Business Modernization
NASA Must Consider Agencywide Needs to Reap the Full Benefits of Its Enterprise Management System Modernization Effort
Gao ID: GAO-07-691 July 20, 2007
Since 1990, GAO has designated the National Aeronautics and Space Administration's (NASA) contract management as an area of high risk in part because it lacked modern systems to provide accurate and reliable information on contract spending. In April 2000, NASA began a system modernization effort, known as the Integrated Enterprise Management Program (IEMP). When GAO last reported on the status of IEMP in September 2005, NASA had begun to implement disciplined processes needed to manage IEMP, but had yet to implement other best practices such as adopting business processes that improve information on contract spending. This GAO report addresses (1) actions taken by NASA to effectively implement the disciplined processes needed to manage IEMP and (2) the extent to which NASA has considered the strategic issues associated with developing a concept of operations and defining standard business processes. GAO interviewed NASA officials and obtained and analyzed documentation relevant to the issues.
Since GAO last reported on NASA's IEMP efforts, NASA implemented its IEMP contract management module and upgraded the software used for its core financial module. NASA has also taken steps to improve its processes for managing IEMP--including implementing improved requirements management and testing processes, enhancing its performance metrics related to tracking system defects, and developing an IEMP risk mitigation strategy. Further, NASA has developed quantitative entry and exit criteria for moving from one phase of an IEMP project to another--a recognized industry best practice. However, NASA has not yet addressed weaknesses in the areas of requirements development and project scheduling, which ultimately caused the agency to assume a greater risk that it would not identify significant system defects prior to implementation of the core financial upgrade. Despite these difficulties, NASA financial managers have stated that the core financial upgrade is now functioning as expected for most transactions. As of the end of GAO's audit work in May 2007, NASA was working to correct a number of system errors, including posting errors for certain types of transactions. Because NASA was still working to stabilize the system, GAO was unable to determine the significance of these weaknesses. Further, NASA has not yet fully considered higher-level strategic issues associated with developing an agencywide concept of operations and defining standard business processes. With a planned investment of over $800 million for IEMP, NASA must immediately and effectively address these strategic building blocks if IEMP is to successfully address long-standing management challenges--including overseeing contractor performance and properly accounting for NASA's property, plant, and equipment. NASA officials stated that they have begun developing a concept of operations to describe how all of its business processes should be carried out. According to NASA officials, they expect to complete the concept of operations by the summer of 2008. Ideally, a concept of operations should be completed before system development begins so that it can serve as a foundation for system planning and requirements development. Nonetheless, while NASA's IEMP efforts are already well under way, the completion of such a document remains essential for guiding the development of the remaining IEMP modules as well as any future upgrades. As part of developing a concept of operations, NASA should also define standard business processes that are supported by its IEMP software. NASA needs to ensure that its business processes and the information that flows from those processes support the enterprise's needs. Efforts that primarily focus on the parochial needs of a specific organizational unit, such as accounting, do not provide reasonable assurance that NASA's agencywide management information needs are addressed.
Recommendations
Our recommendations from this work are listed below with a Contact for more information. Status will change from "In process" to "Open," "Closed - implemented," or "Closed - not implemented" based on our follow up work.
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GAO-07-691, Business Modernization: NASA Must Consider Agencywide Needs to Reap the Full Benefits of Its Enterprise Management System Modernization Effort
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Report to Congressional Requesters:
United States Government Accountability Office:
GAO:
July 2007:
Business Modernization:
NASA Must Consider Agencywide Needs to Reap the Full Benefits of Its
Enterprise Management System Modernization Effort:
NASA's IEMP Processes:
GAO-07-691:
GAO Highlights:
Highlights of GAO-07-691, a report to congressional requesters
Why GAO Did This Study:
Since 1990, GAO has designated the National Aeronautics and Space
Administration‘s (NASA) contract management as an area of high risk in
part because it lacked modern systems to provide accurate and reliable
information on contract spending. In April 2000, NASA began a system
modernization effort, known as the Integrated Enterprise Management
Program (IEMP). When GAO last reported on the status of IEMP in
September 2005, NASA had begun to implement disciplined processes
needed to manage IEMP, but had yet to implement other best practices
such as adopting business processes that improve information on
contract spending. This GAO report addresses (1) actions taken by NASA
to effectively implement the disciplined processes needed to manage
IEMP and (2) the extent to which NASA has considered the strategic
issues associated with developing a concept of operations and defining
standard business processes. GAO interviewed NASA officials and
obtained and analyzed documentation relevant to the issues.
What GAO Found:
Since GAO last reported on NASA‘s IEMP efforts, NASA implemented its
IEMP contract management module and upgraded the software used for its
core financial module. NASA has also taken steps to improve its
processes for managing IEMP”including implementing improved
requirements management and testing processes, enhancing its
performance metrics related to tracking system defects, and developing
an IEMP risk mitigation strategy. Further, NASA has developed
quantitative entry and exit criteria for moving from one phase of an
IEMP project to another”a recognized industry best practice. However,
NASA has not yet addressed weaknesses in the areas of requirements
development and project scheduling, which ultimately caused the agency
to assume a greater risk that it would not identify significant system
defects prior to implementation of the core financial upgrade. Despite
these difficulties, NASA financial managers have stated that the core
financial upgrade is now functioning as expected for most transactions.
As of the end of GAO‘s audit work in May 2007, NASA was working to
correct a number of system errors, including posting errors for certain
types of transactions. Because NASA was still working to stabilize the
system, GAO was unable to determine the significance of these
weaknesses.
Further, NASA has not yet fully considered higher-level strategic
issues associated with developing an agencywide concept of operations
and defining standard business processes. With a planned investment of
over $800 million for IEMP, NASA must immediately and effectively
address these strategic building blocks if IEMP is to successfully
address long-standing management challenges”including overseeing
contractor performance and properly accounting for NASA‘s property,
plant, and equipment.
• NASA officials stated that they have begun developing a concept of
operations to describe how all of its business processes should be
carried out. According to NASA officials, they expect to complete the
concept of operations by the summer of 2008. Ideally, a concept of
operations should be completed before system development begins so that
it can serve as a foundation for system planning and requirements
development. Nonetheless, while NASA‘s IEMP efforts are already well
under way, the completion of such a document remains essential for
guiding the development of the remaining IEMP modules as well as any
future upgrades.
• As part of developing a concept of operations, NASA should also
define standard business processes that are supported by its IEMP
software. NASA needs to ensure that its business processes and the
information that flows from those processes support the enterprise‘s
needs. Efforts that primarily focus on the parochial needs of a
specific organizational unit, such as accounting, do not provide
reasonable assurance that NASA‘s agencywide management information
needs are addressed.
What GAO Recommends:
GAO recommends five new actions directed at improving the processes
used to manage IEMP, developing a concept of operations, and defining
standard business processes. NASA concurred with all five
recommendations and described steps it is taking to improve its
enterprise management system modernization efforts.
[hyperlink, http://www.gao.gov/cgi-bin/getrpt?GAO-07-691].
To view the full product, including the scope and methodology, click on
the link above. For more information, contact McCoy Williams at (202)
512-9095 or Keith Rhodes at (202) 512-6412.
Contents:
Letter:
Results in Brief:
Background:
Progress Made in Developing Disciplined Project Management Processes,
but Some Problems Remain:
NASA Has Not Yet Fully Considered an Enterprise View of Its Operations
and Processes:
Conclusions:
Recommendations for Executive Action:
Agency Comments and Our Evaluation:
Appendix I: Scope and Methodology:
Appendix II: Comments from the National Aeronautics and Space
Administration:
Appendix III: GAO Contacts and Staff Acknowledgments:
Figures:
Figure 1: Current NASA Processes for Oversight of Large, Complex
Contracts and for Asset Accounting:
Figure 2: Example of How NASA Could Follow an Enterprise Process Using
IEMP for Program Management and External Reporting:
United States Government Accountability Office:
Washington, DC 20548:
July 20, 2007:
The Honorable Bart Gordon:
Chairman:
Committee on Science and Technology:
House of Representatives:
The Honorable Todd R. Platts:
House of Representatives:
As we and others have reported in the past, the National Aeronautics
and Space Administration (NASA) has fundamental problems with its
financial management operations that undermine its ability to
effectively manage its major programs and to report externally on its
financial operations. Since 1990, we have designated NASA's contract
management as an area of high risk, in large part because NASA has
lacked a modern financial management system to provide accurate and
reliable information on contract spending.[Footnote 1] In April 2000,
NASA began a program expected to address many of its financial and
management challenges. This program, now known as the Integrated
Enterprise Management Program (IEMP),[Footnote 2] has been focused on
implementing a new integrated financial management system.
Specifically, NASA has invested in an enterprise resource planning
(ERP) solution[Footnote 3]--a business system that is intended to meet
the information needs of both internal and external customers and to
promote standardization and integration of business processes and
systems across the agency. NASA plans to complete IEMP by 2009 for a
total cost of over $800 million.
In April and November 2003--3 years into the IEMP implementation effort
and with significant investment already made in the program--we issued
a series of four reports[Footnote 4] that detailed weaknesses in NASA's
acquisition and implementation strategy for IEMP. Specifically, we
reported that NASA had not followed key best practices for acquiring
and implementing IEMP and, therefore, was at risk of making a
substantial investment in a financial management system that would fall
far short of its stated goal of providing meaningful, reliable, and
timely information to support effective day-to-day program management
and external financial reporting.
NASA is not alone in its struggle to successfully implement an
integrated financial management system. Billions of dollars have been
spent governmentwide to modernize financial management systems that
have often exceeded budgeted cost, resulted in delays in delivery
dates, and did not provide the anticipated functionality when
implemented. In our previous report[Footnote 5] on government financial
management systems failures, we provided our views on actions that can
be taken to help improve the management and control of agency financial
management system modernization efforts. Based on industry best
practices, we identified three key practices, or building blocks, that
are needed to ensure a solid foundation for agencies' successful system
implementation efforts: (1) developing a concept of operations that
would define how an agency will carry out its day-to-day operations in
order to meet mission needs; (2) defining standard business processes
that result in streamlined operations, rather than simply automating
old ways of doing business; and (3) effectively implementing the
disciplined processes necessary to manage the project.
When we last reported on NASA's IEMP effort, in September
2005,[Footnote 6] NASA had begun to implement a number of
recommendations from our earlier reports, including taking steps toward
implementing the disciplined processes necessary to manage IEMP--one of
the key building blocks discussed above that is needed to ensure a
solid foundation for agencies' system implementation efforts. For
example, we reported that NASA had implemented new requirements
management and testing processes and had developed metrics to evaluate
the effectiveness of its system implementation processes. However, at
that time, the agency had not implemented our recommendation to
properly define and document system requirements for already-deployed
IEMP modules, including the core financial module. This was important
not only because it would affect the way the core financial module
functions but also because it would affect NASA's ability to implement
future upgrades and other modules expected to interface with the core
financial module. In addition, we reported that additional enhancements
could be made in the area of regression testing and performance
metrics. Finally, NASA had yet to reengineer its business processes so
that the commercial off-the-shelf (COTS) software products it had
selected for IEMP could support these processes.
Since we last reported, in September 2005, on NASA's efforts to
implement IEMP, NASA implemented its IEMP contract management module
and upgraded the version of the COTS software that is used for the core
financial module of IEMP--which was expected to enhance the
functionality of the core financial module. Because of your continued
interest in NASA financial management, you asked us to provide periodic
updates on the status of NASA's financial management improvement
efforts--including its effort to implement IEMP. Specifically, this
report addresses (1) actions taken by NASA to effectively implement the
disciplined processes necessary to manage IEMP and (2) the extent to
which NASA has considered the higher-level strategic issues associated
with developing an agencywide concept of operations and defining
standard business processes--two key building blocks critical to NASA's
ability to successfully implementing its planned financial management
system.
To achieve these objectives, we interviewed the appropriate NASA
officials and obtained and analyzed documentation supporting the
process improvements that were cited by NASA. We performed our work
from January 2006 through June 2007 in accordance with U.S. generally
accepted government auditing standards. Details on our scope and
methodology are included in appendix I.
Results in Brief:
Since September 2005, when we last reported on NASA IEMP implementation
efforts, NASA has implemented some of the disciplined processes needed
to manage IEMP. Specifically, since 2005, NASA has improved its
requirements management and testing processes, enhanced its performance
metrics program related to tracking system defects, and developed an
IEMP risk management strategy--as we previously recommended. In
addition, NASA has developed quantitative entry and exit criteria for
moving from one phase of an IEMP project to another--a recognized
industry best practice. However, weaknesses in the areas of
requirements development and project scheduling offset some of the
benefits associated with NASA's improved requirements management and
testing processes, causing NASA to compress the testing phase of its
core financial upgrade implementation and assume a greater risk that it
would not identify significant system defects prior to implementation.
According to NASA officials, NASA's ability to complete testing for the
core financial upgrade within the planned implementation time frames
was not so much due to the use of disciplined processes as it was the
result of the extraordinary effort put forth by NASA's project
implementation team. Despite the implementation difficulties, NASA
financial managers have indicated that the core financial upgrade is
now functioning as expected for most transactions. As of the end of
March 2007, the upgrade was in a "stabilization" phase as NASA
continued to work on correcting a number of system errors, including
posting errors for certain types of transactions. Because the upgrade
was still quite new and NASA was continuing to stabilize the system, we
were unable to determine whether these weaknesses were significant.
Although NASA has taken action to improve its processes for managing
the implementation of individual IEMP projects, NASA has not yet fully
considered the higher-level strategic issues associated with developing
an agencywide concept of operations and defining standard business
processes that are supported by its software--two key building blocks
critical to the successful implementation of an integrated system such
as IEMP. With a planned investment of over $800 million, completion of
these strategic building blocks will be critical if IEMP is expected to
address long-standing management challenges, including overseeing
contractor performance and properly accounting for its property, plant,
and equipment (PP&E).
NASA officials indicated that they have undertaken a critical first
step--they have begun developing a concept of operations to describe
how all of its business processes should be carried out. According to
NASA officials, they expect to complete the agency's concept of
operations by the summer of 2008. Ideally, a concept of operations
should be completed before system development begins so that it can
serve as a foundation for system planning and requirements development.
Although NASA's IEMP development effort began in April 2000, the
completion of such a document, even at this late stage in NASA's IEMP
effort, would be beneficial for the development of the remaining IEMP
modules as well as any future upgrades to the core financial module.
For NASA, an effective concept of operations would describe, at a high
level, (1) how all of the various elements of NASA's business systems
relate to each other and (2) how information flows among these systems.
A concept of operations would also provide a useful tool to explain how
business systems at the agency can operate cohesively. It would be
geared to a NASA-wide solution rather than individual stovepiped
efforts. Further, it would provide a road map that can be used to (1)
measure progress and (2) focus future efforts.
As part of an agencywide concept of operations, to best leverage its
investment in IEMP, NASA should also analyze its current business
processes and determine how these processes can be made more efficient
and effective. Specifically, it will be important to define standard
business processes supported by its IEMP software that result in
streamlined operations rather than simply automating the old ways of
doing business. To best leverage its investment in IEMP, NASA needs to
ensure that the business processes supported by this system are
developed and implemented to support the enterprise's needs rather than
primarily focusing on the parochial needs of a specific organizational
entity. For example, system efforts targeted at addressing accounting
or external financial reporting needs do not provide reasonable
assurance that the needs of the program or mission managers are
addressed. With an ERP solution, one source of data is used for
multiple purposes and processes should be designed to ensure that the
data obtained and recorded meet the needs of the enterprise. NASA can
take advantage of the efficiencies inherent in its ERP solution by
allowing the data needed for external financial reporting to be
produced as a by-product of the processes it uses to manage its
mission.
We are making five recommendations aimed at improving NASA's processes
for managing IEMP as well as addressing the higher-level strategic
issues associated with developing a concept of operations and defining
standard business processes supported by NASA's IEMP software. In
written comments on a draft of this report, NASA agreed with all five
of our recommendations and described the steps that it is taking to
improve its enterprise management system modernization efforts. NASA's
comments are discussed further in the Agency Comments and Our
Evaluation section and are reprinted in appendix II.
Background:
For more than a decade, we have identified weak contract management and
the lack of reliable financial and performance information as posing
significant challenges to NASA's ability to effectively run its largest
and most costly programs. While NASA has made some progress in
addressing its contract management weaknesses through improved
management controls and evaluation of its procurement activities, NASA
has struggled to implement a modern, integrated financial management
system. NASA made two efforts in the past to improve its financial
management processes and develop a supporting system intended to
produce the kind of accurate and reliable information needed to manage
its projects and programs and produce timely, reliable financial
information for external reporting purposes. However, both of these
efforts were eventually abandoned after a total of 12 years and a
reported $180 million in spending.
IEMP Implementation Status:
In April 2000, NASA began its third attempt at modernizing its
financial management processes and systems. With its current financial
management system effort, known as IEMP, NASA has invested in an ERP
solution that is intended to meet the information needs of both
internal and external customers and to promote standardization and
integration of business processes and systems across the agency. NASA
plans to complete IEMP by 2009 for a total cost of over $800 million.
As of March 2007, NASA had deployed the following nine IEMP functional
components: core financial, Travel Manager, ERASMUS,[Footnote 7] resume
management, position description management, budget formulation, Agency
Labor Distribution System, Project Management Information Improvement,
and contract management.[Footnote 8] Early in fiscal year 2007, NASA
also implemented an updated version of the core financial software,
which includes several critical enhancements to the previous core
financial software.[Footnote 9] According to NASA, the core financial
upgrade provided the opportunity for it to leverage the best practices
inherent in the new version and allowed it to redesign or enhance
business processes. NASA updated its core financial system in order to
improve compliance with Federal Financial Management System
Requirements, Federal Accounting Standards, and the Federal Financial
Management Improvement Act, and to respond to GAO recommendations.
According to NASA, the software upgrade has enabled it to implement
critical process changes related to financial tracking and reporting,
support the goal of achieving financial management integrity, and
provide better project management information. NASA claims that the
updated software has also provided other enhancements, which should
contribute to NASA's goals of achieving a clean audit opinion and
achieving a "Green" rating on the President's Management Agenda
scorecard for "improved financial performance." Other IEMP modules that
NASA plans to implement in the future include aircraft management and
asset management.
Prior Reporting on IEMP:
As discussed previously, we issued a series of four reports in April
and November 2003 that detailed weaknesses in NASA's acquisition and
implementation strategy for IEMP in general and the core financial
module in particular. The core financial module, which utilizes SAP
software and is considered the backbone of IEMP, was implemented in
June 2003. Because NASA did not follow key best practices or
disciplined processes for acquiring and implementing IEMP, we reported
that NASA had made a substantial investment in a financial management
system that fell far short of its stated goal of providing meaningful,
reliable, and timely information to support effective day-to-day
program management and external financial reporting. We noted problems
in the areas of requirements development, requirements management,
testing, performance metrics, risk management, and business process
reengineering.
* Neither program managers nor cost estimators were involved in the
process of defining requirements for the core financial module. As a
result, the module was not designed to maintain the level of detailed
cost information needed by program managers to perform contract
oversight and by cost estimators to develop reliable cost estimates.
* The requirements management methodology and tools used to implement
the core financial module did not result in requirements that were
consistent, verifiable, and traceable or that contained enough
specificity to minimize requirement-related defects. Because NASA had
not effectively implemented disciplined requirements management
processes,[Footnote 10] we reported that it had increased the risk that
it would not be able to effectively identify and manage the detailed
system requirements necessary to properly acquire, implement, and test
the core financial module.
* NASA's ability to effectively test the core financial module was
limited because of the lack of complete and specific requirements.
Industry best practices, as well as NASA's own system planning
documents, indicated that detailed system requirements should be
documented to serve as the basis for effective system testing.[Footnote
11] Because the link between these two key processes was not
maintained, NASA had little assurance that all requirements were
properly tested.
* NASA also did not effectively capture the type of metrics that could
have helped the agency understand the effectiveness of its IEMP
management processes. For example, NASA did not employ metrics to help
it identify and quantify weaknesses in its requirements management
processes. Because of its lack of performance metrics, NASA was unable
to understand (1) its capabilities to manage IEMP projects; (2) how its
process problems affected cost, schedule, and performance objectives;
and (3) the corrective actions needed to reduce the risks associated
with the problems identified.
* NASA did not consistently identify known and potential risks for the
core financial module. Risk management processes are needed to ensure
that a project's risk is kept at an acceptable level by taking actions
to mitigate risk before it endangers the project's success.
* NASA did not use the implementation of IEMP to fundamentally change
the way it did business. Instead of reengineering its business
processes, NASA automated many of its existing ineffective business
processes. First, NASA did not design the system to accommodate the
information needed to adequately oversee its contracts and programs and
to prepare credible cost estimates. Second, NASA did not reengineer its
contractor cost reporting processes and therefore, did not always
obtain sufficient contract cost information needed by program managers
to oversee contracts and needed by financial managers for external
financial reporting.
When we last reported on NASA's IEMP effort, in September
2005,[Footnote 12] NASA had begun to implement a number of
recommendations from our earlier reports--including steps toward
implementing the disciplined processes necessary to manage IEMP. For
example, we reported that NASA had engaged program managers to identify
program management needs, implemented new requirements management and
testing processes, and developed metrics to evaluate the effectiveness
of its system implementation processes. However, at that time, the
agency had not implemented several of our other recommendations,
including the following:
* Properly define and document system requirements for already-deployed
IFMP modules, including the core financial module. This is important
not only because it would affect the way the core financial module
functions but also because it would affect NASA's ability to implement
future upgrades and other modules expected to interface with the core
financial module.
* Enhance regression testing processes and performance metrics.
* Develop a risk mitigation plan.
* Reengineer its business processes so that the commercial off-the-
shelf software products selected for IEMP could support these
processes.
At the time of our last report, NASA was making plans to reengineer
some of its business processes. However, because the agency was in the
very early planning stage of implementing this recommendation, the
details for how NASA would accomplish its objectives were still vague.
Overall, our September 2005 report concluded that it was not possible
to assess whether NASA's plans would accomplish its stated goal of
enhancing the core financial module to provide better project
management information for decision-making purposes.
Progress Made in Developing Disciplined Project Management Processes,
but Some Problems Remain:
Since September 2005, when we last reported on NASA IEMP implementation
efforts, NASA has implemented some of the disciplined processes needed
to manage IEMP. Specifically, NASA has, as we previously recommended,
implemented more effective requirements management and testing
processes, improved its performance metrics program related to tracking
system defects, and developed an IEMP risk management strategy. In
addition, NASA has developed quantitative entry and exit criteria for
moving from one phase of an IEMP project to another--a recognized
industry best practice. However, weaknesses in the areas of
requirements development and project scheduling have undermined some of
the progress made in other key areas. As a result, NASA struggled to
complete required systems testing and deliver the agency's core
financial upgrade. Ultimately, through the heroic efforts of the core
financial upgrade team, NASA delivered the upgrade within about 2 weeks
of the October 30, 2006, planned completion date. According to NASA
officials, the system is functioning as expected for most transactions.
However, until the end of March 2007, the upgrade was in a
"stabilization" phase as NASA worked on correcting a number of system
errors, including posting errors for certain types of transactions.
Because the upgrade was still quite new and NASA was continuing to
stabilize the system, we were unable to determine the significance of
these weaknesses.
Improvements Made to NASA Requirements Management and Testing
Processes:
Since our September 2005 report, NASA has used its new requirements
management process--which documents sufficiently detailed requirements
that are traceable from the highest (most general) level to the lowest
(most detailed) level in NASA's requirements management system--for
both the core financial upgrade and the contract management module. For
example, we selected several requirements for both the core financial
module and the contract management module and validated that the
requirements management process (1) clearly linked related requirements
consistent with industry standards and (2) contained the information
necessary to understand how each requirement should be implemented and
tested in a quantitative manner.
Because NASA developed and is now using a disciplined requirements
management process, it has the quantitative information necessary to
support disciplined testing processes. NASA's disciplined testing
processes include (1) documentation of the scenarios that need to be
tested to obtain adequate test coverage, (2) requirements that are
traced to the test cases to ensure that all requirements are tested,
(3) instructions and other guidance for the testers, and (4) an
effective regression testing program.[Footnote 13] Although NASA had
disciplined requirements management and testing processes in place for
the implementation of both the contract management module and the core
financial upgrade, difficulties related to requirements development and
project scheduling, discussed later, forced NASA to compress the
testing phase of its core financial upgrade implementation. As a
result, according to NASA officials, completion of testing for the core
financial upgrade required an extraordinary effort on the part of
NASA's implementation team.
NASA Has Implemented an Effective Metrics Program and Risk Management
Strategy:
Since we last reported, in September 2005, NASA has also enhanced its
metrics measurement program, which is used to evaluate the
effectiveness of its project management processes by identifying the
causes of process defects. Understanding the cause of a defect is
critical to evaluating the effectiveness of an organization's project
management processes, such as requirements management and testing. For
example, if a significant number of defects are caused by inadequate
requirements definition, then the organization knows that corrective
actions are needed to improve the requirements definition process. When
we last reported, NASA had made progress in this important area by
collecting information on the causes of system defects it identified in
its regression testing efforts but was not collecting similar
information on defects identified by users and lacked a formal process
for fully analyzing the data related to system defects by identifying
the trends associated with them. Since that time, NASA has developed
additional metrics to track and analyze such things as the number of
changes made to requirements while a system is under development. In
addition, NASA has developed processes for tracking and analyzing
defects identified by IEMP users. For example, since implementation of
the core financial upgrade, NASA has maintained spreadsheets showing
specific information on each service request submitted by users,
including the type of defect involved and the status of the request.
Finally, NASA has also developed a comprehensive risk management
strategy. Specifically, NASA now has an IEMP Risk Management Plan that
outlines the standard processes and techniques for identifying,
analyzing, planning, tracking, and controlling risks as well as
defining the roles and responsibilities for each level of project risk
management. In applying these techniques to the core financial upgrade,
NASA officials documented the risks that they identified for the
project, as well as their mitigation strategies, likelihood,
consequence, and criticality. According to NASA officials, their risk
management process worked well and was one of the key reasons for the
success of the core financial upgrade. For example, using the metrics
information discussed previously, NASA officials said they were able to
assess the risks of changing requirements late in the project and then
mitigate those risks by performing additional testing.
NASA Uses a Recognized Industry Best Practice to Move from One Project
Phase to the Next:
In addition to the disciplined processes discussed above, NASA has also
taken action to establish the use of quantitative entry and exit
criteria to move from one phase of an IEMP project to another. The use
of such criteria is considered an industry best practice. Entry
criteria are the minimum essential items considered necessary to enter
into a given project phase, while exit criteria are the minimum
essential items necessary to consider a given project phase
successfully completed. For example, the NASA entry criterion for
moving into the regression testing phase requires that all remaining
significant defects from the integration testing phase be resolved and
successfully retested before regression testing can begin. NASA
demonstrated application of this criterion when it implemented the
contract management module. About 3 weeks before the scheduled start
date of regression testing, the project had not yet successfully
completed all test scenarios, and several significant defects had not
been fully resolved. In addition, a series of critical corrections from
the software vendor had not yet been delivered, and the project team
agreed that there would not be adequate time to test the corrections
prior to beginning the scheduled regression testing. Consequently, the
team decided to push back the scheduled date for the contract
management module to begin operating.
For the core financial upgrade, NASA officials said that they used
entry and exit criteria as one of the management tools to determine
whether the project should move forward. However, rather than adopt a
"hard stop" approach when criteria were not met, they used the criteria
to make sure that all appropriate factors were considered before moving
forward, including the risks of not meeting certain criteria. Any
instances in which the project team thought exceptions to the criteria
were warranted were ultimately reviewed and decided on by higher levels
of NASA management, which helped ensure that such decisions were
adequately considered.
Improved Requirements Development and Project Scheduling Needed:
Weaknesses in the areas of requirements development and project
scheduling offset some of the benefits associated with NASA's improved
requirements management and testing processes--causing NASA to assume a
greater risk that it would not identify significant system defects
prior to implementation. Weaknesses in requirements development and
project scheduling processes resulted in NASA having to compress the
testing phase of its core financial upgrade implementation. As a
result, according to NASA officials, NASA's ability to complete testing
for the core financial upgrade within the planned implementation time
frames ultimately depended on the extraordinary effort put forth by
NASA's project implementation team.
Because of weaknesses in NASA's requirements development process, it
did not have reasonable assurance that it identified all appropriate
requirements for the core financial upgrade when the project began.
Consequently, NASA continued making changes to the requirements very
late in the project's development, resulting in increased risks,
delays, and a compressed testing schedule. Improperly defined or
incomplete requirements have commonly been identified as a root cause
of system failure. Although NASA made a concerted effort, as part of
its core financial system upgrade, to involve program managers and
other key stakeholders in the requirements development process, it did
not follow standard industry practices for identifying and documenting
user requirements.
According to the Software Engineering Institute (SEI),[Footnote 14] to
help ensure that critical requirements are identified, an organization
should have a well-documented, disciplined requirements development
process that, among other things, (1) defines how customer needs will
be elicited, developed, and validated; (2) specifies how to identify
and ensure involvement of relevant stakeholders; and (3) ensures that
people involved in the requirements development process are adequately
trained in such topics as requirements definition and analysis. In
addition, it is critical that requirements flow from an organization's
business requirements or its concept of operations. However, as
discussed later, NASA has not yet completed a concept of operations.
In developing its core financial upgrade requirements, NASA established
a task force, consisting of both financial and program managers, whose
primary objective was to "review, assess, and document Program/Project
Management requirements as they relate to financial management." In
addition, other groups of program managers were asked to review the
requirements and provide input to the task force. However, according to
NASA officials, they have not yet documented and institutionalized
requirements development procedures as recommended by SEI. Lacking
documentation, NASA cannot ensure that appropriate procedures are
followed and that all appropriate stakeholders are included in the
process so that all requirements are identified. Moreover, the
requirements that were addressed by the task force and user groups were
at a very high or general level and therefore, lacked a level of
specificity that is needed to ensure that users' needs are met.
Because it did not have a well-documented, disciplined requirements
development process in place to provide reasonable assurance that all
requirements had been identified, NASA delayed finalizing the system's
expected functionality until April 2006--about 6 months before the
upgrade was expected to be implemented--and continued to change some
requirements for several months after that. Delays in finalizing the
requirements contributed to delayed testing and a compressed testing
schedule. To meet the planned October 30, 2006, implementation date,
the three rounds of system testing for the core financial upgrade were
scheduled to occur from mid-June through September 22, with less than a
week between each round. A less compressed schedule could have allowed
more time between the testing cycles to perform necessary actions, such
as additional development work and testing to adequately address the
defects that had been identified. This, in turn, could have reduced the
risk that significant system defects would not be detected prior to
implementation.
One key to developing a realistic project schedule is determining the
sequence of activities, which requires identifying and documenting the
dependencies among the various project activities. For example, testing
activities cannot be completed before the software being tested is
developed, and software should not be developed until requirements have
been defined. However, NASA did not document the dependencies among the
detailed project tasks for the core financial upgrade and therefore,
did not have reasonable assurance that the project schedule established
at the start of the project was realistic. According to NASA officials,
they recognized this risk and adopted several processes to identify and
mitigate the weakness, such as having knowledgeable project officials
review the schedule and holding weekly status meetings to determine
whether the tasks were on schedule.
While the techniques used by NASA to constantly evaluate and adjust the
schedule are considered best practices and allowed NASA to gain
confidence in the schedule as the core financial upgrade project
progressed, they were not sufficient to ensure that the original
schedule was reasonable because they relied on ad hoc processes rather
than a formal task dependency analysis. If NASA had also identified the
task dependencies for the core financial upgrade, it would likely not
have had to rely on extraordinary efforts to complete the project.
Rather, project management would have been in a better position to
assess the difficulty in meeting the planned schedule and to take
further steps to reduce this risk, such as scaling back some aspects of
the project or adding more resources to the project.
According to NASA officials, through the heroic efforts of IEMP staff-
-their knowledge and experience with past projects and a considerable
amount of overtime invested--the core financial project team was able
to complete testing and other work within about 2 weeks of the planned
implementation date. Although NASA has made significant improvements in
its project management processes, NASA management recognizes that
weaknesses in its requirements development and project scheduling
processes have undermined some of the progress made. Despite the
implementation difficulties, NASA financial managers have indicated
that the core financial upgrade is now functioning as expected for most
transactions. Through the end of March 2007, the upgrade was in a
"stabilization" phase as NASA continued to work on correcting a number
of system errors, including posting errors for certain types of
transactions. Because NASA was continuing to stabilize the system
during most of our audit period, we were unable to determine the
significance of these weaknesses.
NASA Has Not Yet Fully Considered an Enterprise View of Its Operations
and Processes:
Although NASA has significantly improved its processes for implementing
IEMP projects, these improvements are directed at implementing the
desired functionality for an individual project. NASA has not yet fully
considered the higher-level strategic issues that affect how useful
IEMP will be in addressing long-standing management challenges--
including problems associated with stovepiped systems and parochial
interests of individual NASA components as well as problems in
overseeing contractor performance and properly accounting for its
property, plant, and equipment. NASA envisions IEMP to be a leading-
edge business system[Footnote 15] that will provide management
information needed for mission success, meet the needs of internal and
external customers, and promote standardization and integration of
business processes and systems across NASA. To achieve this vision, it
is critical that NASA develop an agencywide concept of operations and
adopt standard business processes that are supported by its software.
Concept of Operations Would Provide an Important Foundation for IEMP:
NASA officials stated that they have undertaken a critical first step
to achieving their vision for IEMP--they have begun developing a
concept of operations to describe how all of its business processes
should be carried out. NASA created a framework for developing a
concept of operations in fiscal year 2006 and plans to complete it by
the summer of 2008, according to NASA officials. Ideally, a concept of
operations should be completed before system development begins so that
it can serve as a foundation for system planning and requirements
development. Nonetheless, the completion of such a document even at
this late stage in NASA's IEMP effort would be beneficial for the
development of the remaining IEMP modules as well as any future
upgrades to the core financial module. In addition, once a concept of
operations is complete, NASA could reassess the modules that are
already implemented and determine whether and how they might need to be
modified to best meet its agencywide needs.
A concept of operations defines how an organization's day-to-day
operations are (or will be) carried out to meet mission needs. The
concept of operations includes high-level descriptions of information
systems, their interrelationships, and information flows. It also
describes the operations that must be performed, who must perform them,
and where and how the operations will be carried out. Further, it
provides the foundation on which requirements definitions and the rest
of the systems planning process are built. Normally, a concept of
operations document is one of the first documents to be produced during
a disciplined development effort and flows from both the vision
statement and the enterprise architecture.[Footnote 16] According to
Institute of Electrical and Electronics Engineers (IEEE)
standards,[Footnote 17] a concept of operations is a user-oriented
document that describes the characteristics of a proposed system from
the users' viewpoint. The key elements that should be included in a
concept of operations are major system components, interfaces to
external systems, and performance characteristics such as speed and
volume.
For NASA, an effective concept of operations would describe, at a high
level, (1) how all of the various elements of NASA's business systems
relate to each other and (2) how information flows among these systems.
Further, a concept of operations would provide a useful tool to explain
how business systems at the agency can operate cohesively. It would be
geared to a NASA-wide solution rather than individual stovepiped
efforts.[Footnote 18] Further, it would provide a road map that can be
used to (1) measure progress and (2) focus future efforts. While NASA's
enterprise architecture efforts, when fully completed, can be used to
help understand the relationships between the various systems, a
concept of operations document presents these items from the users'
viewpoint in nontechnical terms. Such a document would be invaluable in
getting various stakeholders, including those in the programs and
administrative activities, to understand how the business systems are
expected to operate cohesively and how they fit into "the big picture."
Adopting Enterprise Business Processes Would Help NASA Transform the
Way It Does Business:
As part of an agencywide concept of operations, to best leverage its
investment in IEMP, NASA should also analyze the agency's current
business processes and determine how these processes can be made more
efficient and effective. Specifically, NASA needs to ensure that the
business processes supported by this system are developed and
implemented to support the enterprise's needs rather than primarily
focusing on the needs of a specific organizational entity. For example,
system efforts targeted only at addressing accounting or external
financial reporting needs--as was done during the initial
implementation of the core financial module--do not provide reasonable
assurance that the needs of the mission managers or other support
organizations are addressed as well. Our review identified an important
opportunity for NASA to leverage its investment in IEMP by using the
system's inherent business processes to meet the enterprise's needs.
Agencies such as NASA that invest in ERP solutions to meet their
enterprise needs often face difficulty in shifting from the stovepiped
processes of the past to the enterprise processes that underlie the ERP
concept. According to technical experts,[Footnote 19] a key benefit of
an effective ERP system is that the system provides the entire entity
consistent data regardless of which entity component generates a
request or for what purpose; the system maintains data based on the
concept of "one truth." In other words, in non-ERP environments, one
system may have one amount for an agency's obligations while another
system has another amount for the same obligations. While either of
these systems may be the "official system," actions and plans may be
based on information in the other system. In order for all of an
organization's actions and plans to be consistent, the same information
needs to be available and used by all segments of that organization.
Under the ERP concept, it does not matter whether an individual is in
budget, accounting, procurement, or any other organizational component;
the answer to the question of "how much money has been obligated and
how much is still available" is consistent.
One example of an opportunity for NASA to use enterprise processes to
accomplish multiple needs is in the area of program oversight and
accounting for PP&E. NASA typically spends about 85 percent of its
budget procuring goods and services from its contractors each year.
Therefore, much of the cost information NASA needs to oversee its
programs and compile its external financial reports resides with its
contractors. For its larger contracts,[Footnote 20] NASA generally
obtains cost data from monthly contractor financial management reports,
commonly referred to as NASA Form 533s. NASA Form 533 captures planned
and actual contract costs and, according to NASA officials, is used for
budgeting, monitoring contract costs, and controlling program
resources. The Office of the Chief Financial Officer (OCFO) also uses
NASA Form 533 to capture the costs reported on the agency's financial
statements. However, NASA Form 533 does not contain information related
to the status of work performed on a contract. Therefore, for all major
acquisitions[Footnote 21] and for development or production contracts
and subcontracts valued at $20 million or more, in addition to NASA
Form 533s, NASA's contractors are also required to provide monthly
contract cost performance reports. Each of these reports is treated as
a stovepiped activity; that is, they provide cost information for a
given contract in two different formats and are used by different
organizations and for different purposes within NASA.
For those contracts for which NASA receives contract cost performance
reports in addition to Form 533s, program managers use the cost
performance reports to monitor contract performance, while the OCFO
uses NASA Form 533 to accrue costs that, among other things, are
reported on the agency's financial statements. Although NASA Form 533
and the cost performance report reflect cost data pertaining to the
same contract, the level of detail provided in each report may vary
considerably depending on the contractor cost reporting requirements
negotiated as part of the contract. For example, the cost data required
by program managers to manage major acquisitions are often more
detailed than those required by the OCFO. In addition, because neither
the cost performance report nor NASA Form 533 contains the information
needed by the OCFO to properly account for equipment and other property
acquired from contractors, NASA also relies on periodic, summary-level
information provided by its contractors to report property amounts on
its financial statements.
When NASA initially implemented its IEMP core financial module in June
2003, it did not adequately consider program managers' needs and did
not design the system to accommodate the more detailed cost data
contained in contractor cost performance reports. Since that time, NASA
has redesigned the coding structure embedded in the core financial
module to be more consistent with the work breakdown structure (WBS)
coding used by program managers. However, NASA continues to use cost
data from NASA Form 533--generally reported by contract line
items[Footnote 22]--to populate the core financial module. As a result,
as shown in figure 1, NASA uses a complex, NASA-specific process to
allocate the costs reported on NASA Form 533 to the WBS codes in IEMP
based on available funding.
Figure 1: Current NASA Processes for Oversight of Large, Complex
Contracts and for Asset Accounting:
[See PDF for image]
Source: GAO.
[End of figure]
In a very simplified example,[Footnote 23] if NASA received a Form 533
showing $1,000 of cost incurred for a particular contract line item and
two WBS codes pertained to that line item, NASA would allocate the
costs to those two WBS codes. Assuming WBS 1 had more funding available
than WBS 2, NASA might allocate $600 to WBS 1 and $400 to WBS 2.
However, the contract cost performance report might show that the
actual costs were $500 for WBS 1 and $500 for WBS 2. Although this
allocation process reorganizes cost data reported on NASA Form 533 into
the same reporting structure that is used by program managers, it still
results in different costs, maintained in different systems, used for
different purposes. Accordingly, these separate processes do not result
in the "one truth" that is provided when an ERP view is taken.
Further, this dual reporting approach has not addressed one of NASA's
long-standing financial reporting weaknesses: reporting on its PP&E.
For example, NASA's processes do not allow the agency to identify
capital costs--that is, those that should be recorded as assets--as
they are incurred. Instead, as we recently reported,[Footnote 24] the
agency performs a retrospective review of transactions entered into its
property system to determine which costs should be capitalized. This
subsequent review is labor-intensive and error-prone, and therefore
increases the risk that not all related costs will be properly captured
and capitalized.
Figure 2 provides an example of how NASA could use IEMP to implement an
enterprise process that (1) provides the necessary data for the
enterprise operations and (2) reduces the burden on NASA and contractor
officials.
Figure 2: Example of How NASA Could Follow an Enterprise Process Using
IEMP for Program Management and External Reporting:
[See PDF for image]
Source: GAO.
[End of figure]
As shown in figure 2, if NASA received only one monthly report
containing contract cost data reported in sufficient detail for both
program management and financial reporting purposes, then it could
record these costs directly in IEMP without first going through an
allocation process as it does now. All individuals and components
throughout NASA could then use the same cost data that reside within
IEMP for a given contract; IEMP could provide different arrays of cost
information based on each user's needs, but all cost information for a
given contract would come from one source. For example, as shown in
figure 2, the program manager could use the cost data from IEMP along
with other supplemental contractor performance information, such as
labor hours used, to see if the project is meeting expectations. In
addition, if discrete WBS codes were established to identify the costs
associated with the acquisition of property, then IEMP could
automatically capitalize those costs and financial managers could
readily determine how much cost has been recorded for
property.[Footnote 25] The key is that under the enterprise process
concept, single data entry is used for multiple purposes. Since the
enterprise view provides "one truth," an adequate audit trail over the
data used to report property can be maintained simply by reviewing the
cost reports that were provided by the contractors. Thus, NASA can take
advantage of the efficiencies inherent in an ERP solution by allowing
the data needed for external financial reporting to be produced as a by-
product of the processes it uses to manage its mission.
Conclusions:
NASA has made significant strides in developing and implementing more
disciplined processes for supporting its IEMP efforts since our last
report in 2005. NASA has recognized the need for the disciplined
processes necessary to reduce risks to acceptable levels, as evidenced
by its implementation of several of our recommendations. More
importantly, NASA officials recognize that improving system
implementation processes is a continuous effort and that certain
processes--particularly requirements development and project
scheduling--may need more attention. However, the real key to realizing
NASA's IEMP vision is for NASA's management to develop an overarching
strategy for managing its agencywide management system development
effort. We are encouraged that NASA has begun to develop a concept of
operations. As part of the development of this document, it will be
critical for NASA to define (1) the agency's business processes and
information needs and (2) the types of systems that will be used to
carry out these processes and produce the necessary information.
Another critical factor in developing a concept of operations will be
analyzing the agency's current business processes and determining how
these processes can be made more efficient and effective. For example,
NASA can take advantage of the efficiencies inherent in the solution it
has selected by utilizing an enterprise view to produce the data needed
for external financial reporting as a by-product of the processes it
uses to manage its mission. Unless NASA devotes immediate, focused
attention to taking these critical strategic planning steps, it will
continue to face the risk that its planned $800 million investment in
IEMP will not achieve the transformational changes necessary to provide
NASA with the information needed to make well-informed business
decisions and to effectively manage its operations.
Recommendations for Executive Action:
To help ensure that disciplined processes are effectively implemented
for future IEMP modules, upgrades, or other business systems, we
recommend that the NASA Administrator direct the IEMP Program Director
to take the following two actions.
* Establish requirements development policies and procedures regarding
(1) how customer needs will be elicited, developed, and validated; (2)
how to identify and ensure the involvement of relevant stakeholders;
and (3) required training in such topics as requirements definition and
analysis to be provided to people involved in the requirements process.
* Develop policies and procedures that require project schedules to
include the identification and documentation of dependencies among
various project tasks.
To help ensure that future IEMP projects are designed to carry out
NASA's mission in an efficient manner that meets the needs of all
users, we recommend that the NASA Administrator establish as a high
priority the completion of a concept of operations that addresses
NASA's business operations for both its mission offices and
administrative offices (such as financial management and human capital)
before any new implementation efforts begin.
Once the concept of operations is complete, we recommend that the NASA
Administrator review the functionality of previously implemented IEMP
modules for the purpose of determining whether enhancements or
modifications are needed to bring them into compliance with the concept
of operations.
To help ensure that NASA receives the maximum benefit from its reported
$800 million investment in IEMP, we recommend that the NASA
Administrator establish policies and procedures requiring approval to
establish or maintain business processes that are inconsistent with the
processes inherent in the COTS solutions selected for IEMP. The reasons
for any decisions made to not implement the inherent COTS processes
should be well-documented and approved by the Administrator or his
designee. At a minimum, approved documentation should address any
decisions to maintain current contractor cost reporting processes
rather than revise these processes to facilitate the use of one
consistent source of cost data.
Agency Comments and Our Evaluation:
We received written comments on a draft of this report from NASA, which
are reprinted in appendix II. NASA agreed with our recommendations and
described the approach and steps it is taking or plans to take to
improve its enterprise management system modernization efforts. We are
encouraged that a number of these steps are already under way,
including the establishment of an IEMP advisory body representing
NASA's missions and centers. As NASA progresses in addressing our
recommendations, it is important that it focuses on the concepts and
underlying key issues we discussed, such as considering the need to
reengineer key business processes to support agencywide needs and to
take full advantage of its ERP solution. We continue to believe that
careful consideration of all of the building blocks and key issues we
identified will be integral to the success of NASA's efforts. NASA also
provided technical comments, which we incorporated as appropriate.
As agreed with your offices, unless you announce its contents earlier,
we will not distribute this report further until 30 days from its date.
At that time, we will send copies to interested congressional
committees, the NASA Administrator, and the Director of the Office of
Management and Budget. We will make copies available to others upon
request. In addition, the report will be available at no charge on the
GAO Web site at [hyperlink, http://www.gao.gov].
If you or your staff have any questions concerning this report, please
contact McCoy Williams at (202) 512-9095 or williamsm1@gao.gov or Keith
Rhodes at (202) 512-6412 or rhodesk@gao.gov. Key contributors to this
report are acknowledged in appendix III. Contact points for our Offices
of Congressional Relations and Public Affairs may be found on the last
page of this report.
Signed by:
McCoy Williams:
Director:
Financial Management and Assurance:
Signed by:
Keith A. Rhodes:
Chief Technologist:
Applied Research and Methods:
Center for Technology and Engineering:
[End of section]
Appendix I: Scope and Methodology:
To determine whether the National Aeronautics and Space Administration
(NASA) has improved its management processes for implementing the
Integrated Enterprise Management Program (IEMP), we reviewed project
management documentation for several IEMP projects, including the core
financial upgrade and the contract management module. The documentation
we reviewed for these projects included requirements management
documents, detailed testing plans, project schedules, risk management
plans, and metrics documentation. We also interviewed numerous IEMP
officials, including the IEMP Director, the Director and Assistant
Director at the IEMP Competency Center, and the Manager of IEMP
Application Development and Software Assurance. In addition, we
interviewed the leader of a NASA team that provided an independent
assessment of the core financial upgrade project to obtain his views of
IEMP management processes.
To assess NASA's implementation of disciplined processes, we reviewed
industry standards and best practices from the Institute of Electrical
and Electronics Engineers, the Software Engineering Institute, and the
Project Management Institute. To assess the effectiveness of NASA's
requirements management processes, we performed a traceability analysis
of several requirements for both the contract management module and the
core financial upgrade, which demonstrated that there was traceability
among the different levels of requirements and with testing
documentation. To determine whether NASA had adequately and
systematically determined the information needs of key users of IEMP
data when developing system requirements, we reviewed documentation of
NASA's requirements identification effort for the core financial
upgrade and interviewed a number of program managers and staff who
worked on various space and science programs at three NASA centers--
Marshall Space Flight Center, Johnson Space Center, and Goddard Space
Flight Center. We also met with officials from the Office of the Chief
Financial Officer (OCFO), including the Deputy Chief Financial Officer,
and with officials from the Office of the Chief Engineer to obtain
their opinions regarding the requirements of the core financial
upgrade. In addition, we discussed the requirements development
methodology with IEMP management.
To determine the results of the implementation of the core financial
upgrade, we met with both IEMP and OCFO officials. We reviewed data on
the amount and types of system defects that were identified by users
during the project's stabilization phase. We also obtained written
responses to specific questions about the results of the implementation
from three NASA centers.
To determine the extent to which NASA has considered the higher-level
strategic issues associated with developing an enterprisewide concept
of operations and defining standard business processes, we met with
senior management from IEMP and the OCFO. In addition, we also
discussed these issues with senior officials in the Office of the NASA
Administrator. We also interviewed IEMP officials about NASA's current
processes for recording contract costs. We also discussed this issue
with officials from the OCFO, the Office of the Chief Engineer, and the
Office of Program and Institutional Integration. In addition, we
obtained documentation of NASA's plans for reengineering processes
related to the costs of capital assets. We briefed NASA officials on
the results of our audit, including our findings and their
implications. On May 25, 2007, we requested comments from NASA and we
received them on June 21, 2007. NASA also separately provided technical
comments. Our work was performed from January 2006 through June 2007 in
accordance with U.S. generally accepted government auditing standards.
[End of section]
Appendix II: Comments from the National Aeronautics and Space
Administration:
National Aeronautics and:
Space Administration:
Office of the Administrator:
Washington, DC 20546-0001:
June 21, 2007:
Mr. McCoy Williams:
Director:
Financial Management and Assurance:
United States Government Accountability Office:
Washington, DC 20548:
Dear Mr. Williams:
Thank you for the opportunity to review and comment on the draft report
entitled "NASA Must Consider Agencywide Needs to Reap the Full Benefits
of Its Enterprise Management System Modernization Effort" (GAO-07-691),
dated June 2007. I appreciate the Government Accountability Office's
(GAO) interest in NASA's business modernization as the Agency continues
to improve its business environment, which is also fully consistent
with my own personal priorities for enhancing the Agency's ability to
better manage and report on its mission and goals.
NASA appreciates the GAO noting that "NASA has made significant strides
in developing and implementing more disciplined processes" since it
last reported in this area in 2005. Clearly, NASA's Integrated
Enterprise Management Program (IEMP) has matured in its processes since
its inception in 2000, which has contributed to its successes in
planning, developing, implementing, and operating Agency-wide business
applications – a daunting task for any Federal organization.
Nevertheless, we also recognize more work needs to be done if NASA is
to achieve the full benefit of its investments in this area.
In its draft report, the GAO makes five recommendations aimed at
improving the processes used to manage IEMP, ensuring that NASA's
business systems support NASA's missions and maximize the Agency's
benefit of its investment in its business systems modernization. NASA's
response to each of these five recommendations is provided below.
Recommendation 1: Establish requirements development policies and
procedures regarding (1) how customer needs will be elicited,
developed, and validated, (2) how to identify and ensure the
involvement of relevant stakeholders, and (3) required training in such
topics as requirements definition and analysis to be provided to people
involved in the requirements process.
Response: NASA concurs with this recommendation. As noted in the GAO
report, IEMP has made significant improvements to its requirements
processes for projects in formulation and implementation. In addition
to those improvements, the TEMP is now using an iterative software
development implementation approach that provides for formal product
reviews at the end of each development iteration, soliciting feedback
from a wide range of stakeholders.
This feedback is used to validate requirements, as well as to elicit
additional or changed requirements early in the project life cycle. The
new approach provides more opportunity to validate stakeholder and user
requirements than the previous development methodology. Further, NASA's
Operations Management Council (OMC) chartered the Management/Business
Systems Integration Group (MBSIG) as an advisory body to recommend and
prioritize future IEMP requirements. Membership is comprised of
representatives from Mission Support Organizations, Mission
Directorates, and Centers. The focus of the MBSIG is to assess and
prioritize future IEMP requirements from a strategic and cross
functional perspective, taking into account the end-to-end business
processes. Recommendations from the MBSIG are reviewed and approved by
the OMC. In conjunction with the establishment of the M/BSIG, IEMP has
established the role of Integration Manager, which is responsible for
applying systems engineering techniques to the identification,
prioritization, development, and collation of requirements for future
business systems implementation. The IEMP Integration Manager and the
IEMP Competency Center will assess the systems' capabilities to
efficiently meet the proposed requirements, and recommendations and
assessments will be vetted by the MBSIG.
Notwithstanding the above improvements, IEMP recognizes that policies
and guidance in this area are not cohesively documented. The IEMP
Integration Manager will document a singular policy framework regarding
the identification and prioritization of requirements associated both
with new efforts and with modifications to operational systems. This
framework will also describe a process to elicit customer needs,
develop requirements, prioritize those requirements, and obtain cross
function Agency approval. The target date for completion of this
document is December 2007.
Recommendation 2: Develop policies and procedures that require project
schedules to include the identification and documentation of
dependencies among various project tasks.
Response: NASA concurs with this recommendation. As noted in the above
response, IEMP has adopted a revised software development
implementation approach that is geared toward providing short-term
deliverables. The new methodology, which IEMP began using in early
fiscal year 2007, requires the identification of feature and object
dependencies at the start of each iteration to ensure that completed
components can be delivered by the end of the iteration. The use of the
time-boxed, iterative approach addresses the weakness in the previous
methodology that attempted to manage the project schedule with long-
term, activity-based items that were not well-suited to the
identification of object dependencies. In summary, the new development
approach adopted by IEMP enables more detailed identification and
documentation of project tasks and dependencies, which meets the GAO's
recommendation.
Recommendation 3: Establish as a high priority the completion of a
concept of operations (ConOps) that addresses NASA's business
operations for both its mission offices and administrative offices
(such as financial management and human capital) before any new
implementation efforts begin. Response: NASA concurs with this
recommendation. The IEMP Integration Manager is currently establishing
a plan to develop a ConOps, which will (1) provide a description of
NASA's business systems characteristics from an operational
perspective; (2) facilitate understanding of the overall system goals
with users, managers, and others; (3) form an overall basis for long-
range operations planning and provide guidance for development and/or
update of subsequent system definition documents, such as the system
specification and the interface specification, and (4) describe the
user organization and mission from an integrated user/system point of
view (per ANSI/AIAA G-043-1992, Guide for the Preparation of
Operational Concept Documents). Target completion for the ConOps is the
summer of 2009 due to the need to engage all functional organizations
owning business systems (and their customers) in the development of
this important document.
Recommendation 4: Review the functionality of previously implemented
IEMP modules for the purpose of determining whether enhancements or
modifications are needed to bring them into compliance with the concept
of operations.
Response: NASA concurs with this recommendation. TEMP is currently
working with mission projects to identify business system gaps from the
perspective of the project management community. Data from this
activity, to be completed in the July 2007 timeframe, will be
incorporated into the ConOps. Any enhancements or modifications to
existing IEMP modules will be assessed by the MBSIG following the
completion of the ConOps.
Recommendation 5: Establish policies and procedures requiring approval
to establish or maintain business processes that are inconsistent with
the processes inherent in the COTS solutions selected for IEMP.
Response: NASA concurs with this recommendation. NASA recognizes that
it has, over time, created several complex business processes which
have resulted in complicated and convoluted software configurations and
extensions which create operational inefficiencies. As noted in the
response to Recommendation 1 above, the role of the IEMP Integration
Manager and the IEMP Competency Center will be to assess the systems'
capabilities to efficiently meet the proposed requirements. Assessment
results will be vetted through the MBSIG to ensure cross functional
agency-wide impacts have been addressed. This assessment process will
be included within the forthcoming requirements policy framework
identified in the response to Recommendation 1. Meanwhile, NASA is
already taking steps to assess its cost collection processes with a
target to streamline the business processes while continuing to meet
the information needs of project management, financial management, and
asset management.
Technical comments to the draft report have been provided to GAO
separately.
My point of contact for this matter is Mr. Bobby German, Program
Director for NASA's Integrated Financial Management Program. He may be
contacted by e-mail at bobby.german@nasa.gov or by telephone at (202)
358-2498.
Sincerely,
Signed by:
Shana Dale:
Deputy Administrator:
[End of section]
Appendix III: GAO Contacts and Staff Acknowledgments:
GAO Contacts:
McCoy Williams, (202) 512-9095 or williamsm1@gao.gov:
Keith A. Rhodes, (202) 512-6412 or rhodesk@gao.gov:
Acknowledgments:
In addition to the contacts named above, staff members who made key
contributions to this report were Diane Handley, Assistant Director; J.
Christopher Martin, Senior Level Technologist; Francine DelVecchio;
Kristi Karls; and Lauren Catchpole.
FOOTNOTES
[1] GAO, High-Risk Series: An Update, GAO-07-310 (Washington, D.C.:
January 2007).
[2] The effort was formerly known as the Integrated Financial
Management Program (IFMP). According to NASA, IFMP was renamed to
reflect the addition of program management and labor distribution.
[3] An ERP solution is an automated system using commercial off-the-
shelf software consisting of multiple, integrated functional modules
that perform a variety of business-related tasks such as payroll,
general ledger accounting, contract management, and supply chain
management.
[4] GAO, Business Modernization: Improvements Needed in Management of
NASA's Integrated Financial Management Program, GAO-03-507 (Washington,
D.C.: Apr. 30, 2003); Business Modernization: NASA's Integrated
Financial Management Program Does Not Fully Address Agency's External
Reporting Issues, GAO-04-151 (Washington, D.C.: Nov. 21, 2003);
Information Technology: Architecture Needed to Guide NASA's Financial
Management Modernization, GAO-04-43 (Washington, D.C.: Nov. 21, 2003);
and Business Modernization: Disciplined Processes Needed to Better
Manage NASA's Integrated Financial Management Program, GAO-04-118
(Washington, D.C.: Nov. 21, 2003).
[5] GAO, Financial Management Systems: Additional Efforts Needed to
Address Key Causes of Modernization Failures, GAO-06-184 (Washington,
D.C.: Mar. 15, 2006).
[6] GAO, Business Modernization: Some Progress Made toward Implementing
GAO Recommendations Related to NASA's Integrated Financial Management
Program, GAO-05-799R (Washington, D.C.: Sept. 9, 2005).
[7] ERASMUS is an executive management information system that provides
information on costs, schedule, and risks for all significant NASA
programs and projects. According to the IEMP Program Director, ERASMUS
was discontinued in April 2007.
[8] The contract management module of IEMP is intended to support
contract and grant writing and administration, and procurement workload
management.
[9] Both the previous and updated versions of the core financial
software are from SAP, a company whose integrated software is used by
many of the world's largest corporations.
[10] According to the Software Engineering Institute, requirements
management is a process that establishes a common understanding between
the customer and the software project manager regarding the customer's
business needs that will be addressed by a project. A critical part of
this process is to ensure that the requirements development portion of
the effort documents, at a sufficient level of detail, the problems
that need to be solved and the objectives that need to be achieved.
[11] Testing is the process of executing a program with the intent of
finding errors.
[12] GAO-05-799R.
[13] Regression testing is the practice of testing changes to a
software application before it is released to ensure that modifications
have not caused unintended effects and that the system still complies
with its specified requirements.
[14] Mary Beth Chrissis, Mike Konrad, and Sandy Shrum, CMMI: Guidelines
for Process Integration and Product Improvement, SEI Series in Software
Engineering (Boston, Mass.: Pearson Education, May 2004).
[15] A business system is an information system that is used to support
business activities such as acquisition, financial management,
logistics, strategic planning and budgeting, installations and
environment, and human resources management.
[16] An enterprise architecture is a blueprint that defines, both in
logical terms (including integrated functions, applications, systems,
users, work locations, and information needs and flows) and technical
terms (including hardware, software, data, communications, and
security), how an organization's information technology systems operate
today and how they are to operate in the future and provides a road map
for the transition.
[17] IEEE Std. 1362-1998.
[18] For example, as we discuss later, NASA receives two different
types of cost reports from its major contractors. Even though both
types of reports pertain to the same costs for a given contract, one
report is used for financial management while the other is used for
program management. A concept of operations might describe how NASA
could use the information from only one report for both purposes.
[19] Thomas F. Wallace and Michael H. Kremzar, ERP: Making It Happen;
The Implementers' Guide to Success with Enterprise Resource Planning
(New York: John Wiley & Sons, Inc., 2001).
[20] NASA requires its contractors to report monthly accrued costs on
NASA Form 533 for cost type, price redetermination, and fixed-price
incentive contracts with a performance period of 1 year or more and a
contract value of $500,000 to $999,000 or a performance period of less
than a year but with a contract value of $1 million or more.
[21] A major acquisition, as defined by OMB Circular A-11, means a
system or project requiring special management attention because of its
importance to the mission or function of the agency, a component of the
agency, or another organization; is for financial management and
obligates more than $500,000 annually; has significant program or
policy implications; has high executive visibility; has high
development, operating, or maintenance costs; or is defined as major by
the agency's capital planning and investment control process.
[22] Contract line items are usually consistent with higher levels of
the WBS, but do not contain the details that are found in the lower
levels of the WBS.
[23] This example is for illustrative purposes only; the dollar amounts
in the example are not based on actual NASA data.
[24] GAO, Property Management: Lack of Accountability and Weak Internal
Controls Leave NASA Equipment Vulnerable to Loss, Theft, and Misuse,
GAO-07-432 (Washington, D.C.: June 25, 2007).
[25] In its technical comments on a draft of this report, NASA stated
that it plans to establish unique WBS codes for contractors to use to
report asset costs on the Form 533. It is too early to determine the
extent to which these plans might address agencywide information needs.
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