Summary
Despite its significant investment in business systems, the Department of Defense (DOD) continues to have long-standing financial and business management problems that preclude the department from producing reliable and timely information for making decisions and for accurately reporting on its billions of dollars of assets. GAO was asked to (1) identify DOD's fiscal year 2005 estimated funding for its business systems and (2) determine whether DOD has effective control and accountability over its business systems modernization investments.
DOD's business and financial management weaknesses have resulted in billions of dollars wasted annually in a time of increasing fiscal constraint. These weaknesses continue despite DOD requesting over $13 billion in fiscal year 2005--about $6 billion less than in fiscal year 2004--to operate, maintain, and modernize its existing duplicative business systems. The difference is more a reclassification of systems rather than an actual spending reduction. Some of the reclassifications appeared reasonable and others were questionable due to inconsistent information. At the same time, DOD reported an increase in the number of business systems to 4,150 as of February 2005--an increase of about 1,900 systems since April 2003. The duplicative and stovepiped nature of DOD's systems environment is illustrated by the numerous systems in the same business area. For example, DOD reported that it has over 2,000 logistics systems--an increase of approximately 255 percent since April 2003. DOD still does not have an effective departmentwide management structure for controlling business systems investments. Furthermore, DOD is not in compliance with the National Defense Authorization Act for Fiscal Year 2003, which requires the DOD Comptroller to determine that system improvements with obligations exceeding $1 million meet the criteria specified in the act. Based on limited information provided by DOD, system improvements totaling about $243 million of obligations over $1 million were not reviewed by the DOD Comptroller in fiscal year 2004. Cumulatively, based upon DOD's reported data, system improvements totaling about $651 million of obligations over $1 million were not reviewed by the DOD Comptroller before obligations were made since passage of the 2003 act. The 2005 defense authorization act directed that DOD put in place a management structure to improve the control and accountability over business systems investments by placing more responsibility with the domains. At the same time, each military service has its own investment review process. Absent an integrated management structure that clearly defines the relationship of the domains and the military services, DOD will be at risk that the parochialism contributing to the current problems will continue.
Recommendations
Our recommendations from this work are listed below with a Contact for more information. Status will change
from "In process" to "Implemented" or "Not implemented" based on our follow up work.
Director:
Team:
Phone:
McCoy Williams
Government Accountability Office: Financial Management and Assurance
(202) 512-9505
Recommendations for Executive Action
Recommendation: To improve the department's control and accountability of business systems investments, the Secretary of Defense should direct that the DOD CIO, in consultation with the domains, review the 56 systems reclassified from business systems to national security systems to determine how these should be properly reported in the fiscal year 2007 IT budget request.
Agency Affected: Department of Defense
Status: Implemented
Comments: DOD performed a review of the 56 systems and determined the classification for these systems. Of the 56 systems, 6 had been retired and 5 were reclassified to IT from NSS. Based on the information DOD provided and our review of DOD's fiscal year 2007 IT budget request, we determined that the department appropriately classified the 56 systems.
Recommendation: To improve the department's control and accountability of business systems investments, the Secretary of Defense should direct that the Defense Business Systems Management Committee work with the domain investment review boards to review the reported Business Management Modernization Program business systems inventory so systems are defined in accordance with the definition specified in the fiscal year 2005 defense authorization act.
Agency Affected: Department of Defense
Status: Implemented
Comments: The Ronald W. Reagan National Defense Authorization Act for Fiscal Year 2005 defined what is to be considered a defense business system. Our report pointed out that it is incumbent upon the Department of Defense (DOD) to ensure that the definition in the act is used consistently throughout the department. Subsequently, DOD has established a single authoritative system inventory called the DOD Information Technology Portfolio Repository (DITPR). DOD also issued guidance for certification of business systems modernizations, which defined business systems in accordance with the Act. In addition, the system used to prepare the department's fiscal year 2007 Information Technology (IT) budget request has been reconciled and is continually reconciled with this authoritative system inventory. Our review of DOD's fiscal year 2007 IT budget request determined that the department's business systems are reported in accordance with the criteria specified in the fiscal year 2005 National Defense Authorization Act. These actions meet the intent of our recommendation.
Recommendation: To improve the department's control and accountability of business systems investments, the Secretary of Defense should direct that the Defense Business Systems Management Committee develop a comprehensive plan that addresses implementation of our previous recommendations related to the business enterprise architecture and the control and accountability over business systems investments (at a minimum, the plan should assign responsibility and estimated time frames for completion).
Agency Affected: Department of Defense
Status: In process
Comments: The Department of Defense's (DOD) March 15, 2008 annual report included a high-level summary of the actions taken or planned by DOD to address open GAO recommendations in this area. However, it did not include information such as responsibilities, timeframes, and actions planned to address all of the recommendations that have yet to be fully implemented. The department reported that there are 21 open enterprise-level recommendations. The department stated it will continue to work closely with GAO to address the open recommendations.
Recommendation: To improve the department's control and accountability of business systems investments, the Secretary of Defense should direct that the comprehensive plan we recommend above be incorporated into the department's second annual report due March 15, 2006, to the defense congressional committees, as required by the fiscal year 2005 defense authorization act, to help facilitate congressional oversight.
Agency Affected: Department of Defense
Status: Implemented
Comments: In its March 15, 2006, and March 15, 2007, annual reports to congressional committees, the department included steps that it is taking or plans to take to address our open recommendations.
