Information Technology
Better Informed Decision Making Needed on Navy's Next Generation Enterprise Network Acquisition Gao ID: GAO-11-150 March 11, 2011The Department of the Navy (DON), a major component of the Department of Defense (DOD), has launched its Next Generation Enterprise Network (NGEN) program to replace the Navy Marine Corps Intranet (NMCI) program. NGEN capabilities, such as secure transport of voice and data, data storage, and e-mail, are to be incrementally acquired through multiple providers. As planned, the first increment is expected to provide comparable NMCI capabilities, additional information assurance, and greater DON network control, at a cost of about $50 billion through fiscal year 2025. Given the size, importance, and complexity of NGEN, GAO was asked to determine whether DON has sufficiently analyzed alternative acquisition approaches and has a reliable schedule for executing the program, and whether program acquisition decisions have been performance- and risk-based. To do this, GAO reviewed the NGEN analysis of alternatives, integrated master schedule, and key milestone decisions.
DON did not sufficiently analyze alternative acquisition approaches for NGEN because the alternatives analysis contained key weaknesses, and none of the alternatives assessed match the current acquisition approach. Specifically, the cost estimates for the respective alternatives were not reliable because they were not substantially accurate, and they were neither comprehensive nor credible. Further, the operational effectiveness analysis, the other key aspect of an analysis of alternatives, did not establish and analyze sufficient measures for assessing each alternative's ability to achieve program goals and deliver program capabilities. Moreover, the acquisition approach that DON is actually pursuing was not one of the alternatives assessed in the analysis, and it is riskier and potentially costlier than the alternatives analyzed because it includes a higher number of contractual relationships. According to program officials, the analysis reflects the most that could be done in the time that was available to complete it, and they do not view the alternative selected as materially different from the assessed alternatives, even though it is about $4.7 billion more costly. DON does not have a reliable schedule for executing NGEN. Only two of the four subschedules that GAO reviewed, each of which help form the master schedule, adequately satisfied any of the nine practices that are associated with developing and maintaining a reliable schedule. These weaknesses have contributed to delays in key program milestones. During the course of GAO's review, DON stated that action was taken to address some, but not all, of these weaknesses. According to program officials, schedule estimating was constrained by staffing limitations. NGEN acquisition decisions were not always performance- and risk-based. In particular, the program was approved in the face of known performance shortfalls and risks. For example, the program was approved at a key acquisition review despite the lack of defined requirements, which was recognized as a risk that would impact the completion of other key documents, such as the test plan. This risk was later realized as a critical issue. According to program officials, the decisions to proceed were based on their view that they had sufficiently mitigated known risks and issues. Collectively, these weaknesses mean that DON does not have a sufficient basis for knowing that it is pursuing the best approach for acquiring NGEN capabilities and the program's cost and schedule performance is unlikely to track to estimates. GAO is recommending that DOD limit further investment in NGEN until it conducts an interim review to reconsider the selected acquisition approach and addresses issues discussed in this report. In its comments, DOD stated that it did not concur with the recommendation to reconsider its acquisition approach; GAO maintains that without doing so, DOD cannot be sure it is pursuing the most cost-effective approach.
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: Valerie C. Melvin Team: Government Accountability Office: Information Technology Phone: (202) 512-6304GAO-11-150, Information Technology: Better Informed Decision Making Needed on Navy's Next Generation Enterprise Network
This is the accessible text file for GAO report number GAO-11-150
entitled 'Information Technology: Better Informed Decision Making
Needed on Navy's Next Generation Enterprise Network Acquisition' which
was released on March 11, 2011.
This text file was formatted by the U.S. Government Accountability
Office (GAO) to be accessible to users with visual impairments, as
part of a longer term project to improve GAO products' accessibility.
Every attempt has been made to maintain the structural and data
integrity of the original printed product. Accessibility features,
such as text descriptions of tables, consecutively numbered footnotes
placed at the end of the file, and the text of agency comment letters,
are provided but may not exactly duplicate the presentation or format
of the printed version. The portable document format (PDF) file is an
exact electronic replica of the printed version. We welcome your
feedback. Please E-mail your comments regarding the contents or
accessibility features of this document to Webmaster@gao.gov.
This is a work of the U.S. government and is not subject to copyright
protection in the United States. It may be reproduced and distributed
in its entirety without further permission from GAO. Because this work
may contain copyrighted images or other material, permission from the
copyright holder may be necessary if you wish to reproduce this
material separately.
United States Government Accountability Office:
GAO:
Report to Congressional Requesters:
March 2011:
Information Technology:
Better Informed Decision Making Needed on Navy's Next Generation
Enterprise Network Acquisition:
GAO-11-150:
GAO Highlights:
Highlights of GAO-11-150, a report to congressional requesters.
Why GAO Did This Study:
The Department of the Navy (DON), a major component of the Department
of Defense (DOD), has launched its Next Generation Enterprise Network
(NGEN) program to replace the Navy Marine Corps Intranet (NMCI)
program. NGEN capabilities, such as secure transport of voice and
data, data storage, and e-mail, are to be incrementally acquired
through multiple providers. As planned, the first increment is
expected to provide comparable NMCI capabilities, additional
information assurance, and greater DON network control, at a cost of
about $50 billion through fiscal year 2025. Given the size,
importance, and complexity of NGEN, GAO was asked to determine whether
DON has sufficiently analyzed alternative acquisition approaches and
has a reliable schedule for executing the program, and whether program
acquisition decisions have been performance- and risk-based. To do
this, GAO reviewed the NGEN analysis of alternatives, integrated
master schedule, and key milestone decisions.
What GAO Found:
What GAO Found
DON did not sufficiently analyze alternative acquisition approaches
for NGEN because the alternatives analysis contained key weaknesses,
and none of the alternatives assessed match the current acquisition
approach. Specifically, the cost estimates for the respective
alternatives were not reliable because they were not substantially
accurate, and they were neither comprehensive nor credible. Further,
the operational effectiveness analysis, the other key aspect of an
analysis of alternatives, did not establish and analyze sufficient
measures for assessing each alternative‘s ability to achieve program
goals and deliver program capabilities. Moreover, the acquisition
approach that DON is actually pursuing was not one of the alternatives
assessed in the analysis, and it is riskier and potentially costlier
than the alternatives analyzed because it includes a higher number of
contractual relationships. According to program officials, the
analysis reflects the most that could be done in the time that was
available to complete it, and they do not view the alternative
selected as materially different from the assessed alternatives, even
though it is about $4.7 billion more costly. (See table for comparison
of alternatives.)
Table: Comparison of NGEN Alternative Approaches:
Contractual relationships:
Status quo: 3;
Alt. 2: 3;
Alt. 3 variant: 10;
Alt. 3: 15;
Current approach: 21.
Estimated cost[A]:
Status quo: $10.3;
Alt. 2: $10.8;
Alt. 3 variant: $10.8;
Alt. 3: $10.7;
Current approach: $15.6.
Relative risk:
Status quo: Least;
Alt. 2: More;
Alt. 3 variant: Greater;
Alt. 3: Greatest;
Current approach: Undetermined.
Sources: DON data (status quo and alternatives 2, 3 variant, and 3);
GAO analysis of DON data (current approach).
[A] Fiscal year 2011-2015 in billions.
[End of table]
DON does not have a reliable schedule for executing NGEN. Only two of
the four subschedules that GAO reviewed, each of which help form the
master schedule, adequately satisfied any of the nine practices that
are associated with developing and maintaining a reliable schedule.
These weaknesses have contributed to delays in key program milestones.
During the course of GAO‘s review, DON stated that action was taken to
address some, but not all, of these weaknesses. According to program
officials, schedule estimating was constrained by staffing limitations.
NGEN acquisition decisions were not always performance- and risk-
based. In particular, the program was approved in the face of known
performance shortfalls and risks. For example, the program was
approved at a key acquisition review despite the lack of defined
requirements, which was recognized as a risk that would impact the
completion of other key documents, such as the test plan. This risk
was later realized as a critical issue. According to program
officials, the decisions to proceed were based on their view that they
had sufficiently mitigated known risks and issues.
Collectively, these weaknesses mean that DON does not have a
sufficient basis for knowing that it is pursuing the best approach for
acquiring NGEN capabilities and the program‘s cost and schedule
performance is unlikely to track to estimates.
What GAO Recommends:
GAO is recommending that DOD limit further investment in NGEN until it
conducts an interim review to reconsider the selected acquisition
approach and addresses issues discussed in this report. In its
comments, DOD stated that it did not concur with the recommendation to
reconsider its acquisition approach; GAO maintains that without doing
so, DOD cannot be sure it is pursuing the most cost-effective approach.
View [hyperlink, http://www.gao.gov/products/GAO-11-150] or key
components. For more information, contact Valerie C.Melvin at (202)
512-6304 or melvinv@gao.gov.
[End of section]
Contents:
Letter:
Background:
Current NGEN Acquisition Approach Is Not Grounded in a Reliable AOA:
NGEN's Schedule Does Not Provide a Reliable Basis for Program
Execution, and Program Delays Are Occurring:
NGEN Acquisition Decisions Were Not Always Performance-and Risk-Based:
Conclusions:
Recommendations for Executive Action:
Agency Comments and Our Evaluation:
Appendix I: Objectives, Scope, and Methodology:
Appendix II: Comments from the Department of Defense:
Appendix III: GAO Contact and Staff Acknowledgments:
Tables:
Table 1: Early Transition Activities:
Table 2: Planned NGEN Program Contracts:
Table 3: Organizations Responsible for NGEN Acquisition Oversight and
Management:
Table 4: Description of DAS Phases:
Table 5: Purpose of DON Gate Reviews:
Table 6: Summary of Four Alternatives in the NGEN AOA:
Table 7: Measures Related to Overseeing, Operating, and Managing NGEN:
Table 8: DON's Qualitative Assessment of Alternatives' Ability to Meet
NGEN Capabilities and Goals:
Table 9: Comparison of NGEN AOA Alternatives and Current Approach:
Table 10: Description of Scheduling Best Practices:
Table 11: Summary Results of Selected NGEN Schedules' Satisfaction of
Schedule Estimating Practices:
Table 12: Delays in Key NGEN Program Events and Milestones, as of
August 2010:
Table 13: Naval Probability of Program Success Metric Definitions:
Figures:
Figure 1: Simplified View of OSD DAS and DON Gate Review Process:
Figure 2: NGEN Review Schedule:
Figure 3: Contractual Relationships in Current NGEN Approach:
Figure 4: NGEN Gate 4 Probability of Program Success Assessment
(November 2009):
Figure 5: NGEN Gate 5 Probability of Program Success Assessment
(October 2010):
Abbreviations:
AOA: analysis of alternatives:
CAPE: Cost Assessment and Program Evaluation:
CIO: chief information officer:
DAS: Defense Acquisition System:
DOD: Department of Defense:
DON: Department of the Navy:
IT: information technology:
MAIS: Major Automated Information System:
NGEN: Next Generation Enterprise Network:
NMCI: Navy Marine Corps Intranet:
OSD: Office of the Secretary of Defense:
USD (AT&L): Under Secretary of Defense (Acquisition, Technology, and
Logistics):
[End of section]
United States Government Accountability Office:
Washington, DC 20548:
March 11, 2011:
The Honorable Claire McCaskill:
Chairman:
The Honorable Kelly Ayotte:
Ranking Member:
Subcommittee on Readiness and Management Support:
Committee on Armed Services:
United States Senate:
The Honorable Richard Burr:
United States Senate:
The Department of the Navy (DON) established the Next Generation
Enterprise Network (NGEN) program in 2007 to replace the Navy Marine
Corps Intranet (NMCI), which is provided through a DON-wide network
services contract. As envisioned, NGEN capabilities, including secure
transport of voice and data, data storage, and e-mail, are to be
incrementally acquired through multiple providers. The first increment
is to include capabilities comparable to NMCI, as well as enhanced
information assurance and increased government control over network
operations. To date, NGEN has reportedly spent about $432 million on
work associated with the transition from NMCI. The first increment is
to be fully operational in March 2014 and is to cost approximately $50
billion through 2025.
As agreed, our objectives were to determine whether (1) DON has
sufficiently analyzed alternative approaches for acquiring NGEN, (2)
DON has a reliable schedule for executing NGEN, and (3) acquisition
decisions have been performance-and risk-based. To accomplish our
objectives, we analyzed the NGEN alternatives analysis report and
underlying support, the program's integrated master schedule, program
performance assessments and risk reports, and executive acquisition
decision briefings and meeting minutes, among other things. We
conducted this performance audit from October 2009 to February 2011,
in accordance with generally accepted government auditing standards.
Those standards require that we plan and perform the audit to obtain
sufficient, appropriate evidence to provide a reasonable basis for our
findings and conclusions based on our audit objectives. We believe
that the evidence obtained provides a reasonable basis for our
findings and conclusions based on our audit objectives. Additional
details on our objectives, scope, and methodology are discussed in
appendix I.
Background:
DON is a major component of the Department of Defense (DOD),
consisting of the Navy and the Marine Corps. It is a large and complex
organization, whose primary mission is to organize, train, maintain,
and equip combat-ready naval forces capable of winning wars, deterring
aggression by would-be foes, preserving freedom of the seas, and
promoting peace and security. To support this mission, DON performs a
variety of interrelated and interdependent information technology (IT)-
dependent functions. In fiscal year 2010, DON's IT budget was
approximately $7.4 billion, for 971 investments. NGEN is one such
system investment.
Overview of NGEN:
NGEN is to provide secure data and IT services, such as data storage,
e-mail, and video-teleconferencing, to the Navy and the Marine Corps.
NGEN is also intended to provide the foundation for DON's future Naval
Networking Environment.[Footnote 1] DON is acquiring NGEN through
multiple providers (contractors) to replace and improve the enterprise
network and services provided by NMCI. It is to be developed
incrementally, with the first increment to provide comparable NMCI
capabilities,[Footnote 2] additional information assurance, and
increased government control of the network. Future increments have
yet to be defined. The program's preliminary life cycle cost estimate
(through fiscal year 2025) for the first increment is about $50
billion. As of September 30, 2010, the NGEN program had reportedly
spent about $432 million.
To bridge the time frame between the end of the NMCI contract and the
full transition to NGEN, DON awarded a $3.7 billion continuity of
services contract in July 2010 to the NMCI service provider, Hewlett
Packard Enterprise Services. In addition to providing continuity of
network services, the contract includes transition services and
transfer to DON of NMCI infrastructure and intellectual property,
[Footnote 3] as the NGEN contracts are to require use of the NMCI
infrastructure and access to processes, procedures, and technical
data. The continuity of services contract is scheduled to run from
October 2010 through April 2014.
To reduce the risk during the transition period from NMCI to NGEN, DON
is currently performing eight early transition activities. The
activities are discrete efforts intended to establish government
management capabilities, allow for greater participation in
operational decisions, and help expedite the transition time. Table 1
describes each of these activities.
Table 1: Early Transition Activities:
Early transition activity: Information Technology Service Management
Process Development;
Start date: October 2008;
End date: May 2011;
Cost: $20.5 million;
Description: Develop Information Technology Infrastructure Library[A]
version 3-based service strategies, processes, and procedures.
Early transition activity: Contractor Technical Representative
Workforce Reconstitution;
Start date: January 2009;
End date: April 2011;
Cost: $3.3 million;
Description: Conduct job task analysis and assess learning tools for
contractor technical representatives; develop enterprise-wide position
descriptions and occupational standards for training, advancement,
criteria, and performance objectives.
Early transition activity: Comprehensive Facilities and Infrastructure
Inventory;
Start date: January 2009;
End date: December 2010;
Cost: $12.0 million;
Description: Evaluate, analyze, and validate current NMCI
infrastructure inventory consisting of technical data, assets,
configuration items, and system components.
Early transition activity: Defense Information System Network Core
Extension Phase 1 and Maritime Operation Center Implementation;
Start date: April 2008;
End date: May 2011;
Cost: $6.7 million;
Description: Bring consistent wide area network connectivity from the
Defense Information System Network to eight major nodes at fleet
headquarters (Norfolk, Virginia, and Pearl Harbor, Hawaii).
Early transition activity: Global Network Operations Command and
Control Workforce Establishment;
Start date: October 2008;
End date: July 2011;
Cost: $14.3 million;
Description: Develop the personnel, processes, and tool requirements,
and organizational analysis and alignment.
Early transition activity: Wide Area Network and Enterprise Services
Upgrade;
Start date: April 2009;
End date: August 2012;
Cost: $46.0 million;
Description: Demonstrate network operational control capability and
validate the NGEN System Design baseline through early implementation.
Early transition activity: Enterprise Tools Strategy and
Implementation/Integration;
Start date: April 2009;
End date: May 2011;
Cost: $56.6 million;
Description: Analyze current tool capabilities to support information
technology service management processes, and develop design
requirements and tool integration specifications.
Early transition activity: Nonclassified Internet Protocol Router
Network Migration - Marine Air-Ground Task Force IT Support Centers
East Pilot;
Start date: October 2009;
End date: August 2011;
Cost: $12.9 million;
Description: Assess the transition of base area network, local area
network, and end-user equipment for about 1,200 users from the
continuity of services contract to the government-owned/government-
operated NGEN environment.
Source: GAO analysis of DON data.
[A] Information Technology Infrastructure Library is a framework
intended to align an organization's IT services with its
organizational needs. It consists of service strategy, design,
transition, operation and continual improvement best practice guidance.
[End of table]
To deliver NGEN capabilities, DON plans to award five contracts.
[Footnote 4] See table 2 for a description of these contracts.
Table 2: Planned NGEN Program Contracts:
Contract: Independent Security Operations, Oversight and Assessment
Support;
Award date: April 2011;
Purpose: Provide independent third-party security assessments of NMCI
and NGEN. The contract is planned to include the option to support all
DON networks within the naval network environment.
Contract: Transport Services;
Award date: May 2012;
Purpose: Provide for the operation and sustainment of the transport
infrastructure, associated services, and level-of-effort support for
those services. The contract is planned to include technology refresh
of cable plant, routers, and switches; some leasehold improvements;
and moveable infrastructure associated with local network operations.
Contract: End-User Hardware;
Award date: December 2011;
Purpose: Provide end-user equipment such as computers, monitors, and
keyboards.
Contract: Enterprise Software Licenses;
Award date: March 2012;
Purpose: Provide software licenses to meet DON-wide requirements.
Contract: Enterprise Services/Service Coordination;
Award date: August 2012;
Purpose: Provide the Enterprise Service Desk, seat services supporting
end-user devices, and data center services such as storage and e-mail
along with hardware and software specific to Enterprise Services that
are not covered under the End-User Hardware and Enterprise Software
Licenses contracts. As the service coordinator, this contract is
planned to cover coordination across all NGEN vendors for the
successful delivery of NGEN services.
Source: GAO analysis of DON data.
[End of table]
According to the NGEN Acquisition Strategy, DON plans to complete the
Marine Corps' initial transition to NGEN in January 2012 and final
transition in February 2013. The Navy's initial and final transition
to NGEN are scheduled to be completed in December 2012 and March 2014,
respectively.[Footnote 5]
NGEN Oversight and Management Roles and Responsibilities:
To manage the acquisition and deployment of NGEN, DON established a
program management office within the Program Executive Office for
Enterprise Information Systems. The program office manages the
program's cost, schedule, and performance and is responsible for
ensuring that the program meets its objectives. In addition, various
DOD and DON organizations share program oversight and review
responsibilities. Table 3 lists key entities and their roles and
responsibilities.
Table 3: Organizations Responsible for NGEN Acquisition Oversight and
Management:
Entity: Under Secretary of Defense for Acquisition, Technology, and
Logistics;
Roles and responsibilities: Serves as the milestone decision
authority, with overall responsibility for the program, to include
approving the program to proceed through its acquisition cycle on the
basis of, for example, the acquisition strategy, an independently
evaluated economic analysis, and the Acquisition Program Baseline.
Entity: Director, Cost Assessment and Program Evaluation, Office of
the Secretary of Defense (OSD CAPE);
Roles and responsibilities: Issued NGEN analysis of alternatives (AOA)
guidance, reviewed the AOA study plan, and approved the AOA results.
Verifies and validates the reliability of cost and benefit estimates
found in economic analyses.
Entity: NGEN AOA Advisory Group;
Roles and responsibilities: Oversaw the conduct of the NGEN AOA. Led
by the DON Chief Information Officer.
Entity: Assistant Secretary of the Navy, Research, Development, and
Acquisition;
Roles and responsibilities: Serves as DON's acquisition oversight
organization for the program, to include enforcement of Under
Secretary of Defense for Acquisition, Technology, and Logistics
policies and procedures. Determines when all key milestones are ready
to be submitted to the milestone decision authority.
Entity: Chief of Naval Operations and Commandant of the Marine Corps;
Roles and responsibilities: Serve together as resource sponsors for
NGEN requirements and funding.
Entity: Department of the Navy, Program Executive Office for
Enterprise Information Systems;
Roles and responsibilities: Oversees a portfolio of large-scale
projects and programs designed to enable common business processes and
provide standard capabilities. Reviews the acquisition strategy,
economic analysis, and the Acquisition Program Baseline prior to
approval by the milestone decision authority.
Entity: Department of the Navy Chief Information Officer (CIO);
Roles and responsibilities: Supports DON's planning, programming,
budgeting, and execution processes by ensuring that the program has
achievable and executable goals and conforms to financial management
regulations, and DON, DOD, and federal IT policies in several areas
(e.g., security, architecture, and investment management);
works closely with the program office during milestone review
assessments. Oversaw NGEN AOA, which was led by the Center for Naval
Analyses and supported by Deloitte Consulting.
Entity: NGEN Program Management Office;
Roles and responsibilities: Performs day-to-day program management
and, as such, is the single point of accountability for managing the
program's objectives.
Entity: Space and Naval Warfare Systems Command;
Roles and responsibilities: Reviewed the NGEN AOA cost analysis.
Reviews the NGEN program life cycle cost estimates and economic
analysis. Serves jointly with the Marine Corps Systems Command as the
NGEN technical authority.
Entity: Marine Corps Systems Command;
Roles and responsibilities: Serves jointly with the Space and Naval
Warfare Systems Command as the NGEN technical authority.
Source: GAO analysis of DON data.
[End of table]
Overview of DOD and DON Acquisition Processes and NGEN Status:
NGEN is subject to both Office of the Secretary of Defense (OSD) and
DON Major Automated Information System (MAIS) acquisition policy and
guidance,[Footnote 6] which require it to comply with Defense
Acquisition System (DAS)[Footnote 7] requirements. According to these
requirements, all MAIS programs require a Materiel Development
Decision prior to entering the first DAS phase. In making this
decision, the milestone decision authority is to review the Initial
Capabilities Document, which defines operational goals and needed
capabilities, and authorizes the phase in which the program is to
enter the DAS. The system consists of five key program life cycle
phases and three related milestone decision points. Table 4 provides a
description of each DAS phase.
Table 4: Description of DAS Phases:
Phase: Materiel Solution Analysis;
Description: Prior to entering this phase the milestone decision
authority completes a Materiel Development Decision. The purpose of
the phase is to assess, through an AOA, potential solutions to satisfy
an approved capability need.
Phase: Technology Development;
Description: Prior to entering this phase, the milestone decision
authority conducts a Milestone A decision review of the proposed
solution and a draft Technology Development Strategy. The purpose of
the phase is to determine the appropriate set of technologies to be
integrated into the solution and to refine user requirements.
Phase: Engineering and Manufacturing Development;
Description: Most acquisition programs enter the DAS in this phase.
Prior to entering the phase, the milestone decision authority
completes a Milestone B review to approve the Acquisition Strategy and
Acquisition Program Baseline.[A] The purpose of the phase is to
develop a system or system increment. The phase has two major efforts:
Integrated System Design and System Capability and Manufacturing
Process Demonstration.
Integrated System Design: This effort includes a post-Critical Design
Review assessment of design maturity, and issues and risks that could
result in a breach to the Acquisition Program Baseline or
substantively impact cost, schedule, or performance.
System Capability and Manufacturing Process Demonstration: This effort
is to demonstrate the ability of the system to operate according to
the approved Key Performance Parameters[B] and ends when the system or
system increment meets approved requirements.
Phase: Production and Deployment;
Description: Prior to entering this phase, the milestone decision
authority conducts a Milestone C review of the Capability Production
Document and the Test and Evaluation Master Plan, among other things,
and authorizes limited deployment to support operational testing. The
purpose of the phase is to achieve an operational capability that
satisfies the mission needs, verified through independent operational
test and evaluation, and to implement the system at all applicable
locations. During this phase, the milestone decision authority also
conducts a Full Deployment Decision Review.
Phase: Operations and Support;
Description: The purpose of this phase is to operationally sustain the
system in the most cost-effective manner over its life cycle.
Source: GAO analysis of DOD documentation.
[A] According to DOD's acquisition guidebook, an Acquisition Program
Baseline is a program manager's estimated cost, schedule, and
performance goals. Goals consist of objective values, which represent
what the user desires and expects, and threshold values, which
represent acceptable limits. When the program manager determines that
a current cost, schedule, or performance threshold value will not be
achieved, the milestone decision authority must be notified, and a new
baseline developed, reviewed by decision makers and, if the program is
to continue, approved by the milestone decision authority.
[B] Key Performance Parameters are attributes or characteristics of a
system that are considered critical or essential to the development of
an effective military capability.
[End of table]
In addition to Defense Acquisition System requirements, according to
DON guidance and policy, all DON MAIS and pre-MAIS programs are
required to go through a "Two-Pass/Six-Gate" acquisition review
process.[Footnote 8] The first pass, which consists of Gates 1 through
3, is focused on requirements development and validation and is led by
the Chief of Naval Operations or the Commandant of the Marine Corps.
The second pass, which consists of Gates 4 through 6, is focused on
developing and delivering a solution via systems engineering and
acquisition and is led by the Assistant Secretary of the Navy
(Research, Development, and Acquisition). In addition to meeting
specific criteria for passing a given gate and proceeding to the next
gate, all gate reviews are to consider program health (i.e.,
satisfactory cost and schedule performance, known risks, and budget
adequacy) in deciding whether to proceed. Table 5 lists the key
purpose of each gate review.
Table 5: Purpose of DON Gate Reviews:
Gate: 1;
Purpose: To approve the Initial Capabilities Document and to validate
AOA guidance and assumptions.
Gate: 2;
Purpose: To review the AOA and approve the preferred alternatives
resulting from the analysis.
Gate: 3;
Purpose: To authorize the Capability Development Document, which
defines the system's Key Performance Parameters and includes
information necessary to develop an affordable system or system
increment, to be submitted to Joint Staff for review, and to approve
the Concept of Operations.
Gate: 4;
Purpose: To approve the System Design Specification, which specifies
the system requirements and is derived from the Capability Development
Document.
Gate: 5;
Purpose: To approve the release of a request for proposal to industry.
Gate: 6;
Purpose: To review overall program health, following award of a
contract and satisfactory completion of an Integrated Baseline
Review.[A] Also, to approve the Capability Production Document and
program health prior to and after Milestone C and the Full Deployment
Decision Review.
Source: GAO analysis of DON documentation.
[A] An Integrated Baseline Review is performed to obtain stakeholder
agreement on a contractor's Performance Measurement Baseline, which
represents the cumulative value of planned work and serves as the
baseline against which variances are calculated.
[End of table]
The DAS and DON acquisition phases and decision points for MAIS
programs are illustrated in figure 1.
Figure 1: Simplified View of OSD DAS and DON Gate Review Process:
[Refer to PDF for image: illustration]
Materiel solution analysis:
OSD:
MDD;
DON:
1 ICD;
2 AOA.
Technical development:
OSD:
Milestone A;
DON:
3 CDD;
4 SDS;
5 RFP.
Engineering and manufacturing development:
OSD:
Post-CDR assessment;
Milestone C;
DON:
6 IBR;
6 CPD.
Production and deployment:
OSD:
FDDR;
DON:
6 Program health;
6 Program health.
Operations and support:
Source: GAO analysis of DOD and DON policy and guidance.
Note:
MDD = Materiel Development Decision;
CDR = Critical Design Review;
FDDR = Full Deployment Decision Review;
ICD = Initial Capabilities Document;
AOA = analysis of alternatives;
CDD = Capability Development Document;
SDS = System Design Specification;
RFP = request for proposal;
IBR = Integrated Baseline Review;
CPD = Capability Production Document.
[End of figure]
As depicted in figure 2, DON completed a Gate 3 review of NGEN
requirements in April 2008.[Footnote 9] In April 2009, the DON CIO
completed the AOA for NGEN increment 1, and at the Gate 2 review the
same month, the Deputy Chief of Naval Operations (Integration of
Capabilities and Resources) and the Deputy Marine Corps Commandant for
Programs and Resources approved the AOA to be submitted to the NGEN
AOA Advisory Group.[Footnote 10] The advisory group subsequently
approved the analysis and forwarded it in April 2009 to OSD Cost
Assessment and Program Evaluation (CAPE), which approved it in
December 2009. DON conducted a Gate 4 review of its System Design
Specification in November 2009, and a Gate 5 review of its Transport
Services request for proposal in October 2010. DON plans to conduct a
Gate 6 review in July 2011.
In May 2010, the USD (AT&L) completed the NGEN Materiel Development
Decision, which designated the first increment of NGEN as a MAIS and
authorized the program to enter the DAS in the production and
deployment phase. A Milestone C review is currently planned for August
2011. In June 2010, the USD (AT&L) approved the current acquisition
approach.
Figure 2: NGEN Review Schedule:
[Refer to PDF for image: illustrated schedule]
2008:
January-June:
DON: 3 Requirement (complete).
2009:
February-June:
DON: 2 AOA (complete).
September-December:
DON: 4 SDS (complete).
2010:
March-July:
OSD: MDD (complete).
August-December:
DON: 5 RFP (in process).
2011:
May-September:
DON: 6 CPD (planned).
July-October:
OSD: Milestone C (planned).
Source: GAO analysis of DON data.
Note:
MDD = Materiel Development Decision;
AOA = analysis of alternatives;
SDS = System Design Specification;
RFP = request for proposal;
CPD = Capability Production Document.
[End of figure]
Current NGEN Acquisition Approach Is Not Grounded in a Reliable AOA:
An AOA is intended to help identify the most promising acquisition
approach by comparing alternative solutions' costs and operational
effectiveness. The NGEN AOA contained key weaknesses in its cost
estimates and operational effectiveness analysis that impaired its
ability to inform investment decision making. Further, none of the
alternatives in this analysis match the current acquisition approach,
and these differences have not been analyzed to determine the breadth
of risk that exists. According to DON officials, the AOA reflects the
most that could be accomplished in the time available to meet an
imposed deadline. In addition, OSD officials stated that the
differences between the current approach and the alternatives that
were assessed are, in their view, not significant. However, the
current approach is estimated to cost at least $4.7 billion more than
any of the AOA alternatives. Without sufficient information to
understand the differences in the relative costs and operational
effectiveness among alternatives, decision makers lack assurance that
their selected approach is the most promising and cost-effective
course of action.
NGEN AOA Was Not Based on Reliable Cost Estimates:
According to relevant guidance,[Footnote 11] a key component of an AOA
is a cost analysis that provides for cost estimates of each
alternative. As such, cost estimates should be reliable in order to
provide the basis for informed investment decision making, realistic
budget formulation, meaningful progress measurement, and
accountability for results. Our research has identified four
characteristics of a high-quality, reliable cost estimate: well-
documented, comprehensive, accurate, and credible.[Footnote 12]
The NGEN AOA assessed four alternatives.[Footnote 13] All alternatives
were assumed to deliver the same NMCI capabilities and the technology
across alternatives was assumed to be substantially the same. The
primary differences among the alternatives were how NGEN was to be
acquired, managed, and operated. Table 6 below provides a description
of each alternative.
Table 6: Summary of Four Alternatives in the NGEN AOA:
Alternative: Alternative 1 (status quo);
Description: A recompete of the NMCI contract, in which the contractor
was to be responsible for end-to-end integration of services and
control of the network.
Alternative: Alternative 2 (enhanced status quo);
Description: A single contract similar to NMCI but with upgraded terms
and conditions that were to address known NMCI deficiencies.[A] The
contractor was to be responsible for end-to-end integration of
services, and the government would control the network.
Alternative: Alternative 3 Variant (3V) (segmented[B] approach);
Description: Multiple contracts with different vendors. The government
was to be responsible for end-to-end integration of services and
control of the network.
Alternative: Alternative 3 (segmented approach);
Description: A greater number of contracts than alternative 3V. The
government was to be responsible for end-to-end integration of
services and control of the network.
Source: NGEN Analysis of Alternatives report, Center for Naval
Analyses, April 2009.
[A] See, for example, GAO, Information Technology: DOD Needs to Ensure
That Navy Marine Corps Intranet Program Is Meeting Goals and
Satisfying Customers, GAO-07-51 (Washington, D.C.: Dec. 8, 2006), for
information on NMCI deficiencies.
[B] Segments are components of IT services to be delivered for NGEN
through multiple contracts.
[End of table]
The four alternatives' estimated costs for increment 1 from fiscal
year 2011 to fiscal year 2015 ranged from $10.25 billion (alternative
1) to $10.84 billion (alternatives 2 and 3V). However, the estimates
were not reliable because they substantially met only one of the
characteristics of reliable cost estimates. Specifically,
* The AOA cost estimates were substantially well-documented. To be
well-documented, the cost estimates should state the purpose of the
estimate; provide program background, including a system description;
provide a schedule for developing the estimates; specify the scope of
the estimate (in terms of time and what is and is not included);
disclose key ground rules and assumptions, data sources, calculations
performed and their results, the estimating methodology and rationale,
and the results of a risk analysis; and provide a conclusion about
whether the cost estimate is reasonable. Moreover, this information
should be captured in such a way that the data used to derive the
estimate can be traced to their sources. Finally, the cost estimates
should be reviewed and accepted by management.
Although the AOA did not sufficiently document the schedule, scope,
and results of the risk analysis, it defined the purpose of the
estimate; provided program background (e.g., system description); and
disclosed ground rules and assumptions, data sources, calculations
performed and their results, and the estimating methodology. Also, the
data used to derive the estimates were captured in such a way that
they could largely be traced to their sources, and the final AOA was
reviewed and accepted by DON and OSD oversight entities.
* The AOA cost estimates were not comprehensive. To be comprehensive,
the cost estimates should include all government and contractor costs
over the program's full life cycle, from program inception through
design, development, deployment, and operation and maintenance to
retirement. They should also provide sufficient detail and reflect all
cost-influencing ground rules and assumptions.
However, the cost estimates were not full life cycle costs. Instead,
they only included government and contractor costs for a 5-year period
from fiscal year 2011 to fiscal year 2015, covering 2 years of
continued NMCI services with the current provider, 2 years of
transition to the new provider(s), and 1 year of NGEN operation and
maintenance. DON and OSD CAPE officials attributed this to the
assumption that NGEN increment 1 contracts would have a 5-year period
of performance and that future NGEN increments might be introduced
after that period.
Further, while the estimates were based on a cost element structure
that was decomposed to a sufficient level of detail, and the
documentation largely identified ground rules and assumptions, the
cost estimates did not reflect all assumptions identified in the AOA,
such as schedule and performance risks associated with (1)
implementing IT processes, (2) expanding the government workforce, and
(3) formulating the NGEN contracts. These were significant cost-
influencing risks and thus should have been incorporated into the
estimates.
* The AOA cost estimates were not substantially accurate. To be
accurate, the cost estimates should not be overly conservative or
optimistic and should be, among other things, based on an assessment
of the most likely costs, and adjusted properly for inflation. In
addition, steps should be taken to minimize mathematical mistakes and
to ground the estimate in documented assumptions that can be verified
by supporting data and a historical record of actual cost and schedule
experiences on comparable programs.
To DON's credit, the cost estimates were developed based on NMCI
historical cost data, were adjusted properly for inflation, contained
few mathematical mistakes, and were largely grounded in documented
assumptions. However, the supporting data for key assumptions were not
verified. For example, all estimates assumed that transition activity
costs would amount to about 18 percent of the estimated cost of NGEN
in its first year of operation, and alternative 3's estimate assumed
that total cost would be reduced by 10 percent due to increased
competition from its multicontract approach. However, the supporting
data used by Deloitte Consulting for these assumptions were not
provided to DON or the independent government review team for
verification because the data were proprietary to the contractor.
Further, NMCI historical data were only available at an aggregate
level, so the team had to rely on subject-matter experts and other
sources to estimate costs at a finer level of detail.
* The AOA cost estimates were not credible. To be credible, the cost
estimates should discuss any limitations in the analysis due to
uncertainty or biases surrounding the data and assumptions. Major
assumptions should be varied and other outcomes computed to determine
how sensitive the estimate is to changes in the assumptions. Risk and
uncertainty inherent in the estimate should be assessed and disclosed.
Further, the estimate should be properly verified by, for example,
comparing the results with an independent cost assessment.
While the AOA identified limitations in the cost analysis, such as the
use of NMCI data that did not reflect prices of other service
providers, and evaluated the impact on costs of using different
transition timeline scenarios, it did not include a sensitivity
analysis of the key cost driver (i.e., the number of personnel needed
to manage NGEN), despite concerns that the Navy's estimates of these
numbers were not stabilized at the time of the AOA. In addition, while
each cost estimate included a cost risk analysis based on the quality
of data used, there were discrepancies in how the analysis was
conducted and reported. For example, the cost for local area network
facilities was estimated based on the contractor's experience, which
was considered by the cost team to be a less credible data source, but
it was scored higher on their risk scale, indicating that the data
source was more credible. Also, schedule and performance risks were
not quantified and reflected in the estimates, which is significant
because a qualitative assessment of schedule and performance risks
among alternatives revealed increased risk in implementing a segmented
approach. If such risks had been quantified and reflected in the
estimates, the results would have shown higher costs associated with
alternatives 3 and 3V. Nevertheless, the AOA concluded that there was
no significant cost difference among the alternatives.
In addition, the cost estimates were not validated by the independent
team responsible for reviewing the cost analysis. Specifically,
independent review team officials told us that they participated in a
line-by-line review of the cost model where they raised comments and
questions to the cost team. However, about 69 percent of the team's
comments were not fully addressed and included notable concerns, such
as the questionable use of certain industry-based assumptions that may
not be comparable to a program as large as NGEN or to the government
environment. Independent review team officials attributed the comments
not being closed to the fact that the team did not have authority over
the cost model to ensure that its comments were addressed. Further,
these officials told us that they were not asked to review the final
version of the cost model, which was the version that first introduced
alternative 3V, and their review of the final version of the AOA
report occurred after the DON CIO had submitted it to OSD CAPE for
final approval.
According to officials responsible for developing the AOA, the
weaknesses in the AOA cost estimates largely exist because there was
not enough time to conduct a more thorough analysis. Specifically,
they told us that the AOA schedule was constrained because the program
wanted to get requests for proposals for NGEN contracts out by a
predetermined date. This position was also supported by various
management meeting minutes and other artifacts that we reviewed.
However, DOD and DON officials disagreed with this position and told
us that the time allotted to conduct the AOA did not negatively impact
its quality or scope. A time-constrained approach is not consistent
with DOD guidance, which states that the scope of an alternatives
analysis should be proportionate to the amount of resources affected
by the decision, with more significant programs receiving more
analytical attention. The combination of the AOA weaknesses we
identified, and the fact that NGEN has a preliminary program life
cycle cost estimate of about $50 billion for increment 1 and is
intended to provide the foundation for DON's future networking
environment, suggest the need for considerable analytical attention to
alternative approaches.
Without reliable cost estimates for each alternative, decision makers
did not have a sound basis for making an informed decision on an NGEN
solution. Most notably, since the estimates did not reflect increased
risks associated with the segmented approach, the differences in the
alternatives' costs were understated, and the amount of risk and costs
accepted by proceeding with a segmented approach were not fully
understood.
AOA Did Not Sufficiently Assess Operational Effectiveness:
In addition to including reliable cost estimates, an AOA should assess
how well each alternative satisfies required capabilities or goals.
According to DOD guidance,[Footnote 14] such an analysis should (1)
identify the operational capabilities and goals to be achieved with
the system solution, (2) establish quantitative or qualitative
measures for evaluating the operational effectiveness of each
alternative, and (3) assess the ability of each alternative to achieve
these measures.
While the AOA identified program capabilities and goals, it did not
sufficiently assess the alternatives' operational effectiveness,
making it unclear how well the alternatives would actually satisfy
NGEN capabilities and goals. Specifically,
* The AOA identified capabilities and goals that the system solution
should achieve. Among other things, these included addressing NMCI
capability limitations identified based on 8 years of operational
experience, as well as capabilities needed to support DOD and DON
networking strategies for DOD's Global Information Grid Network
Operations and DON's future Naval Networking Environment. (See table 8
for these capabilities and goals.)
* The AOA did not establish quantitative or qualitative measures for
assessing the alternatives' ability to achieve the identified NGEN
capabilities and goals, as shown in table 8. For example, one of the
capabilities was visibility into root causes for major network
outages, which the AOA merely concluded that alternatives 2, 3V, and 3
were equally effective in addressing, even though no quantitative or
qualitative measures of the alternatives' respective ability to
provide visibility into root causes were defined. Further, the AOA did
not discuss the methodology for assessing the alternatives. Rather, it
simply states that it was a qualitative assessment.
While the AOA did not establish measures for assessing the
alternatives' ability to achieve NGEN capabilities and goals, it did
establish several quantitative measures to differentiate among the
alternatives' respective approaches to acquiring, managing, and
delivering NMCI capabilities. However, these measures alone do not
provide insight into how they would influence the operational
effectiveness of each alternative because they were not linked to NGEN
capabilities and goals, and they did not provide sufficient insight
for selecting a preferred alternative. For example, while the AOA
recognized that an increase in the number of contractual relationships
would result in more complexity and risk in implementing the
alternative, it did not include measures for quantifying how much more
risk is introduced as the number of contractual relationships
increases. (See table 7 for the measures that were provided in the
AOA.)
Table 7: Measures Related to Overseeing, Operating, and Managing NGEN:
Government personnel as a percentage of total NGEN personnel;
Status quo: 28;
Alternative 2: 39;
Alternative 3V: 40;
Alternative 3: 41.
Number of seams[A] managed by the government;
Status quo: 1;
Alternative 2: 1;
Alternative 3V: 36;
Alternative 3: 36.
Number of contractual relationships managed by the government;
Status quo: 3;
Alternative 2: 3;
Alternative 3V: 10;
Alternative 3: 15.
Source: NGEN Analysis of Alternatives report, Center for Naval
Analyses, April 2009.
[A] Seams are the relationships between segments (e.g., local area
networks, service desks, and enterprise hardware).
[End of table]
In addition, the AOA included a separate assessment of the likelihood
of each alternative to successfully implement IT best practices for
end-to-end IT service delivery (i.e., IT Service Management
framework).[Footnote 15] To DON's credit, the approach used to measure
the alternatives in this assessment was more structured and better
documented. Specifically, the AOA team conducted table-top exercises
with subject-matter experts representing each of the communities that
will contribute to the acquisition, operation, and oversight of NGEN,
and it worked through scenarios, such as everyday operations and
responding to a computer network incident, to determine the extent to
which each alternative could employ IT best practices to address a
given scenario. The team captured comments made by participants and
used them to infer rankings that resulted in numerical scores for each
alternative.
The AOA did not assess the alternatives' ability to address
capabilities and goals using defined measures of operational
effectiveness because, as stated previously, no measures were
established. Instead, it compared the alternatives based on
qualitative determinations of whether the capability or goal was
either met or partially met. (See table 8 for the results of DON's
assessment.)
Table 8: DON's Qualitative Assessment of Alternatives' Ability to Meet
NGEN Capabilities and Goals:
Capabilities:
NMCI capabilities and services as of September 2010;
Status quo: [Check];
Alternative 2: [Check];
Alternative 3V: [Check];
Alternative 3: [Check].
Address NMCI deficiencies:
* Solve problem with out-of-scope government directed action;
Status quo: [Empty];
Alternative 2: [Check-];
Alternative 3V: [Check-];
Alternative 3: [Check].
* Sufficient visibility/situational awareness of network operations;
Status quo: [Empty];
Alternative 2: [Check];
Alternative 3V: [Check];
Alternative 3: [Check].
* Visibility into root causes;
Status quo: [Empty];
Alternative 2: [Check];
Alternative 3V: [Check];
Alternative 3: [Check].
* Adequate log keeping;
Status quo: [Empty];
Alternative 2: [Check];
Alternative 3V: [Check];
Alternative 3: [Check].
* Technology refresh/architecture upgrades;
Status quo: [Empty];
Alternative 2: [Check];
Alternative 3V: [Empty];
Alternative 3: [Check].
Network Operations Concept of Operations:
* Support Network Operations Concept of Operations;
Status quo: [Empty];
Alternative 2: [Check];
Alternative 3V: [Empty];
Alternative 3: [Check].
* Proactive control/defense of network;
Status quo: [Empty];
Alternative 2: [Check];
Alternative 3V: [Check];
Alternative 3: [Check].
Goals:
Supports Naval Networking Environment:
* Enterprise network interoperability;
Status quo: [Empty];
Alternative 2: [Check];
Alternative 3V: [Check];
Alternative 3: [Check].
* Government operational control;
Status quo: [Empty];
Alternative 2: [Check];
Alternative 3V: [Check];
Alternative 3: [Check].
* Support transformation to service-oriented architecture;
Status quo: [Check];
Alternative 2: [Check];
Alternative 3V: [Check];
Alternative 3: [Check].
* Open architecture and standards;
Status quo: [Check];
Alternative 2: [Check];
Alternative 3V: [Check];
Alternative 3: [Empty].
* Implement IT services management;
Status quo: [Empty];
Alternative 2: [Check-];
Alternative 3V: [Check-];
Alternative 3: [Check].
* Implement portfolio management process;
Status quo: [Empty];
Alternative 2: [Check];
Alternative 3V: [Check];
Alternative 3: [Check].
* Active monitor/report of service level agreements;
Status quo: [Check];
Alternative 2: [Check];
Alternative 3V: [Check];
Alternative 3: [Check].
Source: NGEN Analysis of Alternatives report, Center for Naval
Analyses, April 2009.
Note: A checkmark indicates that the government's goal or concern
would be addressed by the alternative; a check minus indicates that
the government's goal or concern would be partially addressed by the
alternative.
[End of table]
As with the cost estimates, officials responsible for developing the
AOA told us that the operational effectiveness analysis was subject to
time constraints so that requests for proposals could be issued on
time. Although DOD and DON officials told us that the time allotted to
conduct the AOA did not negatively impact its quality or scope, our
review suggests otherwise. Further, the time-constrained approach is
not consistent with DOD guidance, which states that the scope of an
alternatives analysis should be proportionate to the resources
affected by the decision, with more significant programs receiving
more analytical attention.
Without a more thorough effectiveness analysis, decision makers did
not have a sound basis for making an informed decision on the best
NGEN alternative to pursue. Instead, DON has selected a segmented
approach on the basis that it would provide increased flexibility in
meeting NGEN capabilities and goals with no additional cost, even
though the degree of increased flexibility among the alternatives
remains unclear.
Current Acquisition Approach Was Not Addressed in the AOA and Is
Riskier and Costlier Than Other Approaches in the Analysis:
According to DOD guidance,[Footnote 16] an AOA should examine viable
solutions with the goal of identifying the most promising option,
thereby informing acquisition decision making. However, the segmented
approach currently being pursued by DON was not one of the
alternatives assessed in the AOA. Specifically, the current approach
has more contracts, a different segmentation scheme, and a different
transition timeline than the analyzed alternatives. Further, the
impact of these differences in terms of how they compare to the
original alternatives was not assessed.
The approach that is being pursued by the program office includes a
higher number of contracts than those analyzed in the AOA. Given that
the AOA highlighted greater schedule and performance risks as the
number of contracts and contractual relationships in the approach
increase, the relative schedule and performance risks for the current
approach are likely greater than those for alternative 3, and
therefore are likely to result in greater costs. In support of this
likelihood, DON's November 2009 risk-adjusted preliminary program life
cycle cost estimate for the current approach for fiscal year 2011
through fiscal year 2015 shows that the current approach will cost at
least an estimated $4.7 billion more than any of the alternatives in
the AOA. (See table 9 for a comparison of the current approach to the
approaches assessed in the AOA and figure 3 for an illustration of the
contractual relationships associated with DON's current approach.)
Table 9: Comparison of NGEN AOA Alternatives and Current Approach:
Contracts[A];
Status quo: 2;
Alternative 2: 2;
Alternative 3V: 4;
Alternative 3: 5;
Current approach: 6.
Contractual relationships;
Status quo: 3;
Alternative 2: 3;
Alternative 3V: 10;
Alternative 3: 15;
Current approach: 21.
Fiscal year 2015 operating cost (billions);
Status quo: $2.25;
Alternative 2: $2.62;
Alternative 3V: $2.64;
Alternative 3: $2.65;
Current approach: $2.94.
Fiscal years 2011 to 2015 total cost (billions);
Status quo: $10.3;
Alternative 2: $10.8;
Alternative 3V: $10.8;
Alternative 3: $10.7;
Current approach: $15.6.
Relative schedule risk;
Status quo: Least;
Alternative 2: More;
Alternative 3V: Greater;
Alternative 3: Greatest;
Current approach: (not determined).
Relative risk in delivering planned performance;
Status quo: Least;
Alternative 2: More;
Alternative 3V: Greater;
Alternative 3: Greatest;
Current approach: (not determined).
Transition timeline;
Status quo: 24 months of continued NMCI services before 24 months of
transitioning to new provider, and then 12 months of NGEN steady-state;
Alternative 2: Same timeline as alternative 1;
Alternative 3V: Same timeline as alternative 1;
Alternative 3: Same timeline as alternative 1;
Current approach: 14 months of continued NMCI services before 29
months of transitioning to new providers in staggered phases, and then
17 months of NGEN steady-state.
Sources: NGEN Analysis of Alternatives report, Center for Naval
Analyses, April 2009 (status quo and alternatives 2, 3V, and 3); GAO
analysis of DON data (current approach).
Note: The difference between the total fiscal year 2011 to fiscal year
2015 cost for the current approach and alternative 3V is about $4.7
billion due to rounding.
[A] In all alternatives, wide area network services will be provided
by the Defense Information Systems Agency. DON's relationship with the
Defense Information Systems Agency will be contract-like in that it is
an interagency agreement, in which DON must pay for services and will
have to manage its relationship with the service providers.
[End of table]
Figure 3: Contractual Relationships in Current NGEN Approach:
[Refer to PDF for image: illustration]
The figure depicts relationships among and between the following:
Government;
Enterprise Services/Service Coordination;
End-Users Hardware;
Enterprise Software;
Security;
Transport;
Wide Area Network.
Source: GAO analysis of DON data.
[End of figure]
OSD CAPE officials told us that they believe the differences between
the current approach and alternatives assessed in the AOA are not
significant because DON is still pursing a segmented approach and that
the differences were the result of "an appropriate evolution of the
segmented approach." They further said that the increased risks in the
current approach are offset by mitigating factors, such as the use of
staggered phases to implement NGEN and the use of more efficient
segmentation schemes. However, we have yet to receive any analysis to
support their positions, and the current approach is estimated to cost
about $4.7 billion more. As a result, DON cannot demonstrate that it
is pursuing the most cost-effective approach for acquiring NGEN
capabilities and meeting NGEN goals.
NGEN's Schedule Does Not Provide a Reliable Basis for Program
Execution, and Program Delays Are Occurring:
The success of a large-scale acquisition program depends in part on
having a reliable schedule that defines, among other things, when work
activities and milestone events will occur, how long they will take,
and how they are related to one another. As such, the schedule not
only provides a road map for systematic program execution but also
provides the means by which to gauge progress, identify and address
potential problems, and promote accountability. Without a reliable
schedule, it is likely that established program milestones will slip.
In the case of NGEN, such delays are already being experienced.
Our work has identified nine best practices associated with developing
and maintaining a reliable schedule. These are (1) capturing all
activities, (2) sequencing all activities, (3) assigning resources to
all activities, (4) establishing the duration of all activities, (5)
integrating schedule activities horizontally and vertically, (6)
establishing the critical path[Footnote 17] for all activities, (7)
identifying reasonable "float"[Footnote 18] between activities, (8)
conducting a schedule risk analysis, and (9) updating the schedule
using logic and durations. See table 10 for a description of each of
these best practices.
Table 10: Description of Scheduling Best Practices:
Practice: Capturing all activities;
Description: The schedule should reflect all activities (steps,
events, outcomes, etc.) as defined in the program's work breakdown
structure to include activities to be performed by both the government
and its contractors.
Practice: Sequencing all activities;
Description: The schedule should sequence activities in the order that
they are to be implemented. In particular, activities that must finish
prior to the start of other activities (i.e., predecessor activities),
as well as activities that cannot begin until other activities are
completed (i.e., successor activities) should be identified.
Practice: Assigning resources to all activities;
Description: The schedule should reflect who will do the work
activities, whether all required resources will be available when they
are needed, and whether any funding or time constraints exist.
Practice: Establishing the duration of all activities;
Description: The schedule should reflect the duration of each
activity. These durations should be as short as possible and have
specific start and end dates.
Practice: Integrating schedule activities horizontally and vertically;
Description: The schedule should be horizontally integrated, meaning
that it should link the products and outcomes associated with
sequenced activities. The schedule should also be vertically
integrated, meaning that traceability exists among varying levels of
activities and supporting tasks and subtasks.
Practice: Establishing the critical path for all activities;
Description: The critical path represents the chain of dependent
activities with the longest total duration in the schedule.
Practice: Identifying reasonable float between activities;
Description: The schedule should identify a reasonable amount of
float--the time that a predecessor activity can slip before the delay
affects successor activities--so that schedule flexibility can be
determined. As a general rule, activities along the critical path
typically have the least amount of float.
Practice: Conducting a schedule risk analysis;
Description: A schedule risk analysis is used to predict the level of
confidence in the schedule, determine the amount of time contingency
needed, and identify high-priority schedule risks.
Practice: Updating the schedule using logic and durations;
Description: The schedule should use logic and durations in order to
reflect realistic start and completion dates, be continually monitored
to determine differences between forecasted completion dates and
planned dates, and avoid logic overrides and artificial constraint
dates.
Source: GAO.
[End of table]
In December 2009, NGEN established a baseline integrated master
schedule[Footnote 19] composed of over 25 separate underlying
schedules (or subschedules) to capture program milestones and the
expected completion dates for activities leading up to them. However,
the most current version of this schedule (May 2010) that was
available at the time we began our review was not reliable because
only two of the four subschedules[Footnote 20] that we analyzed
substantially met any of the nine practices. The results of our
analysis of the four subschedules are summarized in table 11.
Table 11: Summary Results of Selected NGEN Schedules' Satisfaction of
Schedule Estimating Practices:
Schedule practice: Capturing all activities;
Transition Integrated Product Team: Partially Met;
IT Service Management Process Development: Partially Met;
Comprehensive Facilities Inventory Phase 2 Plan of Action and
Milestones: Partially Met;
Contract Technical Representative Workforce Reconstitution: Partially
Met.
Schedule practice: Sequencing all activities;
Transition Integrated Product Team: Minimally Met;
IT Service Management Process Development: Substantially Met;
Comprehensive Facilities Inventory Phase 2 Plan of Action and
Milestones: Minimally Met;
Contract Technical Representative Workforce Reconstitution: Minimally
Met.
Schedule practice: Assigning resources to all activities;
Transition Integrated Product Team: Not Met;
IT Service Management Process Development: Not Met;
Comprehensive Facilities Inventory Phase 2 Plan of Action and
Milestones: Not Met;
Contract Technical Representative Workforce Reconstitution: Not Met.
Schedule practice: Establishing the duration of all activities;
Transition Integrated Product Team: Minimally Met;
IT Service Management Process Development: Met;
Comprehensive Facilities Inventory Phase 2 Plan of Action and
Milestones: Minimally Met;
Contract Technical Representative Workforce Reconstitution: Met.
Schedule practice: Integrating schedule activities horizontally and
vertically;
Transition Integrated Product Team: Partially Met;
IT Service Management Process Development: Substantially Met;
Comprehensive Facilities Inventory Phase 2 Plan of Action and
Milestones: Partially Met;
Contract Technical Representative Workforce Reconstitution: Partially
Met.
Schedule practice: Establishing the critical path for all activities;
Transition Integrated Product Team: Minimally Met;
IT Service Management Process Development: Minimally Met;
Comprehensive Facilities Inventory Phase 2 Plan of Action and
Milestones: Minimally Met;
Contract Technical Representative Workforce Reconstitution: Minimally
Met.
Schedule practice: Identifying reasonable float between activities;
Transition Integrated Product Team: Minimally Met;
IT Service Management Process Development: Partially Met;
Comprehensive Facilities Inventory Phase 2 Plan of Action and
Milestones: Minimally Met;
Contract Technical Representative Workforce Reconstitution: Partially
Met.
Schedule practice: Conducting a schedule risk analysis;
Transition Integrated Product Team: Not Met;
IT Service Management Process Development: Not Met;
Comprehensive Facilities Inventory Phase 2 Plan of Action and
Milestones: Not Met;
Contract Technical Representative Workforce Reconstitution: Not Met.
Schedule practice: Updating the schedule using logic and durations;
Transition Integrated Product Team: Partially Met;
IT Service Management Process Development: Partially Met;
Comprehensive Facilities Inventory Phase 2 Plan of Action and
Milestones: Partially Met;
Contract Technical Representative Workforce Reconstitution: Partially
Met.
Source: GAO analysis of DON data.
"Met" = DON provided complete evidence that satisfied the criterion.
"Substantially Met" = DON provided evidence that satisfied more than
one-half of the criterion.
"Partially Met" = DON provided evidence that satisfied about one-half
of the criterion.
"Minimally Met" = DON provided evidence that satisfied less than one-
half of the criterion.
"Not Met" = DON provided no evidence that satisfied any portion of the
criterion.
Note: The Transition Integrated Product Team subschedule contains work
associated with transition planning, such as development of the
Transition Management Strategy and Transition Concept of Operations.
The IT Service Management Process Development subschedule contains
early transition activity work focused on developing service
management processes and procedures. The Comprehensive Facilities
Inventory Phase 2 Plan of Action and Milestones subschedule contains
early transition activity work associated the evaluation, analysis,
and validation of the current NMCI infrastructure inventory. The
Contract Technical Representative Workforce Reconstitution subschedule
contains early transition activity work associated with job task
analysis and the assessment of learning tools for contract technical
representatives.
[End of table]
* Capturing all activities. All four subschedules partially met this
practice. Specifically, the majority of the activities contained in
these subschedules could be mapped back to the program's NGEN work
breakdown structure. However, this structure is defined at a high
level and is not expected to be further decomposed into planned work
products and deliverables until the program enters the deployment
phase when NGEN contracts are awarded. Until this structure is
sufficiently defined, it cannot be determined whether the program
schedules capture all work needed to accomplish program objectives.
For example, we identified risk mitigation activities for 10 active
risks that should have been, but were not, captured as scheduled work.
During our review, program officials told us that they had since taken
steps to ensure that all risk mitigation activities are added to the
schedule. However, until NGEN work is sufficiently defined, the
program does not have complete assurance that the activities currently
captured in the various schedules support NGEN increment 1.
* Sequencing all activities. One subschedule substantially met this
practice while the other three minimally met it. The subschedule that
substantially met this practice had less than 1 percent of activities
missing a predecessor or successor dependency. Of the remaining three
subschedules, two did not identify predecessor or successor activities
for over half of the activities in their schedules. This is of concern
because if an activity that has no logical successor slips, the
schedule will not reflect the effect of these slips on the critical
path, float, or scheduled start dates of "downstream" (i.e., later)
activities. Additionally, one subschedule had "constraints" placed on
about 73 percent of its activities, meaning that these activities
cannot begin earlier even if upstream work is completed ahead of
schedule. According to program officials, they are working to reduce
the number of constraints in the schedule. However, until activities
are properly sequenced, these issues reduce the credibility of the
dates calculated by the scheduling tool.
* Assigning resources to all activities. Program officials told us
that they do not assign resources to any of the program schedules.
They stated that the effort necessary to assign resources within the
schedules would be significant and that they did not have the staff
available to do this. However, without proper allocation of resources
in the schedule, the program office cannot accurately forecast the
likelihood that activities will be completed by their projected end
dates, and the risk that key milestones will slip increases.
* Establishing the duration of all activities. Two subschedules met
this practice while two only minimally met it. The two subschedules
that met this practice had established activities with reasonable
durations--the majority of which were under 30 days. The remaining two
did not establish reasonable durations for their activities. For
example, the majority of the activities that were in progress for the
Transition Integrated Product Team subschedule had durations ranging
from 50 days to 1000 days. When such long durations are assigned to
work activities, it is likely that the activity is not defined to the
necessary level to identify all the work that must be performed.
* Integrating schedule activities vertically and horizontally. One of
the subschedules substantially met and the other three partially met
this practice. The subschedule that substantially met the practice is
horizontally aligned, meaning activities are logically sequenced, and
vertically aligned, meaning that detailed activities roll up into
larger summary tasks. The other three subschedules are also vertically
aligned; however, they are unable to demonstrate horizontal
integration because, as previously discussed, activities were not all
logically sequenced.
The integration issues identified on these subschedules also impact
the NGEN master schedule. Because of the high number of missing
dependencies, the number of in-progress activities with durations
exceeding 30 days, and the high number of constraints, the master
schedule is likely not fully horizontally integrated.
Further, one of the subschedules is not vertically aligned with the
master schedule because none of the key work activities in the
subschedule were included in the master schedule. In addition, the
master schedule was not integrated with the approved NGEN acquisition
strategy. Program officials told us they did not revise the dates in
the master schedule until after the continuity of services contract
was awarded (July 2010), and that the dates in the acquisition
strategy reflected the current information. By using a source other
than the program office's working schedule, oversight officials'
expectations about when milestones will be met may not be realistic.
* Establishing the critical path for all activities. None of the four
subschedules fully met this practice. Specifically, the scheduling
tool was unable to generate a valid critical path for the subschedules
due to the extent of issues associated with the sequencing of
activities, integration of activities, and identification of
reasonable float (discussed below). Program officials stated that they
do not manage a critical path generated by the scheduling tool.
Instead, these officials stated that they track activities associated
with the deployment phase decision (Milestone C), which they have
designated as being critically important to them. However, such
practice does not allow the program to have immediate insight into the
full sequence of activities (both critical and noncritical) that, if
delayed, would impact the planned completion date of Milestone C, as
well as a projected completion date should one of these activities be
delayed.
* Identifying reasonable float between activities. Two subschedules
partially met this practice, while the remaining two minimally met it.
Each of these subschedules identified float; however, the amount of
excessive float varied. Both the Contract Technical Representative
Workforce Reconstitution and IT Service Management Process Development
subschedules partially met this practice because only 25 percent and
41 percent of their work activities had float of 100 days or greater,
respectively. The two remaining subschedules minimally met this
practice because over 60 percent of their activities contained float
of 100 days or greater.
Excessive float values are indicative of schedule logic that is
flawed, broken, or absent. As such, these float values are of limited
value to mitigate risk by reallocating resources from tasks that can
safely slip to tasks that must be completed on time.
* Conducting a schedule risk analysis. The program has not performed a
schedule risk analysis. Instead, according to program officials,
schedule risks are considered during risk management board meetings
and program health assessments. However, without this analysis, it is
not possible to determine a level of confidence in meeting program
milestones. A schedule risk analysis will calculate schedule reserve,
which can be set aside for those activities identified as high-risk.
Without this reserve, the program faces the risk of delays if they
were to occur on critical path activities.
* Updating the schedule using logic and durations. All four
subschedules partially met this practice. According to program
officials, status updates are performed on the subschedules once a
week. However, despite status updates, date anomalies exist. For
example, the Contract Technical Representative Workforce
Reconstitution subschedule included five activities with an actual
start date in the future. Furthermore, the subschedules' inability to
produce a valid critical path indicates that the sequencing of
activities is not appropriate, thus impairing the scheduling tool's
ability to generate realistic start and end dates.
According to program officials, they were aware of some of these
schedule weaknesses based on a May 2010 assessment of the schedule
performed by a support contractor. Among other things, the
contractor's assessment found that the schedule did not provide for
stakeholder review of most of the major acquisition documents or steps
to mitigate known risks, and that it lacked a valid critical path due
to network logic issues and activity constraints. Officials told us
that they plan to address these issues.
In addition, program officials stated that they hold monthly program
management reviews to discuss schedule quality issues, as well as
risks or issues that might affect the schedule. However, these reviews
are not addressing key schedule issues. Specifically, the NGEN
schedule management plan calls for the schedule to be resource-loaded
from a centralized resource pool approved by the program manager,
activities beginning within 90 days to have durations of no more than
20 days, and activities for mitigating approved program risks to be
added to the schedule. However, our analysis of the schedule showed
that:
* resources are not assigned within the schedule,
* activities that are to begin within 90 days have durations that
exceed 20 days, and:
* activities for mitigating 10 approved program risks were not
included.
Collectively, the weaknesses in implementing the nine key practices
for the program's integrated master schedule increase the risk of
schedule slippages and related cost overruns and make meaningful
measurement and oversight of program status and progress, as well as
accountability for results, difficult to achieve. Moreover, they
undermine the schedule's ability to produce credible dates for planned
NGEN milestones and events. In the case of increment 1, this risk has
already been realized. Specifically, the NGEN master schedule was
rebaselined in August 2010, resulting in delays in a number of key
dates, including a 5-month delay of the Milestone C decision. See
table 12 for a summary of key event and milestone delays.
Table 12: Delays in Key NGEN Program Events and Milestones, as of
August 2010:
Milestone decisions:
Event/milestone: Materiel Development Decision;
Status of event/milestone: Completed;
Delay in months[A]: 3.
Event/milestone: DON Gate 5 Review;
Status of event/milestone: In progress;
Delay in months[A]: 4.
Event/milestone: DON Gate 6 Review;
Status of event/milestone: Not yet occurred;
Delay in months[A]: 7.
Event/milestone: Milestone C;
Status of event/milestone: Not yet occurred;
Delay in months[A]: 5.
Documents complete:
Event/milestone: Acquisition Strategy;
Status of event/milestone: Completed;
Delay in months[A]: 4.
Event/milestone: Economic Analysis;
Status of event/milestone: In progress;
Delay in months[A]: 0.
Event/milestone: Cost Analysis Requirements Description;
Status of event/milestone: In progress;
Delay in months[A]: 4.
Event/milestone: Preliminary Program Life Cycle Cost Estimate;
Status of event/milestone: In progress;
Delay in months[A]: 4.
Event/milestone: Capability Production Document;
Status of event/milestone: In progress;
Delay in months[A]: 9.
Event/milestone: Systems Engineering Plan;
Status of event/milestone: In progress;
Delay in months[A]: 10.
MIlestone decisions:
Event/milestone: Test and Evaluation Master Plan;
Status of event/milestone: In progress;
Delay in months[A]: 14.
Event/milestone: Acquisition Program Baseline;
Status of event/milestone: In progress;
Delay in months[A]: 3.
Contracts:
Event/milestone: Independent Security Operations, Oversight and
Assessment Support Contract Award;
Status of event/milestone: Not yet awarded;
Delay in months[A]: 4.
Event/milestone: Continuity of Services Contract Award;
Status of event/milestone: Completed;
Delay in months[A]: 5.
Event/milestone: Transport Request for Proposal Release;
Status of event/milestone: Not yet released;
Delay in months[A]: 4.
Event/milestone: Transport Contract Award;
Status of event/milestone: Not yet awarded;
Delay in months[A]: 5.
Event/milestone: Hardware Contract Award;
Status of event/milestone: Not yet awarded;
Delay in months[A]: 0.
Event/milestone: Software Contract Award;
Status of event/milestone: Not yet awarded;
Delay in months[A]: 0.
Event/milestone: Enterprise Services Request for Proposal Release;
Status of event/milestone: Not yet released;
Delay in months[A]: 0.
Event/milestone: Enterprise Services Contract Award;
Status of event/milestone: Not yet awarded;
Delay in months[A]: 2.
Source: GAO analysis of DON data.
[A] Delays were calculated by comparing data in the December 2009
schedule with the data in the August 2010 schedule. Delays were
rounded to the nearest month.
[End of table]
While officials stated that they have addressed some of the weaknesses
identified above in the August 2010 rebaselined integrated master
schedule, they conceded that this schedule does not assign resources
to work activities, and the scheduling tool is unable to generate a
valid critical path. Because these key scheduling practices are not
being performed, the schedule is still not reliable.
Without a fully integrated and reliably derived schedule for the
entire NGEN program, the program office cannot identify when and how
it will proceed through Milestone C and ultimately transition from
NMCI to NGEN, and it cannot adequately manage and measure its progress
in executing the work needed to do so.
NGEN Acquisition Decisions Were Not Always Performance-and Risk-Based:
Successful execution of system acquisition programs depends in part on
effective executive-level governance, to include having organizational
executives review these programs at key milestones in their life
cycles and make informed performance-and risk-based decisions as to
how they should proceed.[Footnote 21] DON policy recognizes the
importance of such milestone reviews. According to this policy,
acquisition programs must proceed through a series of gate reviews (as
discussed above), during which program performance is assessed and
satisfactory program health must be demonstrated prior to moving
forward.
Currently, program performance and health at each gate are assessed
using the Naval Probability of Program Success assessment methodology,
which was established in September 2008. This assessment addresses
four aspects of a program: (1) requirements, (2) resources, (3)
planning/execution, and (4) external influencers. Associated with each
aspect are two or more metrics, each of which is scored based on
underlying criteria that are unique to each gate. (See table 13 for a
description of each metric.) At a given gate review, the criteria are
rated in terms of green, yellow, or red.[Footnote 22] Further, the
metrics can be designated as critical, meaning that any significant
issues that are associated with these metrics must be resolved before
the gate can be exited.
Table 13: Naval Probability of Program Success Metric Definitions:
Program aspect: Requirements;
Metric: Parameter status;
Definition: Progress toward defining capability requirements and
meeting those requirements; requirements traceability and validity of
the threat assessment.
Program aspect: Requirements;
Metric: Scope evolution;
Definition: Stability of performance parameters from the established
baseline and the impact of requirements changes on total program cost
and schedule.
Program aspect: Requirements;
Metric: Concept of operations;
Definition: Progress toward developing and scoping the concept of
operations, using it to inform program requirements, acquisition
approaches, and strategies, and the validity of the concept of
operations over time.
Program aspect: Resources;
Metric: Budget and planning;
Definition: Sufficiency of funding based on last approved budget
controls and degree of deviation from the current cost estimate. Also
assesses how well acquisition, systems development, and sustainment
strategies are evolving in ways intended to mitigate Total Ownership
Cost growth.
Program aspect: Resources;
Metric: Manning;
Definition: Stability and adequacy of Resource Sponsor and Program
Office staffing (availability, skills, experience, certification, and
training).
Program aspect: Planning/execution;
Metric: Acquisition management;
Definition: Completeness of the program master schedule, status of
milestone documentation development, and progress toward defining
derived requirements in the System Design Specification.
Program aspect: Planning/execution;
Metric: Industry/company assessment;
Definition: Assesses market research activities, industrial base
health, and an understanding of industrial implications for cost,
schedule, and technical risks. For major contracts, assesses each
company's financial health, financial systems, and manufacturing/
production capabilities.
Program aspect: Planning/execution;
Metric: Total ownership cost estimating;
Definition: Adequacy of the elements required to produce sound cost
estimates: program description information, cost data, cost estimating
process, cost estimate stability and comparisons, and cost estimate
measures.
Program aspect: Planning/execution;
Metric: Test and evaluation;
Definition: Progress toward defining and executing the Test and
Evaluation Strategy and Test and Evaluation Master Plan.
Program aspect: Planning/execution;
Metric: Technical maturity;
Definition: Maturity of the system and subsystems design, as well as
the technical maturity of critical technology elements in accordance
with an approved Technology Development Strategy.
Program aspect: Planning/execution;
Metric: Sustainment;
Definition: Progress toward defining and executing the sustainment
strategy, and the resource adequacy applied toward the life cycle
sustainment activities.
Program aspect: Planning/execution;
Metric: Software;
Definition: Status of software management and engineering activities
by government agencies and/or contractors that are integral to program
deliverables.
Program aspect: Planning/execution;
Metric: Contract planning and execution;
Definition: Status of procurement activities and achievement of
contracting milestones against the planned schedule;
performance of major contractors and/or government performers.
Program aspect: Planning/execution;
Metric: Government program office performance;
Definition: Progress toward defining and executing intragovernment
requirements;
responsiveness to deliverable submissions;
delivery of facilities, funding, and government furnished
equipment/information in accordance with scheduled requirements;
and effectiveness of configuration management and risk management
boards.
Program aspect: Planning/execution;
Metric: Technology protection[A];
Definition: Progress of safeguarding the research, technology
information, and applied knowledge associated with the program.
Program aspect: External influencers;
Metric: Fit in vision;
Definition: Alignment with current documented OSD guidance and Navy/
Marine Corps strategies.
Program aspect: External influencers;
Metric: Program advocacy;
Definition: Support from key stakeholders, such as USD (AT&L) (or
equivalent), CAPE, international partners, and other military services.
Program aspect: External influencers;
Metric: Interdependencies;
Definition: Status of dependent programs' delivery of the requisite
capability or quantity on schedule.
Source: DON Naval Probability of Program Success Guidebook version 2.2.
[A] This was a new metric introduced in the Naval Probability of
Program Success version 2 framework.
[End of table]
As noted earlier, a Gate 1 review was not held because the gate-review
process was not established when the program began. In lieu of a Gate
1 review, according to the NGEN Acquisition Strategy, the Chief of
Naval Operations Executive Board met to confirm NGEN requirements
during the winter of 2007/2008 and these meetings were "nominally" a
Gate 1 review. Subsequent to the establishment of the DON gate
process, an NGEN Gate 2 review--intended to focus on an analysis of
alternatives--was waived in early 2008 because the department planned
to continue the use of existing NMCI technology, and NGEN entered the
DON review process at Gate 3 in April 2008. OSD later identified the
program as a pre-MAIS acquisition, resulting in the direction to
conduct an analysis of acquisition alternative approaches. As such,
DON held a Gate 2 review in April 2009, one year after the Gate 3
review. Since then, DON held a Gate 4 review in November 2009, as well
as a Gate 5 review in October 2010. As discussed below, the extent to
which each of the gate reviews was performance-and risk-based varied.
* Gate 3 review. At the time of this review, which was in April 2008,
the Probability of Program Success assessment methodology was not yet
in place. Therefore, program review documentation focused on, for
example, program activities that had been completed, were under way,
and were planned. However, these activities were not presented
relative to any benchmark or goal, and thus program performance was
not apparent in the documentation. Further, while program
documentation shows that risks were disclosed, such as funding
shortfalls for fiscal years 2008 and 2009, as well as workforce and
training challenges, the scope and nature of the information presented
did not extend to the level that the assessment methodology provides.
For example, the information presented did not address the realism and
achievability of the program master schedule and the confidence level
associated with the current cost estimate, including the difference
between the program office and independent cost estimates, which are
both relevant criteria under the assessment methodology for the gate.
Notwithstanding these gaps in information that would have limited
informed program decision making, the program was approved to proceed.
* Gate 2 review. At the time of this review, which was in April 2009,
the Probability of Program Success assessment methodology was in
place. However, it was not used to inform program decision making.
Instead, the review focused on the AOA, next steps, and the overall
program timeline. While briefing documentation shows that cost
estimates for the alternatives exceeded planned funding, the
documentation did not disclose the range of AOA and integrated master
schedule weaknesses discussed earlier in this report, and the risks
associated with these limitations. This is significant because the
Gate 2 assessment criteria focus on, among other things, whether the
AOA cost estimates and master program schedule are reliable and
whether program execution is on schedule. Notwithstanding these
weaknesses, the program was approved to proceed.
* Gate 4 review. For this review, DON used its Probability of Program
Success methodology and assessed the health of the program against
each of the 17 metrics,[Footnote 23] including 3 that DON designated
as potentially critical--parameter status, budget and planning, and
acquisition management. According to the program health assessment
used at this gate, 8 of the 17 metrics were rated as red, meaning that
the program had identified significant issues that would inhibit
delivery of capability within approved cost and schedule constraints
and that mitigation strategies had not been identified. Moreover, the
8 metrics rated as red included 3 that were designated as critical,
meaning that these issues needed to be resolved before exiting the
gate. Specifically, the parameter status metric was rated as red
because NGEN requirements that increment 1 is to meet had not yet been
defined; the budget and planning metric was rated as red because the
program was not fully funded; and the acquisition management metric
was rated as red because the USD (AT&L) had yet to authorize the
milestone at which the program would enter the Defense Acquisition
System. (See figure 4 for the assessment results for all 17 metrics.)
Moreover, the gate briefing document highlighted a number of risks
facing the program. For example, it faced the risk that key program
documentation, such as the System Engineering Plan and the Test and
Evaluation Master Plan, would not be completed until NGEN requirements
were defined. Further, it faced the risk that insufficient funding
would impact the program office's ability to acquire NMCI assets.
Nevertheless, the program was approved to proceed.
Figure 4: NGEN Gate 4 Probability of Program Success Assessment
(November 2009):
[Refer to PDF for image]
[Refer to PDF for image: illustration]
NGEN Program Health: Red;
Program requirements: Red;
Parameter Status[A]: Red, critical;
Scope Evolution: Green;
Concept of Operations: Yellow;
Program resources: Red;
Budget and Planning[A]: Red, critical;
Manning: Red;
Program planning/execution: Red;
Acquisition Management[A]: Red, critical;
Industry/Company Assessment: Red;
Total Ownership Cost Estimating: Red;
Test and Evaluation: Yellow;
Technical Maturity: Yellow;
Sustainment: Red;
Software: Yellow;
Contract Planning and Execution: Red;
Government Program Office Performance: Green;
External influencers: Green;
Fit in Vision: Green;
Program Advocacy: Green;
Interdependencies: Green.
Source: GAO analysis of DON data.
Note:
Green means that the program is on track to provide capability within
approved cost and schedule constraints.
Yellow means that the program has identified some significant issues
with providing capability within approved cost and schedule
constraints, but mitigation strategies are being executed.
Red means that the program has identified significant issues that will
inhibit delivery of capability within approved cost and schedule
constraints and mitigation strategies have not been identified; and
"critical" means that a potential nonexecutable situation exists for
the program that must be remedied.
[A] These metrics are considered critical when they are scored red.
[End of figure]
* Gate 5 review. For this review, which was conducted in October 2010,
DON again used its Probability of Program Success methodology and
assessed program performance and risk against all 18 metrics,
including 9 that DON designated as potentially critical. Three metrics
were rated as red; 1, test and evaluation, was deemed critical.
According to the assessment, the test and evaluation metric was rated
as red because the Test and Evaluation Master Plan was not complete;
the budget and planning metric was rated as red because of significant
NGEN funding reductions; and the manning metric was rated as red
because of inadequate program office contracting, engineering and
logistics personnel. Further, according to the assessment, the Test
and Evaluation Master Plan was not complete because the requirements
were not defined. As discussed above, the program recognized, at Gate
4, the risk that a delay in defining NGEN requirements would impact
the completion of this plan. (See figure 5 for the assessment results
for all 18 metrics.) According to the gate briefing document, these
red ratings introduced a number of risks, such as the risk that the
program would not be able to execute its current acquisition approach
and meet program milestones.
In addition, even though the assessment rated the acquisition
management metric as green, this rating is not consistent with our
findings in this report about the NGEN integrated master schedule.
Specifically, the rationale for the green rating was that the August
2010 rebaselined schedule was viewed as realistic and achievable by
key stakeholders. However, as stated earlier, program officials
conceded that the schedule does not assign resources, and the
scheduling tool is unable to generate a valid critical path, which are
key scheduling practices; thus the August 2010 schedule was not
reliable. The approval of the Assistant Secretary of the Navy
(Research, Development and Acquisition) for NGEN to proceed beyond
Gate 5 was made conditional on the program satisfactorily completing
action items focused on releasing the request for proposals for the
Transport Services contract (scheduled for January 2011) and resolving
its funding shortfall.
Figure 5: NGEN Gate 5 Probability of Program Success Assessment
(October 2010):
[Refer to PDF for image: illustration]
NGEN Program Health: Yellow;
Program requirements:Yellow;
Parameter Status[A]: Yellow;
Scope Evolution: Green;
Concept of Operations: Yellow;
Program resources: Red;
Budget and Planning[A]: Red;
Manning: Red;
Program planning/execution: Yellow;
Acquisition Management: Green;
Industry/Company Assessment[A]: Green;
Total Ownership Cost Estimating[A]: Yellow;
Test and Evaluation[A]: Red, critical;
Technical Maturity[A]: Yellow;
Sustainment: Green;
Software: Green;
Contract Planning and Execution[A]: Yellow;
Government Program Office Performance[A]: Yellow;
Technology protection: Yellow;
External influencers: Green;
Fit in Vision: Green;
Program Advocacy[A]: Yellow;
Interdependencies: Green.
Source: GAO analysis of DON data.
[A] These metrics are considered critical when certain underlying
criteria are rated red. This approach is different from the Gate 4
assessment because DON used a revised version of the Probability of
Program Success framework when it conducted the Gate 5 assessment
[End of figure]
As shown above, DON has demonstrated a pattern of approving NGEN at
key acquisition review gates in the face of both limited disclosure of
the program's health and risks and known program risks and shortfalls
in performance. According to DON officials, the decisions to pass the
gates and proceed were based on their view that they had sufficiently
mitigated known risks and issues. By not fully ensuring that NGEN gate
decisions sufficiently reflected program challenges, DON has increased
the likelihood that the NGEN acquisition alternative that it is
pursuing is not the most cost-effective course of action, and that the
program will cost more and take longer to complete than planned.
Conclusions:
Given the enormous size, complexity, and mission importance of NGEN,
it is vital that DON and DOD assure decision makers, including the
congressional defense committees, that the approach to acquiring
needed capabilities is the most cost-effective and that its execution
is guided by a well-defined schedule and informed milestone decision
making. To date, this has not occurred to the degree that it should.
Most notably, while DON produced substantially well-documented cost
estimates, the NGEN acquisition approach currently being followed is
not grounded in a reliable analysis of alternative approaches, and the
selected approach was not even assessed and is about $4.7 billion
costlier and introduces more risk than the alternatives that were
assessed. Further, the program's execution to date has not been based
on the kind of reliably derived integrated master schedule that is
essential to program success. While the program office is aware of
some of the schedule weaknesses and intends to address them,
additional work is needed to ensure that the schedule can produce
credible dates for planned NGEN milestones and events. Exacerbating
this is an equally troubling pattern of missed milestones and delays
in key program documentation, as well as gate review decisions that
have allowed the program to proceed in the face of significant
performance shortfalls and risks.
While NGEN is scheduled for an OSD-level milestone review in August
2011, the above schedule limitations make it likely that this review
date will slip. It is thus imperative, given the scope and nature of
the program's problems, that swift and immediate action be taken to
ensure that the most cost-effective acquisition approach is pursued
and that a reliable schedule and performance-and risk-based decision
making are employed. To do less increases the chances that needed NGEN
capabilities will be delivered late and be more costly than necessary.
Recommendations for Executive Action:
To ensure that NGEN capabilities are acquired in the most cost-
effective manner, we recommend that the Secretary of Defense take the
following two actions:
* direct the Under Secretary of Defense for Acquisition, Technology,
and Logistics to conduct an interim NGEN milestone review, and:
* direct the Secretary of the Navy to immediately limit further
investment in NGEN until this review has been conducted and a decision
on how best to proceed has been reported to the Secretary of Defense
and congressional defense committees.
At a minimum, this review should ensure that DON pursues the most
advantageous acquisition approach, as evidenced by a meaningful
analysis of all viable alternative acquisition approaches, to include
for each alternative reliably derived cost estimates and metrics-based
operational effectiveness analyses. In addition, the review should
consider existing performance shortfalls and known risks, including
those discussed in this report.
To facilitate implementation of the acquisition approach resulting
from the above review, we further recommend that the Secretary of
Defense direct the Secretary of the Navy to take the following two
actions:
* ensure that the NGEN integrated master schedule substantially
reflects the key schedule estimating practices discussed in this
report, and:
* ensure that future NGEN gate reviews and decisions fully reflect the
state of the program's performance and its exposure to risks.
Agency Comments and Our Evaluation:
In written comments on a draft of this report, signed by the Deputy
Assistant Secretary of Defense (C3, Space and Spectrum), and reprinted
in appendix II, DOD stated that it concurred with one of our four
recommendations, did not concur with one recommendation, and partially
concurred with two. The department's comments are discussed below.
* The department partially concurred with our recommendation to
conduct an interim milestone review that provides assurance that DON
is pursuing the most advantageous acquisition approach. Specifically,
the department stated that it intended to leverage the next OSD-
chaired NGEN Overarching Integrated Product Team meeting in February
2011 for the review and that following this meeting, the USD(AT&L)
will conduct a Milestone Decision Authority review of the current NGEN
approach, along with risks. According to the department, this approach
balances the review processes already in place, resource constraints,
and the need for an additional milestone review. Further, the
department said it had concluded that DON's AOA was sufficient and
that the analysis had been approved by CAPE. DOD added that it will
complete an economic analysis--a post AOA-activity--for the August
2011 Milestone C review, which will include a follow-on independent
cost estimate and an updated determination of the most cost-effective
solution.
While these are important steps, DOD's planned actions do not appear
to fully address our recommendation. Specifically, the department did
not indicate any intent to reevaluate whether the current solution is
indeed the most advantageous approach, despite the weaknesses
contained in the AOA identified in this report and the fact that the
current approach was not included in its analysis. According to the
September 2010 draft NGEN economic analysis development plan, only the
status quo and the current approach are to be analyzed, not the other
three alternatives that were included in the AOA. Without a meaningful
analysis of alternatives, DOD will be unable to determine the most
cost-effective solution in its two upcoming key reviews.
* The department did not concur with our recommendation that it limit
further investment in NGEN until a decision has been made on how best
to proceed based on an interim review that considers all viable
alternative acquisition approaches and this decision has been reported
to the Secretary of Defense and to congressional defense committees.
The department stated that DON's NGEN acquisition strategy and program
management have been approved by the milestone decision authority, and
that adequate oversight is in place to ensure regulatory and statutory
compliance. Further, the department said that the limitation on NGEN
investments will impact future DON business operations and,
ultimately, Naval warfighting capabilities. The department added that
it will make adjustments to NGEN investments if it determines they are
required; however, it also said it must continue to execute the
investments within the time frame of the continuity of services
contract.
* While oversight is in place for the NGEN program, it is not
effective. Specifically, as discussed in this report, DON's past
reviews have resulted in decisions that were not always performance-
and risk-based. Given that DON is continuing to proceed in the face of
the problems we are reporting, it is even more important that adequate
oversight be provided by the Secretary and congressional defense
committees.
Moreover, we maintain that limiting further investment in NGEN,
thereby delaying the Milestone C event and its associated activities,
is the most prudent action at this time. By not evaluating all viable
acquisition approaches before proceeding with further investment in
NGEN, the department cannot be assured that it is pursuing the most
cost-effective approach. Further, by selecting an approach that, as
discussed in this report, carries greater relative schedule and
performance risks than other alternatives and is being executed
against an unreliable program schedule, the department increases the
risk that its approach will lead to future cost overruns, requiring it
to expend additional resources that could otherwise be used to provide
other warfighting capabilities. Furthermore, even if the department
proceeds along its current course, the issues we have identified with
the program's schedule, along with the delays already experienced,
raise concerns that it will be unable to complete the transition as
planned within the time frames of the current continuity of services
contract.
* The department partially concurred with our recommendation that the
Secretary of Defense direct the Secretary of the Navy to ensure that
the NGEN integrated master schedule substantially reflects the key
schedule estimating practices discussed in this report. DOD stated
that the integrated master schedule was developed in accordance with
industry best practices. However, as discussed in this report, none of
the subschedules that we analyzed reflected all the practices that our
work has identified as necessary to develop and maintain a reliable
schedule. To its credit, DOD also said it would seek ways to improve
schedule performance and that DON will review the scheduling practices
discussed in this report and incorporate those found to be beneficial.
We continue to believe that the Secretary of the Navy should ensure
that the NGEN integrated master schedule incorporates all of the best
practices for schedule estimating discussed in this report to help
manage and measure its progress in executing the work needed to
proceed through Milestone C and ultimately transition from NMCI to
NGEN.
* The department concurred with our recommendation to ensure that
future NGEN gate reviews and decisions fully reflect the state of the
program's performance and its exposure to risks. In this regard, the
department stated that it plans to continue to conduct monthly risk
management board meetings and program health reviews, and report the
results to program leadership. It will be critical that decisions on
NGEN fully reflect the state of the program's performance and exposure
to risks.
We are sending copies of this report to the appropriate congressional
committees; the Director, Office of Management and Budget; the
Congressional Budget Office; the Secretary of Defense; and the
Secretary of the Navy. The report also is available at no charge on
the GAO Web site at [hyperlink, http://www.gao.gov].
If you or your staff members have any questions on matters discussed
in this report, please contact me at (202) 512-6304 or
melvinv@gao.gov. Contact points for our Offices of Congressional
Relations and Public Affairs may be found on the last page of this
report. GAO staff who made major contributions to this report are
listed in appendix III.
Signed by:
Valerie C. Melvin:
Director, Information Management and Human Capital Issues:
[End of section]
Appendix I: Objectives, Scope, and Methodology:
Our objectives were to determine whether (1) the Department of the
Navy (DON) sufficiently analyzed alternative approaches for acquiring
its Next Generation Enterprise Network (NGEN), (2) DON has a reliable
program schedule for executing NGEN, and (3) acquisition decisions
have been performance-and risk-based.
To address the first objective, we evaluated the analysis of
alternatives (AOA) report and its supporting documentation against
relevant Department of Defense (DOD) guidance[Footnote 24] and GAO's
Cost Estimating and Assessment Guide[Footnote 25] and compared the
alternatives in the AOA final report with the NGEN Acquisition
Strategy. More specifically,
* For the cost analysis, we compared the AOA cost estimating
documentation, such as the cost model spreadsheet, supporting
documentation for the cost model, and the final NGEN AOA report,
against the four characteristics of a reliable estimate[Footnote 26]
in GAO's Cost Estimating and Assessment Guide to determine the extent
to which the cost estimates reflected each of the four characteristics.
* For the operational effectiveness analysis, we compared an NGEN
alternatives performance assessment report and the AOA final report
against the relevant DOD guidance to determine the extent to which the
analysis was sufficient. In addition, we reviewed NGEN AOA Advisory
Group meeting minutes and documentation containing the results of a
Space and Naval Warfare Systems Command review of the cost analysis.
We also interviewed cognizant DON and Office of the Secretary of
Defense officials about the AOA's development and results.
To address the second objective, we first reviewed the integrated
master schedule and 4 of the 29 subschedules that existed when we
began our review and that comprised the early transition activities
intended to address key program risks, as well as high-level plans for
postdeployment.[Footnote 27] Accordingly, we focused on assessing the
May 2010 subschedules against the nine key schedule estimating
practices[Footnote 28] in GAO's Cost Estimating and Assessment Guide
using commercially available software tools to determine the extent to
which each subschedule reflected each of the nine practices (e.g., a
logical sequence of activities and reasonable activity durations).
Further, we characterized the extent to which each subschedule
satisfied each of the practices as either met, substantially met,
partially met, minimally met, or not met.[Footnote 29] In addition, we
compared the baseline schedule, established in December 2009, to the
rebaselined schedule, established in August 2010, to identify whether
key event and milestone dates had slipped. We also interviewed
cognizant officials about development and management of the integrated
master schedule and underlying subschedules. We also reviewed program
documentation, such as the NGEN schedule management plan, program
performance reports, program management reviews, and the acquisition
strategy.
To address the third objective we compared program review
documentation, such as briefings, program performance assessments, and
meeting minutes, to DON acquisition review policies and procedures, as
well as to other programmatic documents, such as risk registers and
risk management board briefings and meeting minutes. We also
interviewed cognizant program officials regarding NGEN performance and
program risks.
To assess the reliability of the data that we used to support the
findings in this report, we reviewed relevant program documentation to
substantiate evidence obtained through interviews with agency
officials. We determined that the data used in this report are
sufficiently reliable. We have also made appropriate attribution
indicating the sources of the data.
We conducted this performance audit at DOD offices in the Washington,
D.C., metropolitan area and at the Space and Naval Warfare Systems
Command in San Diego, California, from October 2009 to February 2011
in accordance with generally accepted government auditing standards.
Those standards require that we plan and perform the audit to obtain
sufficient, appropriate evidence to provide a reasonable basis for our
findings and conclusions based on our audit objectives. We believe
that the evidence obtained provides a reasonable basis for our
findings and conclusions based on our audit objectives.
[End of section]
Appendix II: Comments from the Department of Defense:
Office Of The Assistant Secretary Of Defense:
Networks And Information Integration:
6000 Defense Pentagon:
Washington, DC 20301-6000:
February 15, 2011:
Ms. Valerie C. Melvin:
Director, Information Management and Human Capital Issues:
U.S. Government Accountability Office:
441 G Street, NW:
Washington, DC 20548:
Dear Ms. Melvin:
This is the Department of Defense (DoD) response to the GAO Draft
Report, GAO-11150, 'Information Technology: Better Informed Decision
Making Needed on Navy's Next Generation Enterprise Network
Acquisition,' dated December 15, 2010 (GAO Code 310679). We
acknowledge receipt of the draft report and note that the Department's
written comments are included.
Our point of contact is Mr. Mark Godino at (703) 602-2720, ext 142.
Please contact him with any questions or if you need clarification.
Sincerely,
Signed by:
Dr. Ronald C. Jost:
Deputy Assistant Secretary of Defense (C3, Space and Spectrum):
Enclosure: As Stated:
[End of letter]
GAO Draft Report Dated December 15, 2010:
GAO-11-150 (GAO Code 310679):
"Information Technology: Better Informed Decision Making Needed On
Navy's Next Generation Enterprise Network Acquisition"
Department Of Defense Comments To The GAO Recommendations:
Recommendation 1: The GAO recommends that the Secretary of Defense
direct the Under Secretary of Defense for Acquisition, Technology and
Logistics (USD(AT&L)) to conduct an interim Next Generation Enterprise
Network (NGEN) milestone review.
DOD Response: Partially Concur. The Department concurs with the
finding that an interim milestone review may provide additional
benefit, even though a thorough review was conducted by the Office of
the Secretary of Defense (OSD) chaired, NGEN Overarching
Integrated Product Team (OIPT) in November 2010. The Department
intends to further leverage the next upcoming OSD chaired NGEN OIPT
scheduled for 17 February 2011, for this purpose. Following this OIPT
meeting, the USD(AT&L) will conduct a Milestone Decision Authority
(MDA) review of the current NGEN acquisition approach, along with the
risks. This approach reconciles the balance between recognition of
vetted consensus review processes already in place, resource
constraints, and the need for an additional milestone review. The
Department has concluded the Department of the Navy (DON) Analysis of
Alternatives (AoA) was sufficient. The Office of the Director of Cost
Assessment and Program Evaluation (CAPE) approved the NGEN Increment 1
AoA in December 2009. Per Clinger-Cohen Certification and DoD
requirements, a follow-on independent cost estimate and an updated
determination of the most cost effective solution are completed as
part of the Economic Analysis. The Economic Analysis is a post-AoA
activity and will be completed at Milestone C, when the NGEN program
is baselined (MDA approves Acquisition Program Baseline (APB)) in
August 2011.
Recommendation 2: The GAO recommends that the Secretary of Defense
direct the Secretary of the Navy to immediately limit further
investment in NGEN until this review has been conducted and a decision
on how best to proceed has been reported to the Secretary and
Congressional defense committees.
DOD Response: Nonconcur. The DON's Next Generation Enterprise Network
(NGEN) program management and investment strategy is well defined in
its Acquisition Strategy, which was approved by the MDA and further
clarified in subsequent Acquisition Decision Memorandums (ADMs).
Additionally, the NGEN program has definitive, dedicated, and
qualified acquisition oversight in place to ensure its regulatory and
statutory compliance. The DON is presently in the midst of a limited-
period Continuity of Service Contract (CoSC) that is providing bridge
services during the transition from the present Navy Marine Corps
Intranet (NMCI) network to the future NGEN state. If, during the
upcoming interim review by the USD(AT&L), the Department feels
adjustments are required to the current or planned NGEN investments,
actions will be taken at that time. Limitation of NGEN investments, at
this time, will significantly impact future DON business operations
and ultimately, Naval warfighting capabilities. In the near term, such
limitations would impair Program Management Office activities critical
to support planned Milestone C events in the Fourth Quarter of FY1 1.
Timely execution of NGEN investments must continue in order to
successfully transition from CoSC within the contractually obligated
timeframe allotted.
Recommendation 3: To facilitate implementation of the acquisition
approach resulting from the above review, the GAO recommends that the
Secretary of Defense direct the Secretary of the Navy to ensure that
the (NGEN) integrated master schedule substantially reflects the key
schedule estimating practices discussed in this report.
DOD Response: Partially Concur. The NGEN Integrated Master Schedule
(IMS) was developed in accordance with industry best practices for
scheduling and was recently finalized and approved by the Program
Manager (PM) on 26 August 2010. The NGEN IMS will continue to evolve
as we move forward to Milestone C and an approved Acquisition Program
Baseline (APB). As the NGEN IMS evolves, the Department will continue
to seek out ways to improve our schedule performance. The Department
will review the key schedule estimating practices discussed in this
report and will consider incorporating those found to be beneficial.
Recommendation 4: To facilitate implementation of the acquisition
approach resulting from the above review, the GAO recommends that the
Secretary of Defense direct the Secretary of the Navy to ensure that
future NGEN gate reviews and decisions fully reflect the state of the
program's performance and its exposure to risks.
DOD Response: Concur. The NGEN PM will continue to conduct monthly
formal Risk Management Board (RMB) and Probability of Program Success
(POPS) (V2.0) reviews. Results of both of these formal meetings are
regularly reported in the NGEN Program Dashboard, which is distributed
weekly to program leadership and monthly to the Navy Senior
Integration Board (NSIB) chaired by Principal Civilian Deputy
Assistant Secretary of the Navy (Research, Development, and
Acquisition) (PCDASN(RDA)). Additionally, program risk status is
briefed at the OSD chaired OIPT meetings. Finally, both past and
future NGEN gate reviews have and will continue to fully reflect the
state of the program's performance and its exposure to risk.
[End of section]
Appendix III: GAO Contact and Staff Acknowledgments:
GAO Contact:
Valerie C. Melvin, (202) 512-6304, or melvinv@gao.gov:
Staff Acknowledgments:
In addition to the individual named above, key contributors to this
report were Randolph C. Hite, Director; Carol Cha, Assistant Director;
Monica Anatalio; Mathew Bader; Neil Doherty; Cheryl Dottermusch; James
Houtz; Kaelin Kuhn; Neela Lakhmani; Lee McCracken; Jeanne Sung; and
Adam Vodraska.
[End of section]
Footnotes:
[1] The Naval Networking Environment is to be an iterative set of
integrated, phased programs that share a common enterprise
architecture and standards. It includes NGEN and the Consolidated
Afloat Networks and Enterprise Services program, among others, and is
to be in place by 2016.
[2] NMCI provides about 382,000 workstations to approximately 700,000
users across 2,500 Navy and Marine Corps locations around the world.
NMCI is composed of transport infrastructure, such as cables, routers,
and switches; end-user equipment, such as computers, monitors, and
keyboards; and software. It provides, among other things, data
storage, e-mail, transport of voice and data, and video-
teleconferencing.
[3] The NMCI contractor will deliver in place the NMCI infrastructure
and provide DON with a Government Purpose Rights license for NMCI
technical data, computer software, and computer software documentation.
[4] In addition to these contracts, DON plans to enter into an
interagency agreement with the Defense Information Systems Agency to
provide wide area network services.
[5] NGEN program documentation defines initial transition for the Navy
as execution and operation of NGEN services for 5 percent of the Navy
management domain, and for the Marine Corps as execution and operation
of 5 percent of Marine Corps seats. Final transition is defined as
complete when increased government operational control and visibility
are established and test and evaluation requirements are verified and
validated for 80 percent of the Navy management domain and when 80
percent of Marine Corps seats are transitioned and increased operation
control of the network and visibility activities are implemented at
the global, regional, and local level.
[6] Department of Defense Instruction 5000.02, Operation of the
Defense Acquisition System, Dec. 8, 2008, and Secretary of the Navy
Instruction 5000.2D, Implementation and Operation of the Defense
Acquisition System and the Joint Capabilities Integration and
Development System (Oct. 16, 2008).
[7] The DAS five-phase acquisition process is intended to translate
mission needs and requirements into stable, affordable, and well-
managed acquisition programs.
[8] Secretary of the Navy Instruction 5000.2D, Implementation and
Operation of the Defense Acquisition System and the Joint Capabilities
Integration and Development System (Oct. 16, 2008).
[9] The gate process had not been established at the time. DON
reported that Gate 1 was nominally held in a series of Chief of Naval
Operations Executive Board meetings during the winter of 2007/2008.
[10] Gate 2 was initially waived because DON's original acquisition
approach was to continue to use the existing NMCI technology and,
therefore, a traditional analysis of alternative technologies was not
planned. Subsequently, OSD identified the program as a pre-Major
Automated Information System acquisition, and as a result an analysis
of acquisition alternatives was directed. A Gate 2 review was
conducted to review the AOA.
[11] GAO, GAO Cost Estimating and Assessment Guide: Best Practices for
Developing and Managing Capital Program Costs, [hyperlink,
http://www.gao.gov/products/GAO-09-3SP] (Washington, D.C.: March
2009); Defense Acquisition University, Defense Acquisition Guidebook,
Section 3.3 "Analysis of Alternatives" (accessed Mar. 19, 2010).
[12] [hyperlink, http://www.gao.gov/products/GAO-09-3SP].
[13] DON officials stated that the NGEN AOA was not intended to be a
traditional analysis to determine a system solution; rather, it was an
analysis of alternative acquisition approaches.
[14] Defense Acquisition Guidebook, Section 3.3 "Analysis of
Alternatives" (Mar. 19, 2010); DON Acquisition and Capabilities
Guidebook (December 2008); and Air Force Analysis of Alternatives
Handbook (July 2008).
[15] To support DON's Naval Networking Environment goals, NGEN plans
to implement an IT service management framework to measure and report
on all aspects of end-to-end IT service delivery. DON plans to use the
IT Infrastructure Library best practices to implement this framework.
[16] Defense Acquisition Guidebook, Section 3.3 "Analysis of
Alternatives" (Mar. 19, 2010).
[17] The critical path represents the chain of dependent activities
with the longest total duration in the schedule.
[18] Float is the amount of time a task can slip before affecting the
critical path.
[19] This schedule, considered to be an informal baseline schedule,
was approved by the program manager to allow for later comparison to
the current plan and to manage the overall scope of work to be
conducted within the program. An official baseline schedule is
expected to be approved by the USD (AT&L) as part of the Acquisition
Program Baseline at Milestone C.
[20] These schedules were the Transition Integrated Product Team, IT
Service Management Process Development, Comprehensive Facilities
Inventory Phase 2 Plan of Action and Milestones, and Contract
Technical Representative Workforce Reconstitution. These subschedules
represented the ongoing and/or planned work on NGEN to be completed
prior to the deployment phase, as well as high-level plans for
remaining work to be completed postdeployment.
[21] GAO, Information Technology: Federal Agencies Need to Strengthen
Investment Board Oversight of Poorly Planned and Performing Projects,
[hyperlink, http://www.gao.gov/products/GAO-09-566] (Washington, D.C.:
June 30, 2009).
[22] Criteria are rated green, yellow, or red based on the extent to
which the program meets necessary elements associated with that
criteria. These measures can vary and are defined specifically for
each criterion. For example, it could be based on the status of a
deliverable (i.e., green if completed, yellow if in progress, or red
if not yet started), the significance of issues (i.e., green if no
issues, yellow if some issues, or red if significant issues), a
percentage (i.e., green if less than 10 percent, yellow if between 10
percent and 30 percent, or red if greater than 30 percent cost
growth), or schedule (i.e., green if less than 6 months, yellow if
between 6 and 12 months, or red if greater than 12 months schedule
slip).
[23] At the time of the Gate 4 review, DON was using the Probability
of Program Success version 1 framework that consisted of 17 metrics.
Technology Protection was added in version 2 of the framework.
[24] Defense Acquisition University, Defense Acquisition Guidebook,
Section 3.3 "Analysis of Alternatives" (accessed Mar. 19, 2010); DON
Acquisition and Capabilities Guidebook (December 2008); and Air Force
Analysis of Alternatives Handbook (July 2008).
[25] [hyperlink, http://www.gao.gov/products/GAO-09-3SP].
[26] These are (1) comprehensive, (2) well-documented, (3) accurate,
and (4) credible.
[27] These schedules were the Transition Integrated Product Team, IT
Service Management Process Development, Comprehensive Facilities
Inventory Phase 2 Plan of Action and Milestones, and Contract
Technical Representative Workforce Reconstitution.
[28] These are (1) capturing all activities, (2) sequencing all
activities, (3) assigning resources to all activities, (4)
establishing the duration of all activities, (5) integrating
activities horizontally and vertically, (6) establishing the critical
path for all activities, (7) identifying reasonable "float" between
activities, (8) conducting a schedule risk analysis, and (9) updating
the schedule using logic and durations.
[29] "Met" means DON provided complete evidence that satisfies the
entire criterion. "Substantially Met" means DON provided evidence that
satisfies a large portion of the criterion. "Partially Met" means DON
provided evidence that satisfies about half of the criterion.
"Minimally Met" means DON provided evidence that satisfies a small
portion of the criterion. "Not Met" means DON provided no evidence
that satisfies any of the criterion.
[End of section]
GAO's Mission:
The Government Accountability Office, the audit, evaluation and
investigative arm of Congress, exists to support Congress in meeting
its constitutional responsibilities and to help improve the performance
and accountability of the federal government for the American people.
GAO examines the use of public funds; evaluates federal programs and
policies; and provides analyses, recommendations, and other assistance
to help Congress make informed oversight, policy, and funding
decisions. GAO's commitment to good government is reflected in its core
values of accountability, integrity, and reliability.
Obtaining Copies of GAO Reports and Testimony:
The fastest and easiest way to obtain copies of GAO documents at no
cost is through GAO's Web site [hyperlink, http://www.gao.gov]. Each
weekday, GAO posts newly released reports, testimony, and
correspondence on its Web site. To have GAO e-mail you a list of newly
posted products every afternoon, go to [hyperlink, http://www.gao.gov]
and select "E-mail Updates."
Order by Phone:
The price of each GAO publication reflects GAO‘s actual cost of
production and distribution and depends on the number of pages in the
publication and whether the publication is printed in color or black and
white. Pricing and ordering information is posted on GAO‘s Web site,
[hyperlink, http://www.gao.gov/ordering.htm].
Place orders by calling (202) 512-6000, toll free (866) 801-7077, or
TDD (202) 512-2537.
Orders may be paid for using American Express, Discover Card,
MasterCard, Visa, check, or money order. Call for additional
information.
To Report Fraud, Waste, and Abuse in Federal Programs:
Contact:
Web site: [hyperlink, http://www.gao.gov/fraudnet/fraudnet.htm]:
E-mail: fraudnet@gao.gov:
Automated answering system: (800) 424-5454 or (202) 512-7470:
Congressional Relations:
Ralph Dawn, Managing Director, dawnr@gao.gov:
(202) 512-4400:
U.S. Government Accountability Office:
441 G Street NW, Room 7125:
Washington, D.C. 20548:
Public Affairs:
Chuck Young, Managing Director, youngc1@gao.gov:
(202) 512-4800:
U.S. Government Accountability Office:
441 G Street NW, Room 7149:
Washington, D.C. 20548:
