as our past work and the DOD
Inspector General work have demonstrated. As a result, DOD runs a high
risk that hundreds of millions of dollars will continue to be invested
annually in modernization efforts that will not result in improvements
in the department‘s operations.
In each of the four system projects we discuss in the report, DOD has
invested millions of dollars without economically justifying its
investments, in large part because those entities responsible for
managing and overseeing these investments have not required such
justification despite schedule slippages, cost overruns, and reductions
in planned capability. Urgent need for effective investment control is
exemplified by DPPS--$126 million for a terminated project. More
vigorous oversight of DPPS could have precluded the substantial
investment in this failed effort. Until it has effective investment
management and oversight, DOD will not have reasonable assurance that
its continued investment in the remaining three projects discussed in
this report, as well as its other system projects, are justified.
Recommendations for Executive Action:
We recommend that the Secretary of Defense direct the Under Secretary
of Defense (Comptroller) to limit funding in the DFAS Corporate
Database/ Corporate Warehouse, the Defense Standard Disbursing System,
and the Defense Departmental Reporting System until the DOD
Comptroller, in collaboration with the Assistant Secretary of Defense
(Command, Control, Communications & Intelligence), and the Director,
Program Analysis and Evaluation, demonstrates on the basis of credible
analysis and data that continued investment in these three projects
will produce benefits that exceed costs.
We further recommend that the Secretary of Defense, in light of the
department‘s ongoing efforts to modernize its business systems, direct
the Under Secretary of Defense (Comptroller) to evaluate all remaining
DFAS IT projects and ensure that each project is being implemented at
acceptable costs, within reasonable time frames, and is contributing to
tangible, observable improvements in mission performance.
Agency Comments and Our Evaluation:
DOD provided written comments on a draft of this report. DOD concurred
with our recommendations and identified actions it planned to take to
ensure that future investments in DFAS‘s systems are justified. For
example, the Under Secretary of Defense (Comptroller) noted that the
review of DCD/DCW, DDRS, and DSDS would be completed by June 15, 2003.
Additionally, the Under Secretary of Defense (Comptroller) stated that
all systems would be reviewed as part of the department‘s effort to
establish a financial management enterprise architecture governance
structure. As discussed in our February 2003 report,[Footnote 37] the
governance structure is intended to provide DOD the means to gain
control over its IT investments. However, as noted in our report, we
have not verified or evaluated the extent to which the planned
governance structure will address our recommendation. DOD comments are
reprinted in appendix II.
:
As agreed with your office, unless you announce the contents of this
report earlier, we will not distribute this report until 30 days from
its date. At that time, we will send copies to the Chairman and Ranking
Minority Member, Senate Committee on Armed Services; Chairman and
Ranking Minority Member, Senate Appropriations Subcommittee on Defense;
Chairman and Ranking Minority Member, House Armed Services Committee;
Chairman and Ranking Minority Member, House Appropriations Subcommittee
on Defense; Chairman and Ranking Minority Member, Senate Committee on
Governmental Affairs; Chairman and Ranking Minority Member, House
Committee on Government Reform; the Director, Office of Management and
Budget; the Under Secretary of Defense (Comptroller); the Assistant
Secretary of Defense (Command, Control, Communications & Intelligence);
and the Director, Defense Finance and Accounting Service. Copies of
this report will be made available to others upon request. The report
will also be available on GAO‘s Web site at http://www.gao.gov.
If you or your staff have any questions on matters discussed in this
report, please contact Gregory D. Kutz at (202) 512-9505 or
kutzg@gao.gov or Randolph C. Hite at (202) 512-3439 or hiter@gao.gov.
Major contributors to this report are acknowledged in appendix III.
Signed by:
Gregory D. Kutz
Director, Financial Management and Assurance:
Randolph C. Hite
Director, Information Technology Architecture and Systems Issues:
Signed by Gregory D. Kutz and Randolph C. Hite:
[End of section]
Appendixes:
Appendix I: Scope and Methodology:
To obtain an overview of DOD‘s current business systems environment we
met with representatives of the then Financial Management Modernization
Program Office[Footnote 38] to obtain information on the number of
systems that are part of the current systems environment. We also
reviewed DOD‘s $26 billion fiscal year 2003 IT budget request to
determine what portion of the budget relates to DOD business systems.
Additionally, we reviewed the IT budget to determine the reported
operations, maintenance, development, and infrastructure costs for
DOD‘s business systems.
To determine if DOD was effectively managing and overseeing its IT
investments, we focused on the four system projects previously noted.
To assist us in our evaluation, we used our Information Technology
Investment Management (ITIM) framework. The ITIM identifies critical
processes for successful IT investment and organizes these processes
into a framework of increasingly mature stages. We focused on the Stage
2 critical processes of IT project oversight and IT investment board
practices based on DFAS‘s self assessment that it was at Stage 2.
Figure 7 shows ITIM‘s five stages of maturity.
Figure 7: ITIM Stages of Maturity:
[See PDF for image]
[End of figure]
In addition, we also evaluated DOD‘s and DFAS‘s guidance on systems
acquisition, as it relates to life-cycle management and milestones for
proceeding to the next phase of the system acquisition
process.[Footnote 39] To verify application of the critical processes
and practices, we selected projects that (1) were in different life-
cycle phases of systems development
(2) required oversight by a DOD authority outside of the DOD
Comptroller, such as the Office of the Assistant Secretary of Defense
(Command, Control, Communications & Intelligence)--DOD‘s CIO, and (3)
supported different DFAS business areas such as disbursements and
departmental reporting. For these four projects we reviewed
documentation, such as mission needs statements, acquisition program
baseline updates, and project management plans. According to DOD, it
provided estimates for DCD/DCW and DDRS in constant dollars and DPPS
and DSDS in escalated dollars. We also reviewed and analyzed charters
and meeting minutes of the DFAS investment oversight boards and working
groups. To supplement our document reviews, we interviewed senior DFAS
officials in the CIO and Systems Integration Offices, as well as the
program managers for the four projects. We also met with officials in
the offices of the DOD Comptroller and DOD CIO to obtain an
understanding of their specific duties and responsibilities in
approving, reviewing, and overseeing investments in the four DFAS
systems modernization projects.
We conducted our work at DFAS Headquarters; the Office of the Under
Secretary of Defense (Comptroller); the Office of the Secretary of
Defense Program Analysis and Evaluation; and the Office of the
Assistant Secretary of Defense (Command, Control, Communications &
Intelligence) from November 2001 through January 2003, in accordance
with U.S. generally accepted government auditing standards. We did not
verify the accuracy and completeness of the cost information provided
by DFAS for the four projects we reviewed. We requested comments on a
draft of this report from the Secretary of Defense or his designee. We
received written comments on a draft of this report from the Under
Secretary of Defense (Comptroller), which are reprinted in appendix II.
[End of section]
Appendix II: Comments From the Under Secretary of Defense:
COMPTROLLER:
UNDER SECRETARY OF DEFENSE:
1100 DEFENSE PENTAGON WASHINGTON, DC 20301-1100:
MAR 19 2003:
Mr. Gregory Kutz:
Director, Financial Management and Assurance United States General
Accounting Office Washington, DC 20548:
Dear Mr. Kutz:
This is the Department of Defense (DoD) response to the General
Accounting Office (GAO) draft report, ’DoD Business Systems
Modernization: Continued Investment in Key Accounting Systems Needs to
be Justified,“ dated February 14, 2003, (GAO Code 192043/ GAO-03-465).
We concur with the two recommendations of the draft report. The DoD
comments to the draft GAO recommendations are enclosed. My point of
contact for this matter is Mr. Steven Worton, Director for Business
Modernization and Systems Integration. Mr. Worton may be contacted by
e-mail at wortons@osd.pentagon.mil or by telephone at (703) 607-3380.
Dov S. Zakheim:
Signed by Dov S. Zakheim:
Enclosure:
DoD Comments to GAO Draft Report, ’DOD Business Systems Modernization:
Continued Investment in Key Accounting Systems Needs to be Justified,“
dated February 14, 2003, (GAO Code 192043/GAO-03-465):
GAO Recommendation 1: The GAO recommended that the Secretary of Defense
direct the Under Secretary of Defense (Comptroller) to limit funding in
the Defense Corporate Database/ Defense Corporate Warehouse, the
Defense Standard Disbursing System, and the Defense Departmental
Reporting System, until the DoD Comptroller, in collaboration with the
Assistant Secretary of Defense (Command, Control, Communications and
Intelligence), and the Director, Program Analysis and Evaluation
demonstrates, on the basis of credible analysis and data, that
continued investment in these three projects will produce benefits that
exceed costs.
DoD Comment to GAO Recommendation 1: Concur. During the development of
the
fiscal years (FY) 2004/2005 President‘s Biennial budget, the Department
terminated the Defense Procurement and Payment System and limited
related funding for Defense Corporate Database and Defense Corporate
Warehouse (DCD/DCW). We are now revising the DCD/DCW strategy and plan
to review it along with Defense Departmental Reporting System, and
Defense Standard Disbursing System. These reviews will be coordinated
with the Assistant Secretary of Defense (Command, Control,
Communications and Intelligence), and the Director, Program Analysis
and Evaluation as appropriate. We will provide a status of these
reviews by June 15, 2003. The status will include an update and
schedule to complete the reviews. The reviews will validate scope,
direction, cost, and benefit for each system. It is important to note
that investment decisions may be based on nonmonetary benefits, such as
the need for timely and accurate financial information for
decisionmaking or a clean audit opinion, and may not always exceed
costs.
GAO Recommendation 2: The GAO recommended that the Secretary of Defense
direct the Under Secretary of Defense (Comptroller) to evaluate all
remaining Defense Finance and Accounting Service Information Technology
projects and provide assurance that each project is being implemented
at acceptable costs and within reasonable time frames and are
contributing to tangible, observable improvements in mission
performance.
DoD Response to GAO Recommendation 2: Concur. The USD(C) and other
Domain Owners, as necessary, will review all systems. The Department is
inventorying all systems. The inventory will be validated by Domain
Owners and provide the basis for them to stratify systems for review to
ensure that the critical ones are reviewed first. Vehicles for the
reviews will include the Architecture Review Board and Investment
Review Board being established as part of the Financial Management
Enterprise Architecture governance structure.
Enclosure:
General Comments:
Fact Corrections:
Page 3, Results in Brief, Second paragraph, a sentence reads as
follows: ’One project‘s cost had increased by as much as $274 million,
while the schedule slipped by 3 _years.“:
The DPPS did not have a project cost increase of $274 million. The DPPS
program was approved for Milestone I/II in June 1998 with a cost
baseline not to exceed $152 million. The program did not exceed this
baseline amount.
Page 4, paragraph 1:
Change from: ’For example, in one case, they allowed a $270M project to
proceed without an economic analysis.“:
Change to: For example, in one case, they allowed a $270M project to
continue based on a cost benefit analysis instead of an economic
analysis.
Page 4, Results in Brief, Second paragraph (continued from page 3),
states ’...DOD Comptroller and the DOD Chief Information Officer - have
not questioned the impact of the cost increases and schedule delays,
and allowed the proiects to proceed in the absence of the requisite
analytical justification.“:
The OASD C3I directed DPPS to revise the life cycle cost estimate based
on the new assumptions that would be needed for the program to continue
to accomplish its intended mission. As a result, the program created a
new life cycle cost estimate. The program conducted a full function
point count to ensure that the cost for development and maintenance of
the additional software enhancements were accounted for properly. The
program‘s new life cycle cost estimate underwent an independent
Component Cost Analysis (CCA). A reconciled cost position for DFAS for
DPPS was attained. In addition, DFAS conducted its own Vendor Pay
System Analysis of Alternatives (AOA). The purpose of the analysis was
to ensure that DFAS make the appropriate investment in the right
software solution for vendor payment entitlement. DFAS reviewed its
current entitlement systems to ascertain the capability of each system.
Page 5, paragraph 2:
Change from: ’In February 2001, the project‘s scope was revised after
DFAS realized that crosswalks of detail transaction data were
cumbersome and cost prohibitive. Currently DFAS is planning to
crosswalk only summary level data.“:
Change to: In February 2001, the project‘s scope was revised based on
an assessment of the prototype effort that resulted in significant and
continuous data clean up due to the lack of edits at the front end of
the source system and a reassessment of the DCII strategy to reengineer
COTS applications into the DCII. Consistent with the Clinger-Cohen
mandate to use COTS, DFAS procured a COTS solution to replace the DCII
strategy to build a DWCF capability replacement for DBMS and a COTS
solution for AF accounts
receivable. In addition, a GAFS-R AF specific datawarehouse was
established to resolve the AF general fund accounting deficiencies.
[eliminate ’Currently DFAS is planning to crosswalk only summary level
data“ - this is inaccurate].
Page 8 figure:
Change from: Financial feeder systems.
Change to: Financial feeder systems and source accounting systems
Change from: DDRS is intended to use data from the DCD and DCW...
Change to: DDRS is intended to use data from the DCD, DCW and source
accounting systems.
Page 11, paragraph 1:
The IG, DoD report on the Defense Travel System cited an 87 percent
cost increase - which is not true. The report improperly compared a
contract cost ($263.7M) with a total program budget ($491.9M). The
contract cost has not changed.
Page 11, paragraph 2:
Change from: ’Subsequently, in February 1998, DFAS decided that the AF
could withdraw from using WAS, because either the Air Force processes
or the WAS processes would need significant reengineering to permit use
of a joint accounting system. As a result, the AF started its own
general fund accounting system-GAFS-which resulted in the development
of a fourth general fund accounting system.“:
Change to: In February 1998, DFAS performed a functional feasibility
assessment that identified significant mission and business process
differences between the AF and Army financial and feeder systems.
Because WAS was based on Army processes and data structures, either
significant modification would be required to the AF financial system
architecture or an AF version of WAS that incorporates AF processes and
data structures would be necessary. The scope of WAS was limited to the
Army where it could be readily implemented. The DFAS developed a cost/
benefit analysis for the enhancement of the AF existing GAFS.
Page 17, paragraph 2:
Change from: ’For example, an economic analysis has yet to be prepared
for DCD/DCW and the other three projects did not have an economic
analyses that reflected the fact that project costs, schedules and/or
expected benefits had changed materially.“ Change to: For example, a
cost benefit analysis was used instead of an economic analysis for the
DCD/DCW. Attempts to develop an economic analysis proved difficult due
to the fact that the DCD/DCW is an architecture, not a defined project.
Projects are added, modified and eliminated from the architecture based
on the business case and progress of the parent initiative. For
example, with the elimination of DPPS, the related interfaces and
supplemental functionality supported by the DCD/DCW have been
discontinued. The introduction of a new DoD initiative like DIMHRS
levies new interfaces to the architecture, thereby changing the scope
and cost of DCD/DCW. Because the architecture evolves and the benefits
accrue to the parent project, completing an economic analysis on the
DCD/DCW architecture is elusive.
Page 17, Table 4: Reported Cost Increases and Schedule Delays for the
Four DFAS Projects Reviewed (dollars in million).
The table shows that the DPPS original cost estimate was $278 million.
This is not accurate. The original LCCE for DPPS was $1.8 billion. This
is the figure that was approved at Milestone UII for the program in
June 1998. The original estimate presumed an immediate cut-over
strategy, which was a more aggressive implementation methodology. These
decisions to implement DPPS in a dual processing environment made the
difference not in the cost of obtaining DPPS as a system itself. The
current estimate of $552 million is the most recent estimate after DFAS
conducted its own independent component cost analysis. The major cost
drivers in the $552 million figure was legacy system operation and
maintenance and a change in how DPPS was to be implemented in that the
new estimate accounted for an extended data conversion strategy wherein
DFAS would be in a dual system operational mode for a time.
Page 18, paragraph 3:
Change from: ’DoD has yet to economically justify that its investment
in DCD/DCW will result in tangible improvement in DoD financial
management operations.“ Change to: ’DoD has been unable to economically
justify that its investment in DCD/DCW will result in tangible
improvement in DoD financial management operations. Since the DCD/DCW
provides only an architecture for supporting other initiatives it does
not, by itself, produce quantifiable benefits. In addition, the
evolving use of the architecture changes as the Department updates its
financial management system strategy and as new system solutions are
introduced into the architecture. The cost of DCD/DCW interfaces,
crosswalks, and edits need to be applied across specific benefiting
programs in order to compare total cost to total benefits for a
specified capability.
Page 19, paragraph 1:
Change from: ’In May 2000, the Director, DFAS granted approval to
continue with the development of the DCD with a condition that an
economic analysis be completed within 2 months. In November 2000, 4
months after the economic analysis was due, it had still not been
completed“:
Change to: ’In May 2000, the Director, DFAS granted approval to
continue with the development of the DCD with a condition that a cost
benefit analysis be completed within 2 months.“ The cost benefit
analysis was completed in October 2000.
Change from: ’The DFAS CIO verbally granted a waiver to for the
development of the DCD economic analysis,....“:
Change to: ’The System Decision Memorandum for Milestone UII stated
that the DCD must complete the Cost Benefit Analysis within 2 months.“:
Page 21, paragraph 1:
Change from: ’In February, the scope of the DCD project was revised
after DFAS realized, through testing of AF detailed transactions from
feeder systems, that the planned crosswalks were cumbersome and cost
prohibitive. Currently DFAS is planning to crosswalk only summary-level
data into DCD, meaning the originally envisioned capability will not be
provided. Additionally, DCD/DCW will continue to rely on the error-
plagued data in the feeder systems and will not produce financial
records that are traceable to transaction-level data.
Change to: In February 2001, the project‘s scope was revised based on
an assessment of the prototype effort that resulted in significant and
continuous data clean up due to the lack of edits at the front end of
the source system and a reassessment of the DCII strategy to reengineer
GOTS applications into the DCII. Consistent with the Clinger-Cohen
mandate to use COTS, DFAS procured a COTS solution to replace the DCII
strategy to build a DWCF capability to replace DBMS and a COTS solution
to support AF accounts receivable. In addition, an AF specific
datawarehouse was established to resolve the AF general fund accounting
deficiencies and provide general ledger traceability to detail
accounting transactions. [eliminate ’Currently DFAS is planning to
crosswalk only summary level data“ - we have been and continue to
crosswalk detail transactions to standardize and normalize data for our
customers]. The Department will need to maintain on emphasis on front-
end edits in source systems and maintain the integrity of the data
between systems to maintain the auditability of financial transactions.
Page 22/23, Economic Justification - for the Other Three Projects Is
Not Current states: ’In the case of DPPS, PA&E questioned the validity
of the economic analysis developed by DFAS.-Despite these concerns, the
DOD CIO granted permission to continue the protect.“:
The GAO report failed to mention that DFAS and PA&E met after their May
1998 letter was issued. DFAS and PA&E discussed the cost position for
the program, although PA&E did not change or update their assessment of
the economic analysis. After this meeting wherein these issues were
satisfactorily resolved, the DOD CIO approved the program.
Page 24, paragraph 2:
Change from: ’DDRS has experienced increased cost and schedule delays.
However, the economic analysis has not been updated to reflect the
known changes in the project‘s cost and schedule.“:
Change to: ’DDRS has experienced increased scope and cost; and schedule
delays. For example, to meet the OMB Bulletin 01-09 which established
accelerated and quarterly reporting requirements for Audited Financial
Statements, DFAS approved in June 2002, the DDRS development of a Data
Collection Module (DCM) to capture financial information for the
Audited Financial Statements from nonfinancial systems. The DCM was
implemented in September 2002. The DDRS, to date, has completely
transformed the Department‘s Audited Financial Statement process.
Consistent with the DFAS LCM Regulation, DDRS completed an LCCE, which
included an ROI for each milestone
decision. The LCCE is again being updated for the July 2003 Milestone C
decision for DDRS Budgetary Reporting.
Page 25:
Change from: ’DDRS is no longer intended to provide the capability to
build an audit trail so that financial data can be tracked back to its
transaction-based support, as originally planned.“:
Change to: The DDRS strategy changed to acknowledge the fact that
source systems are required to maintain an audit trail from detail
transactions to general ledger accounts that produce financial results.
Duplicating this capability in DDRS has the potential for deriving
disparate results based on attributes and posting logic resulting in
unnecessary reconciliation between systems. Instead, source systems
produce summarized trial balances monthly that are traceable to daily
transactions. The trial balance is submitted to DDRS to produce
Departmental Reports. The DDRS maintains a drill down to the trial
balance received while the source system maintains a drill down from
the trial balance to source detail transactions.
Page 26:
Change from: ’Additionally, until DCD is operational, DDRS will be
receiving data from the feeder systems in order to prepare the
department‘s financial reports on the results of its operations.
Therefore, DoD‘s financial reports produced by DDRS will: (1) continue
to be incomplete and inaccurate and thus not useful for decisionmaking
purposes and (2) remain unable to withstand the scrutiny of a financial
audit.“:
Change to: Data reliability must be accomplished through an enterprise
architecture that ensures data integrity at the source accounting
system and auditability to DDRS. Four of the eighteen DoD Reporting
Entities using DDRS received an unqualified opinion for FY2002 -
showing that the potential for accurate data to be used for
decisionmaking purposes and the ability to withstand the scrutiny of a
financial audit can be accomplished through an enterprise solution.
Page 27:
Change from: Additionally, DSDS delivery of promised benefits depends
upon the DCD/DCW being implemented on time. However, as previously
discussed, DCD/DCW implementation has been fraught with difficulties,
which has a corresponding adverse effect on DSDS schedule delays. For
example, DCD/DCW project management officials are in the process of
addressing 102 requests for requirement changes. According to the DCD/
DCW program manager, the date for resolving these changes and approving
the ORD is November 2003. Until this process is completed affected
systems integration testing for other DCD/DCW dependent systems, such
as DSDS, cannot be finalized. Change to: The DSDS program needs to
incorporate the functionality, cost and schedule associated with the
DCD/DCW interfaces and crosswalks to provide a complete program cost
and benefit. DSDS life cycle decisions need to be accomplished
independent of other capabilities and programs using the DCD/DCW
architecture. In actuality, the DSDS program development, including
DCD/DCW interfaces and capabilities are developed and tested as an
integrated solution independent from other programs and initiatives.
Page 28:
Change from: Further, according to DFAS officials, the continued
operation of existing legacy systems may result in an increase to the
DSDS life cycle cost estimate by $14M for each 6-month delay. This
would quickly erode the savings of $171M estimated by DFAS in September
2000.
Change to: Further, continued operation of existing legacy systems,
while not changing the ROI (based on FOC plus 10 years), defers savings
to future years.
Page 29, paragraph 2.
Change from: ’They (Comptroller officials) indicated that they were
unaware of the cost increases and schedule slippages on the projects
until we brought them to their attention. ...If the budget request is
generally consistent from year-to-year, they said that they do not
raise questions about the project.“:
Change to: ’They review the funding requirements, including prior
expenditures and planned expenditures, for each of the projects in the
capital purchases program during development of the President‘s budget
and throughout execution. They receive budgetary information as part of
the Budget Estimates Submission, in accordance with the ’DoDFMR,“ that
includes a funding profile and narrative justification. They also
require a cost-benefit analysis for each capital purchase program and
review it as part of the budget development process. Major
discrepancies from year-to-year are identified in the justification
material and reviewed with the Components. If there is continued poor
performance or a lack of a cost-benefit analysis, the program is
recommended for termination, as was the case with the Defense
Procurement Pay System.
Page 30, DOD Oversight of DFAS IT, last paragraph states ’...No such
guide exists to describe the CIO/BIE‘s roles or responsibilities, and
no process guide exists to describe how the board evaluates projects
and proposals“:
The DFAS 8000.1 Regulation states the roles and responsibilities of
CIO/BIE Council as it relates to IT oversight. The Director of DFAS
sent guidance to all Executives, defining the process for obtaining
system approvals and funding for IT Investments. A copy of this
direction was provided to the GAO during this review. In addition, we
provided the Program Managers with standard templates for each
presentation that keep each presentation on target for all issues that
should be addressed at that particular point in development.
[End of section]
Appendix III: GAO Contacts and Staff Acknowledgments:
GAO Contacts:
Darby Smith, (202) 512-7803
Jenniffer Wilson, (202) 512-9192:
Acknowledgments:
In addition to the individuals named above, key contributors to this
report included Beatrice Alff, Joseph Cruz, Francine DelVecchio, Lester
Diamond, Jason Kelly, J. Christopher Martin, Stacey Smith, and Robert
Wagner.
(192043):
:
FOOTNOTES
[1] Business systems include those that are used for areas such as
civilian personnel, finance, health, logistics, military personnel,
procurement, and transportation, with the common element being the
generation or use of financial data.
[2] U.S. General Accounting Office, High-Risk Series: An Overview, GAO-
HR-95-263 (Washington, D.C.: February 1995).
[3] U.S. General Accounting Office, High-Risk Series: An Update, GAO-
03-119 (Washington, D.C.: January 2003).
[4] U.S. General Accounting Office, DOD Financial Management: Important
Steps Underway But Reform Will Require a Long-term Commitment, GAO-02-
784T (Washington, D. C.: June 4, 2002).
[5] DOD Information Technology Fiscal Year 2003 Budget Estimate,
February 2002.
[6] Translate information so that systems that define data differently
(i.e., use different data schemes) can understand each other and
communicate accurately.
[7] Feeder systems are outside the direct control of DFAS. These are
the systems used by DOD‘s various functional areas such as acquisition,
logistics, and personnel. DOD has estimated that 80 percent of the
department financial management data comes from the feeder systems
controlled by the military services and defense agencies.
[8] Major automated information systems are defined as IT projects with
(1) program costs in any single year that exceed $32 million, (2) total
program costs that exceed $126 million, or (3) total life-cycle costs
that exceed $378 million. The life-cycle cost is the total cost to the
government for an information system over its expected useful life and
includes the costs to acquire, operate, maintain, and dispose of the
system. DOD Regulation 5000.2-R, Mandatory Procedures for Major Defense
Acquisition Programs and Major Automated Information System Acquisition
Programs, specifies mandatory policies and procedures for major
acquisitions. The policy also specifies that the DOD CIO is the
milestone decision authority, responsible for program approval, for all
major automated information systems, such as DCD/DCW and DPPS.
[9] Negative unliquidated obligations occur when recorded disbursements
exceed recorded obligations, indicating that expenditures may exceed
amounts obligated.
[10] Unmatched disbursements occur when a disbursement cannot be
matched to an obligation.
[11] DFAS‘s system life-cycle process is consistent with DOD‘s Defense
Acquisition System guidance, which has three milestones: Milestone A or
Concept and Technology Development, Milestone B or System Development
and Demonstration, and Milestone C or Production and Deployment. The
Defense Acquisition System guidance was revised in October 2000. Prior
to this, Milestone A was Milestone 0, Milestone B was Milestone I/II,
and Milestone C was Milestone III.
[12] U.S. General Accounting Office, DOD Systems Modernization:
Continued Investment in the Standard Procurement System Has Not Been
Justified, GAO-01-682 (Washington, D.C.: July 31, 2001).
[13] U.S. General Accounting Office, DOD‘s Standard Procurement System:
Continued Investment Has Yet to Be Justified, GAO-02-392T (Washington,
D.C.: Feb. 7, 2002).
[14] Department of Defense Office of the Inspector General, Allegations
to the Defense Hotline on the Management of the Defense Travel System,
Report No. D-2002-124 (Arlington, Va.: July 1, 2002).
[15] The original name of the system was the Corps of Engineers
Financial Management System (CEFMS). After it was determined that CEFMS
could be modified to satisfy Army customers and had the potential for
supporting the Defense Working Capital Funds, DFAS selected CEFMS to
meet the DJAS requirements.
[16] Department of Defense Office of the Inspector General, Acquisition
of the Defense Joint Accounting System, Report No. D-2000-151
(Arlington, Va.: June 16, 2000).
[17] U.S. General Accounting Office, Financial Management: DOD
Improvement Plan Needs Strategic Focus, GAO-01-764 (Washington, D.C.:
Aug. 17, 2001).
[18] U.S. General Accounting Office, DOD Financial Management:
Important Steps Underway But Reform Will Require a Long-term
Commitment, GAO-02-784T (Washington, D.C.: June 4, 2002).
[19] U.S. General Accounting Office, Information Technology:
Architecture Needed to Guide Modernization of DOD‘s Financial
Operations, GAO-01-525 (Washington, D.C.: May 17, 2001).
[20] U.S. General Accounting Office, Defense Acquisitions: DOD Faces
Challenges in Implementing Best Practices, GAO-02-469T (Washington,
D.C.: Feb. 27, 2002).
[21] U.S. General Accounting Office, Information Technology:
Architecture Needed to Guide Modernization of DOD‘s Financial
Operations, GAO-01-525 (Washington, D.C.: May 17, 2001).
[22] P.L. 107-314, December 2, 2002.
[23] Clinger-Cohen Act of 1996, P.L. 104-106, Div. E, 110 Stat. 679,
February 10, 1996 (originally known as the Information Technology
Management Reform Act of 1996) and OMB Circular A-130, Management of
Federal Information Resources (Nov. 30, 2000).
[24] DOD Regulation 5000.2-R, Mandatory Procedures for Major Defense
Acquisition Programs and Major Automated Information System Acquisition
Programs (Apr. 5, 2002).
[25] DOD Regulation 5000.2-R, Mandatory Procedures for Major Defense
Acquisition Programs and Major Automated Information System Acquisition
Programs (Apr. 5, 2002) and DFAS 8000.1-R, Part C, DFAS Information
Technology Life Cycle Management Policy (May 3, 2002).
[26] Translate information so that systems that define data differently
can understand each other and communicate accurately.
[27] Department of Defense Office of the Inspector General, Development
of the Defense Finance and Accounting Service Corporate Database and
Other Financial Management Systems, Report No. D-2002-014 (Arlington,
Va.: Nov. 7, 2001).
[28] OMB Circular A-130 (Nov. 30, 2000).
[29] P.L. 104-208, Div. A, 110 Stat. 3009-389, Sept. 30, 1996.
[30] U.S. General Accounting Office, DOD Financial Management:
Important Steps Underway But Reform Will Require a Long-term
Commitment, GAO-02-784T (Washington, D. C.: June 4, 2002).
[31] The full operational capability date represents the date that a
system will be operating at all intended locations.
[32] In March 1998, DFAS estimated the FOC date would be February 2002.
[33] U.S. General Accounting Office, Information Technology Investment
Management: A Framework for Assessing and Improving Process Maturity
(Exposure Draft), GAO/AIMD-10.1.23 (Washington, D.C.: May 2000).
[34] U.S. General Accounting Office, Defense IRM: Poor Implementation
of Management Controls Has Put the Migration Strategy at Risk, GAO/
AIMD-98-5 (Washington, D.C.: Oct. 20, 1997).
[35] U.S. General Accounting Office, DOD Business Systems
Modernization: Improvements to Enterprise Architecture Development and
Implementation Efforts Needed, GAO-03-458 (Washington, D.C.: Feb. 28,
2003).
[36] U.S. General Accounting Office, Information Technology:
Architecture Needed to Guide Modernization of DOD‘s Financial
Operations, GAO-01-525 (Washington, D.C.: May 17, 2001).
[37] U.S. General Accounting Office, DOD Business Systems
Modernization: Improvements to Enterprise Architecture Development and
Implementation Efforts Needed, GAO-03-458 (Washington, D.C.: Feb. 28,
2003).
[38] This office has been renamed the Business Modernization Systems
Integration Office.
[39] DOD Regulation 5000.2-R, Mandatory Procedures for Major Defense
Acquisition Programs and Major Automated Information System Acquisition
Programs (Apr. 5, 2002), DOD Instruction 5000.2, Operation of the
Defense Acquisition System (Apr. 5, 2002), DFAS 8000.1-R, Part C, DFAS
Life Cycle Management Policy (May 3, 2002), and DFAS 8000-1-R,
Information Systems Life Cycle Management, policies for 1996, 1997, and
1998.
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