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United States Government Accountability Office: 
GAO: 

Report to Congressional Requesters: 

February 2012: 

DOD Financial Management: 

Implementation Weaknesses in Army and Air Force Business Systems Could 
Jeopardize DOD's Auditability Goals: 

GAO-12-134: 

GAO Highlights: 

Highlights of GAO-12-134, a report to congressional requesters. 

Why GAO Did This Study: 

The Department of Defense (DOD) has stated that successful 
implementation of its enterprise resource planning (ERP) systems is 
critical to DOD’s auditability goals. An ERP is an automated system 
that performs a variety of business-related functions. The National 
Defense Authorization Act for Fiscal Year 2010 mandates that DOD be 
able to validate its financial statements as audit ready by September 
30, 2017. GAO has previously reported that DOD has not effectively 
employed acquisition management controls to help ensure that the ERPs 
deliver the promised capabilities on time and within budget. GAO was 
asked to determine issues being encountered by the Army and the Air 
Force in the implementation of selected ERPs. GAO reviewed independent 
assessments and reports and interviewed the systems’ users and program 
management office officials. 

What GAO Found: 

DOD has invested billions of dollars and will invest billions more to 
develop and implement its ERPs. The ERPs play a key role in DOD’s goal 
of audit readiness by fiscal year 2017. Furthermore, in light of the 
Secretary of Defense’s decision that the Statement of Budgetary 
Resources is to be audit ready by fiscal year 2014, it is critical 
that DOD effectively implement the ERPs to support its auditability 
goals. 

Assessments by independent agencies of the Army’s General Fund 
Enterprise Business System (GFEBS) and the Global Combat Support 
System and the Air Force’s Defense Enterprise and Accounting 
Management System (DEAMS) and Expeditionary Combat Support System 
identified operational problems, such as deficiencies in data 
accuracy, inability to generate auditable financial reports, and the 
need for manual workarounds. Further, according to DFAS users, GFEBS 
and DEAMS did not provide all expected capabilities in accounting and 
decision support. For example: 

* Approximately two-thirds of invoice and receipt data must be 
manually entered into GFEBS from the invoicing and receiving system 
due to interface problems. Army officials explained that the primary 
cause of the problem is that the interface specification that GFEBS is 
required by DOD to use does not provide the same level of 
functionality as the interface specification used by the legacy 
systems. At the time of our review, Army officials stated that they 
are working with DOD to resolve the problem, but no time frame for 
resolution had been established. 

* DEAMS cannot produce the monthly accounts receivable aging report as 
intended. The DEAMS Financial Management Office is aware of the 
problems and is in the process of resolving them. However, at the time 
of our review, no timetable had been set for the problems’ resolution.  

DOD oversight authority has limited the deployment of GFEBS and DEAMS 
based upon the results of the independent assessments. Continued 
monitoring of DOD ERPs is essential to identify system weaknesses and 
to help ensure that the systems provide the promised capabilities. 
Without timely and effective corrective action, the department is at 
risk of making investment and system deployment decisions that may not 
provide the desired results—-improvements in the department’s business 
operations. 

According to DFAS personnel, the training they received for GFEBS and 
DEAMS did not fully meet their needs. DFAS personnel informed us that 
the training focused on an overview of GFEBS and DEAMS and how the 
systems were supposed to operate. While this was beneficial in 
identifying how GFEBS and DEAMS were different from the existing 
legacy systems, the training focused too much on concepts rather than 
the skills needed for DFAS users to perform their day-to-day 
operations. 

What GAO Recommends: 

GAO is making five recommendations to the Secretary of Defense to 
ensure the correction of system problems prior to further system 
deployment, including user training. DOD concurred with four and 
partially concurred with one of the recommendations and described its 
efforts to address them. 

View [hyperlink, http://www.gao.gov/products/GAO-12-134]. For more 
information, contact Asif A. Khan at (202) 512-9869 or khana@gao.gov. 

[End of section] 

Contents: 

Letter: 

Objective, Scope, and Methodology: 

Background: 

Deficiencies in ERP Capabilities and Implementation Could Jeopardize 
DOD's Progress toward Accountability and Auditability: 

Conclusions: 

Recommendations for Executive Action: 

Agency Comments and Our Evaluation: 

Appendix I: Comments from the Department of Defense: 

Appendix II: Six ERPs Not Discussed In This Report: 

Appendix III: GAO Contacts and Staff Acknowledgments: 

Abbreviations: 

AFOTEC: Air Force Operational and Test Evaluation Center: 

ATEC: Army Test and Evaluation Command: 

BSM: Business System Modernization: 

DAI: Defense Agencies Initiative: 

DCMO: Deputy Chief Management Officer: 

DEAMS: Defense Enterprise Accounting and Management System: 

DFAS: Defense Finance and Accounting Service: 

DLA: Defense Logistics Agency: 

DOD: Department of Defense: 

EBS: Enterprise Business System: 

ECSS: Expeditionary Combat Support System: 

ERP: enterprise resource planning: 

FFMIA: Federal Financial Management Improvement Act of 1996: 

FIAR: Financial Improvement and Audit Readiness: 

FMO: Financial Management Office: 

GCSS-Army: Global Combat Support System--Army: 

GCSS-MC: Global Combat Support System--Marine Corps: 

GFEBS: General Fund Enterprise Business System: 

LMP: Logistics Modernization Program: 

MDA: Milestone Decision Authority Navy: 

ERP: Navy Enterprise Resource Planning: 

PMO: program management office: 

SFIS: Standard Financial Information Structure: 

[End of section] 

United States Government Accountability Office: 
Washington, DC 20548: 

February 28, 2012: 

Congressional Requesters: 

The Department of Defense's (DOD) business systems[Footnote 1] 
modernization program has been on GAO's high-risk list[Footnote 2] 
since 1995 because of the size and complexity of DOD, the large and 
complex systems to be developed, and the significant efforts needed to 
establish effective and efficient business systems departmentwide. 
DOD's business systems modernization entails purchasing, designing, 
and implementing comprehensive, integrated business systems for 
managing its resources, with the concurrent elimination of hundreds of 
legacy systems. These comprehensive business systems are commonly 
referred to as enterprise resource planning (ERP) systems.[Footnote 3] 
According to DOD, the successful implementation of the ERPs is 
critical for addressing long-standing weaknesses in financial 
management and for resolving weaknesses in other high-risk areas such 
as business systems modernization and supply chain management. 
[Footnote 4] The department has noted that the successful 
implementation of ERPs is essential for DOD to be able to validate 
that its financial statements are audit ready by September 30, 2017, 
as mandated by the National Defense Authorization Act for Fiscal Year 
2010.[Footnote 5] In light of the Secretary of Defense's recent 
decision that the Statement of Budgetary Resources[Footnote 6] is to 
be audit ready by fiscal year 2014, it is critical that the department 
effectively implement the systems to support its auditability goals. 

Over the years we have frequently reported[Footnote 7] that the 
department has not effectively employed acquisition management 
controls to help ensure that ERPs deliver the promised capabilities on 
time and within budget. Delays in the successful implementation of 
ERPs have extended the funding for existing duplicative, stovepiped 
systems longer than anticipated. Continued implementation problems can 
erode savings that were estimated to accrue to DOD as a result of 
modernizing its business systems and thereby reduce funds that could 
be used for other DOD priorities. Delays in the successful 
implementation of the ERPs can also have a negative impact on the 
department's business operations. 

Objective, Scope, and Methodology: 

As requested, this report provides information to support your 
oversight of DOD's progress in modernizing its business systems to 
address long-standing financial management weaknesses and ultimately 
to transform its business operations. As agreed with your offices, our 
objective was to identify issues being encountered by the Army and the 
Air Force in the implementation of selected ERPs. Further, as agreed 
with your offices, we selected the Army's General Fund Enterprise 
Business System (GFEBS) and the Global Combat Support System (GCSS-
Army), and the Air Force's Defense Enterprise Accounting and 
Management System (DEAMS) and the Expeditionary Combat Support System 
(ECSS), because of the concerns discussed in our October 2010 report, 
[Footnote 8] and the importance of these systems to the Army, the Air 
Force, and the department's audit-readiness goals. 

To address our objective, we (1) reviewed the assessment reports on 
GFEBS and GCSS-Army that were prepared by the Army Test and Evaluation 
Command (ATEC) and the assessment reports on DEAMS and ECSS that were 
prepared by the Air Force Operational Test and Evaluation Center 
(AFOTEC); (2) interviewed system users from the Defense Finance and 
Accounting Service (DFAS) about the functionality provided by the 
selected ERPs; (3) reviewed Core Financial System Requirements to 
identify system requirements for measuring systems capabilities; and 
(4) met with DOD officials in offices of the DOD Deputy Chief 
Management Officer (DCMO)[Footnote 9] and the Army and the Air Force 
Chief Management Officers, and the project management office (PMO) of 
the four selected ERPs. In regard to GCSS-Army and ECSS, DFAS 
officials told us they had just started using the systems for 
financial reporting purposes, and they were not in a position to 
evaluate GCSS-Army or ECSS effectiveness in performing day-to-day 
tasks from a user point of view. Further, we did not separately 
evaluate these systems, but rather, reviewed the evaluations that had 
been conducted by ATEC and AFOTEC. Most of the financial information 
in this report was obtained through interviews or responses to our 
questions from knowledgeable military service and PMO officials for 
the four selected ERPs, and we did not perform any separate 
evaluations of these systems, but rather, reviewed the evaluations 
that had been conducted by ATEC and AFOTEC. 

We conducted this performance audit from October 2010 through February 
2012 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 objective. We 
requested comments on a draft of this report from the Secretary of 
Defense or his designee. We received written comments from the 
Department of Defense Deputy Chief Management Officer, which are 
reprinted in appendix I. 

Background: 

DOD is one of the largest and most complex organizations in the world. 
For fiscal year 2012, the budget requested for the department was 
approximately $671 billion--$553 billion in discretionary budget 
authority and $118 billion to support overseas contingency operations. 
To support its operations, DOD performs an assortment of interrelated 
and interdependent business functions, such as logistics, procurement, 
health care, and financial management. As we have previously reported, 
the DOD systems environment that supports these business functions has 
been overly complex and error prone, characterized by (1) little 
standardization across the department, (2) multiple systems performing 
the same tasks, (3) the same data stored in multiple systems, and (4) 
the need for data to be entered manually into multiple systems. For 
fiscal year 2012, the department requested about $17.3 billion to 
operate, maintain, and modernize its business systems. DOD has 
reported that it relies on 2,258 business systems, including 335 
financial management systems, 709 human resource management systems, 
645 logistics systems, 243 real property and installation systems, and 
281 weapon acquisition management systems. 

DOD's ERP Efforts: 

As we reported in our October 2010 report,[Footnote 10] DOD has 
identified 10 ERPs as critical to transforming the department's 
business operations and addressing some of its long-standing 
weaknesses in financial management, business systems modernization, 
and supply chain management. The department has estimated that the 
successful implementation of these 10 ERPs will replace over 500 
legacy systems that reportedly cost hundreds of millions of dollars to 
operate annually. We further reported that, based upon data provided 
by DOD, 6 of the 10 ERPs DOD had identified as critical to 
transforming its business operations had experienced schedule delays 
ranging from 2 to 12 years, and 5 had incurred cost increases totaling 
an estimated $6.9 billion. The 4 ERPs we reviewed for this report are 
briefly described below. The 6 ERPs[Footnote 11] we did not review for 
this report are described in appendix II. 

* GFEBS was initiated in October 2004 and is intended to support the 
Army's standardized financial management and accounting practices for 
the Army's general fund,[Footnote 12] with the exception of the Army 
Corps of Engineers, which will continue to use its existing financial 
system, the Corps of Engineers Financial Management System.[Footnote 
13] GFEBS is intended to allow the Army to share financial, asset, and 
accounting data across the active Army, the Army National Guard, and 
the Army Reserve. The Army estimates that when fully implemented, 
GFEBS will be used to control and account for about $140 billion in 
annual spending. According to the Army DCMO, GFEBS will be fully 
deployed to all intended users by July 2012. According to the Army, 
the GFEBS life-cycle cost estimate[Footnote 14] is approximately $1.3 
billion. As of September 30, 2011, the Army reported that it had 
obligated approximately $770 million and expended $684 million for 
GFEBS. 

* GCSS-Army was initiated in December 2003[Footnote 15] and is 
expected to integrate multiple logistics functions by replacing 
numerous legacy systems and interfaces. The system will provide 
tactical units with a common authoritative source for financial and 
related nonfinancial data, such as information related to maintenance 
and transportation of equipment. The system is also intended to help 
the Army achieve total asset visibility.[Footnote 16] GCSS-Army will 
manage over $49 billion in annual spending by the active Army, 
National Guard, and the Army Reserve. The May 2011 Financial 
Improvement and Audit Readiness (FIAR) Plan notes that the full-
deployment[Footnote 17] date has been changed from the fourth quarter 
of fiscal year 2015 to the fourth quarter of fiscal year 2017 in order 
to reduce the operational risk of having tactical units in training 
and combat in a mixed logistics information systems environment. In 
August 2011, the program received approval to be placed into limited 
deployment to support operational testing.[Footnote 18] The Army 
estimates the life-cycle cost to be approximately $4.2 billion. As of 
September 30, 2011, the Army reported that it had obligated 
approximately $890 million and expended $804 million for GCSS-Army. 

* DEAMS was initiated in August 2003 and is intended to provide the 
Air Force with the entire spectrum of financial management 
capabilities, including collections, commitments and obligations, cost 
accounting, general ledger, funds control, receipts and acceptance, 
accounts payable and disbursement, billing, and financial reporting 
for the general fund. According to Air Force officials, when DEAMS is 
fully operational, it is expected to maintain control and 
accountability for about $160 billion in annual spending. The Air 
Force anticipates that DEAMS will be fully deployed by July 2016. Air 
Force officials estimate the DEAMS life-cycle cost estimate to be 
approximately $2 billion. As of September 30, 2011, the Air Force 
reported that it had obligated approximately $315 million and expended 
$301 million for DEAMS. 

* ECSS was initiated in January 2004 and is intended to provide the 
Air Force with a single, integrated logistics system--including 
transportation, supply, maintenance and repair, engineering and 
acquisition--for both the Air Force's general and working capital 
funds. ECSS is also intended to provide the financial management and 
accounting functions for the Air Force's working capital fund 
operations. When fully implemented, ECSS is expected to control and 
account for about $122 billion of inventory. As noted in the May 2011 
FIAR Plan, the full-deployment decision and the full deployment for 
the first release only are scheduled for the first and fourth quarters 
of fiscal year 2013. According to the May 2011 FIAR Plan, the two 
events had originally been scheduled for the third quarter of fiscal 
year 2012 and the third quarter of fiscal year 2013. According to Air 
Force officials, the ECSS life-cycle cost estimate is approximately 
$5.2 billion. As of September 30, 2011, the Air Force reported that it 
had obligated approximately $986 million and expended $876 million for 
ECSS. 

Deficiencies in ERP Capabilities and Implementation Could Jeopardize 
DOD's Progress toward Accountability and Auditability: 

Deficiencies in the capability of GFEBS, GCSS-Army, DEAMS, and ECSS to 
perform essential functions as intended at sites of deployment have 
impaired the systems' efficiency and effectiveness in accounting for 
business transactions and reporting reliable financial information. 
Independent assessments conducted by ATEC[Footnote 19] and 
AFOTEC[Footnote 20] have identified operational problems with each 
system. The reported problems include areas such as data quality, data 
conversion, system interfaces, and training. DFAS users of GFEBS and 
DEAMS also told us they were having difficulties in using the systems 
to perform their day-to-day operations. The problems identified by 
DFAS users include interoperability deficiencies between legacy 
systems and the new ERP systems, lack of query and ad hoc reporting 
capabilities, and reduced visibility for tracing transactions to 
resolve accounting differences. To compensate, DFAS users were relying 
on manual workarounds to enter data into the ERPs, thus adversely 
impacting operational efficiency. Using manual workarounds to 
accomplish day-to-day tasks falls far short of the vision DOD has for 
its business system investments, which is to improve the efficiency 
and effectiveness of its support operations. Army and Air Force 
officials told us that they have plans to address these issues, and 
the Army has plans to validate the audit readiness of GFEBS in a 
series of independent auditor examinations of selected business 
processes and controls in the GFEBS environment over the next several 
fiscal years. 

While we were told that the Army and the Air Force have corrective 
actions underway to address identified deficiencies, specific time 
lines have not been developed for purposes of tracking and monitoring 
progress. Monitoring the status of the corrective actions, along with 
the overall progress of DOD ERPs, is essential to help ensure that the 
systems are implemented on schedule and within budget, and provide the 
promised capabilities. We have previously reported that if a system is 
deployed and not providing users with the intended capabilities, it 
can have an adverse effect on agency operations.[Footnote 21] 

Implementation efforts for both GFEBS and DEAMS have been impacted by 
inadequate training that did not meet the needs of users. The system 
training that DFAS users received, officials told us, presented an 
overview of how the systems were supposed to operate rather than the 
training necessary for users to perform day-to-day operations. 
According to DFAS officials, the training was not user role-based and 
lacked instructions for data mining and managerial reporting. 

Independent Assessments and DFAS Users Have Identified Implementation 
Problems with Army and Air Force ERPs: 

Independent testing and evaluation by ATEC and AFOTEC have identified 
operational deficiencies in GFEBS, GCSS-Army, DEAMS, and ECSS that 
impaired the systems' efficiency and effectiveness in accounting for 
business transactions and reporting reliable financial information. 
Further, at the time of our review, GFEBS and DEAMS were not providing 
DFAS users with the expected capabilities in accounting, management 
information, and decision support. According to the Office of Federal 
Financial Management, "Core Financial System Requirements," a system 
must be able to provide consistent, standardized information for 
program managers, financial managers, agency executives, and oversight 
organizations. 

GFEBS: 

According to the Army, when completed, GFEBS will be operational at 
200 locations and will have approximately 79,000 users. Currently, 
GFEBS is deployed to about 160 locations and is being used by 
approximately 38,000 individuals. 

In December 2009,[Footnote 22] ATEC reported on deficiencies in GFEBS 
Release 1.3[Footnote 23] data accuracy, reliability, and timeliness. 
More specifically, the report noted that Army "installations were 
certifying year-end data with caveats and notes related to inaccurate, 
incomplete, and missing data." Furthermore, the report noted that 
"because of incomplete or not implemented business processes, users at 
times, executed their mission using the workarounds of the legacy 
systems that the GFEBS is intended to replace or subsume." The report 
recommended that the deployment of GFEBS be limited until the problems 
are resolved and the corrective actions have been validated by ATEC. 
According to the PMO, a plan of action and milestones has been 
developed in conjunction with ATEC, to address the issues. The PMO 
noted that GFEBS is undergoing an additional operational test and 
evaluation limited user test,[Footnote 24] and at the conclusion of 
the testing, a determination will be made whether the ATEC issues have 
been addressed. 

Further, in November 2010, ATEC reported that while GFEBS Release 
1.4.1 successfully executed core business mission transactions for 
every functional area, except funds management, the system did not 
meet standards for generating auditable financial management reports 
and period-end data.[Footnote 25] The report further noted that 
overall GFEBS's limitations significantly affected users' abilities to 
perform their daily tasks and that GFEBS did not improve 
accountability and oversight of budgetary resources. The report also 
stated that GFEBS's reporting capabilities, including ad hoc query 
reports, were inadequate and unreliable. For example, operational 
testing found that GFEBS accurately captured user data entries, but 
internal data processing did not always reflect the original input. 
There were other cases where missing data caused delays and rework for 
users, as well as many workarounds, which need programming 
improvements to GFEBS. According to the Milestone Decision Authority 
(MDA),[Footnote 26] ATEC will conduct continuous evaluation to 
validate any remaining problems and additional operational testing for 
future releases. 

To help identify operational issues with GFEBS, we met with DFAS 
personnel who use the system in performing their daily duties and 
responsibilities. According to DFAS, the backlog of unresolved GFEBS 
trouble tickets[Footnote 27] increased from about 250 in September 
2010 to approximately 400 in May 2011. Most of the problems are 
related to areas such as system security, the entitlement process, 
unmatched disbursements, and cash reconciliation with the Fund Balance 
with Treasury. According to Army officials, this increase in the 
number of tickets was not unexpected because the number of users and 
the number of transactions being processed by the system has 
increased, and the Army and DFAS are taking steps to address the 
problems identified by DFAS. However, the Army had not developed a 
specific time frame for completion of the actions. 

DFAS users stated that approximately two-thirds of invoice and receipt 
data must be manually entered into GFEBS from the invoicing and 
receiving system (i.e., Wide Area Work Flow) due to interface 
problems.[Footnote 28] DFAS personnel told us that manual data entry 
will eventually become infeasible due to increased quantities of data 
that will have to be manually entered as GFEBS is deployed to 
additional locations. Army officials explained that the primary cause 
of the problem is that the interface specification that GFEBS is 
required to use by the department does not provide the same level of 
functionality as the interface specification that the legacy systems 
are allowed to use. Army officials stated they are working with DOD to 
resolve the problem. Again, the Army had not developed a specific time 
frame for completion of the corrective actions. 

DFAS users also noted that GFEBS does not provide users the ability to 
run ad hoc queries or to research data to resolve problems or answer 
questions.[Footnote 29] The Army has recognized this limitation and is 
currently developing a system enhancement that Army officials expect 
will better support the users' needs. However, a specific time frame 
for completion of corrective actions had not yet been developed. At 
the time of our review, some reports were created by extracting the 
data from GFEBS and downloading reports into applications or copying 
the data into spreadsheets before analyses can be performed. This 
workaround increases the difficulty in performing some account 
analyses such as aging analysis. More specifically, DFAS officials 
told us that the Army has initiated a pilot providing DFAS with 30 
enhanced licenses to strengthen connectivity to GFEBS and permit users 
to pull moderate quantities of data without the system's timing out. 
However, the limited number of licenses does not fully satisfy DFAS 
user needs and cannot sustain future GFEBS deployments which will 
increase the number of transactions. 

Another interoperability deficiency is the manual transfer of accounts 
receivable transactions from legacy financial systems into GFEBS. 
[Footnote 30] According to DFAS officials, this problem is the result 
of the relevant business processes not being incorporated within 
GFEBS. Although the Army has debt management pilots under way, debt 
collection will continue to be nonoptimal until the functionality is 
developed and operational within GFEBS. DFAS officials were not 
certain whether or when the functionality would be incorporated. 

GCSS-Army: 

According to the Army DCMO, when fully deployed, GCSS-Army will be 
operational at 379 locations and will have approximately 170,000 
users. Currently, GCSS-Army is undergoing initial operational test and 
evaluation activities that began in March 2011 and will continue 
through October 2011 at Ft. Bliss, Texas. 

In April 2011,[Footnote 31] ATEC reported on the results of its user 
testing of the GCSS-Army Release 1.1.[Footnote 32] The report noted 
that its primary purpose was to ascertain whether the system has the 
potential to be operationally effective, suitable, and survivable. 
[Footnote 33] The report noted that the limited testing found that 
logistics information processing is near real time and that supervisor-
level users were satisfied and expressed confidence in the accuracy of 
the transactions processed by the system. However, the report also 
noted that at times the users needed to implement manual workarounds 
to accomplish their mission. Further, at the time of the review, ATEC 
found that GCSS-Army was not compliant with certain standards in DOD's 
business enterprise architecture, such as DOD's Standard Financial 
Information Structure (SFIS),[Footnote 34] or requirements of the 
Federal Financial Management Improvement Act of 1996 (FFMIA).[Footnote 
35] The report also pointed out that training could be improved 
through the use of hands-on training in addition to instructor-led 
training. The PMO is currently implementing a "get-well plan" to 
ensure that GCSS-Army is effective in the deployed environment and 
compliance efforts are underway to address the SFIS and FFMIA 
compliance issues. A specific time frame for the resolution of the 
identified problems is being developed. 

DEAMS: 

When completed, DEAMS is to be deployed to 179 locations and used by 
30,000 individuals. DEAMS is currently being tested at Scott Air Force 
Base and DFAS Limestone and has been in use there since 2010 by about 
1,050 individuals. 

In January 2011, AFOTEC reported on the Air Force's implementation 
efforts at Scott Air Force Base and found that substantial manual 
intervention is required on a daily basis to keep DEAMS working as 
intended.[Footnote 36] It was further noted that many interfaces were 
inoperable and required reports were not being produced or were 
inaccurate or incomplete. AFOTEC also found that training was 
inadequate and system deficiencies were present when the assessment 
started and had continued to accrue. In May 2011, we interviewed the 
DEAMS PMO who told us that 245 problems needed to be addressed. The 
Air Force is in the process of developing a time line to show when 
each problem needs to be addressed and the specific actions that must 
be taken to resolve the problem. At the time of our review, a specific 
time frame for completion of the corrective actions had not been 
developed. 

In interviews, DFAS officials and users of DEAMS identified problems 
in the system's operation. DEAMS is not able to produce the monthly 
accounts receivable aging report as intended, officials told us, and 
therefore, the report is produced manually.[Footnote 37] According to 
the officials, the capability to produce the aging report existed in 
the legacy systems. Manual workarounds are also needed to process 
certain accounts receivable transactions such as travel debts. DFAS 
personnel told us that these accounts receivable-related problems are 
the result of the improper conversion of data transferred from the 
legacy systems to DEAMS. The DEAMS Financial Management Office (FMO) 
is aware of the problems and is in the process of resolving them. 
However, at the time of our review, no timetable had been set for the 
problem resolution. 

DFAS users told us they were experiencing difficulty with some DEAMS 
system interfaces.[Footnote 38] For example, the interface problem 
with the Standard Procurement System had become so serious that the 
interface had been turned off, and the data were manually entered into 
DEAMS. In September 2011, the Air Force testified that there were 
problems with the interface because the data in the procurement system 
is not accurate.[Footnote 39] A DOD DCMO official stated that the 
Standard Procurement System will be replaced, but a time frame has not 
been established for the system initiative start date or estimated 
completion date. 

DFAS users also told us that DEAMS does not provide the capability--
which existed in the legacy systems--to produce ad hoc query reports 
that can be used to perform the data analysis needed for daily 
operations.[Footnote 40] For example, they said that legacy systems 
had a support-system tool called On-Line Report View that allowed data 
normally printed to be generated for an electronic report. DFAS 
considers this a useful tool for viewing fund-status reports and other 
reports generated from the legacy systems. However, they noted that 
when some reports are produced, the accuracy of those reports is 
questionable. According to DFAS officials, they are currently working 
with the DEAMS FMO to design the type of reports DFAS needs. DFAS 
personnel further noted that DEAMS' current processes are not 
streamlined and have not made the process easier. Further, an external 
survey report issued in April 2011, noted that about 48 percent of 
DEAMS users said that their workload increased as a result of the 
tasks they perform in DEAMS, 15 percent felt satisfied with DEAMS, and 
10 percent felt their work was more accurate.[Footnote 41] 

ECSS: 

According to the Air Force PMO, when fully implemented, ECSS is to be 
deployed to 186 locations and used by approximately 250,000 
individuals. ECSS is currently being tested at 10 locations at Hanscom 
Air Force Base with a total of 225 users and has been in use there 
since December 2010. 

In April 2010,[Footnote 42] AFOTEC reported on its review of Release 1 
Pilot A[Footnote 43] for ECSS. The review was conducted to assess the 
system's progress toward operational effectiveness, suitability, and 
mission capability. Due to the limited scope of Pilot A (with less 
than one-tenth of the planned Release 1 capability), AFOTEC was not 
able to collect sufficient quantitative data to determine whether the 
program was on track to deliver desired performance at the conclusion 
of Release 1. However, interviews with subject matter experts and 
analysis of the limited data identified several areas of concern, 
including data quality, data conversion, interoperability, usability, 
information assurance, and requirements testability. For example, ECSS 
will have approximately 230 one-way interfaces, with approximately 120 
to be implemented in Release 1. However, Pilot A had only implemented 
two, so there were insufficient data to assess interface development. 

The report further noted that many requirements were written at a high 
level and were not written specifically to address the performance of 
ECSS and that the ECSS requirements needed to be significantly 
refined. In a July 2010 memorandum, the Director of the DOD 
Operational Testing and Evaluation Office noted that the ECSS PMO had 
taken actions and conducted additional tests to mitigate the areas of 
concern. In October 2011, the Air Force DCMO testified that "the 
development and implementation of ECSS have lagged."[Footnote 44] 
According to the Air Force DCMO, the Air Force raised concerns to the 
DOD MDA and noted that "the department is now engaged in a strategic 
reassessment of the overall program." The Air Force DCMO further noted 
that the reassessment maintains focus on addressing both audit 
readiness and achievement of genuine return on investment. The joint 
DOD and Air Force team is to make recommendations on the way ahead for 
ECSS to the MDA by December 2011. Alternatives under consideration 
include building on the current ERP software, leveraging other 
service/defense agency solutions, and/or modifying legacy capability. 

Army and Air Force officials told us that they have plans to address 
these issues, and the Army has plans to validate the audit readiness 
of GFEBS in a series of independent auditor examinations auditing 
selected business processes and controls in the GFEBS environment over 
the next several fiscal years. Regarding DEAMS, the MDA has directed 
that the system not be deployed beyond Scott Air Force Base until the 
known system weaknesses have been corrected and the system has been 
independently tested to ensure that it is operating as intended. 

Continual Monitoring of ERPs Is Needed to Help Ensure Successful 
Implementation: 

Monitoring is essential to help ensure that systems are implemented on 
schedule and within budget, and provide the promised capabilities. It 
helps to ensure that identified deficiencies are corrected prior to 
full deployment, and also helps to provide visibility for senior 
management into investment management activities. Standards for 
internal control note that monitoring should be ongoing and be 
performed continually.[Footnote 45] 

At DOD, the MDA plays a crucial role in monitoring as the senior 
official with overall authority to approve the advancement of ERPs 
through the phases of the acquisition process. For the ERPs we 
reviewed, the MDA authority is divided between two officials. For 
GFEBS and DEAMS, the MDA is the DOD DCMO and for GCSS-Army and ECSS, 
the MDA is the Under Secretary of Defense for Acquisition, Technology 
and Logistics. The MDA determines the entry point of an acquisition 
program in the acquisition process and is accountable for cost, 
schedule, and performance reporting, including congressional 
reporting. While factors such as cost, schedule, performance, risk, 
and technical maturity are considered by the MDA, the entrance 
criteria for each phase of the life cycle guide the MDA in determining 
the appropriate entry point for a program. 

The MDA for GFEBS and DEAMS has responded to the results of ATEC and 
AFOTEC reviews with actions to help ensure the systems' readiness for 
full deployment. The MDA limited the deployment of GFEBS when the two 
ATEC reports previously mentioned noted deficiencies in the operation 
of the system. In regard to DEAMS, the MDA has directed that the 
system not be deployed beyond Scott Air Force Base until the known 
system weaknesses have been corrected and the system has been 
independently tested to ensure that it is operating as intended. 
Regarding GCSS-Army and ECSS, ATEC and AFOTEC have identified 
implementation issues. Once ATEC and AFOTEC have performed additional 
testing of the systems, and if deficiencies are identified, the MDA 
for the systems will have an opportunity to evaluate the results, as 
did the MDA for GFEBS and DEAMS, and take appropriate corrective 
actions. The resolution or mitigation of these system deficiencies is 
critical prior to the approval of further deployment of the systems. 

While we were informed that the Army and the Air Force have corrective 
actions underway or planned, they have not established specific time 
frames for the purposes of tracking and monitoring progress of the 
corrective actions needed to address the issues identified by DFAS. 
The timely resolution of these issues is important in order for DFAS 
users to perform their day-to-day operations as the department's 
primary accounting entity. The establishment of a time frame and 
milestone dates by the Army and the Air Force is important for 
measuring and monitoring progress. If a planned milestone date is not 
achieved, Army and Air Force management can then ascertain what 
additional actions are needed to help ensure that the problem is 
resolved promptly. 

Further, given the Secretary of Defense's goal for the department, 
that the Statement of Budgetary Resources is to be audit ready by 
fiscal year 2014, the resolution of the issues identified at DFAS is 
even more critical since GFEBS and DEAMS are an essential part of the 
ability of the Army and the Air Force to meet the Secretary's goal. 
Without timely and effective corrective action, the department is at 
risk of making investment decisions that may not provide the desired 
results--improvements in the department's business operations--and the 
ERP efforts could continue to experience unnecessary schedule delays 
and cost increases. 

System Training Does Not Fully Meet User Needs: 

Army and Air Force ERP training strategies were intended to provide 
ERP users with the skills and knowledge they need to successfully 
perform their new roles. However, according to DFAS personnel, the 
training they received for GFEBS and DEAMS, prior to the systems 
becoming operational at the various DFAS locations, did not fully meet 
their needs as users. DFAS personnel informed us that the training 
focused on an overview of GFEBS and DEAMS and how the systems were 
supposed to operate. While this was beneficial in identifying how 
GFEBS and DEAMS were different from the existing legacy systems, the 
instruction focused too much on concepts rather than the skills needed 
for DFAS users to perform their day-to-day operations. The training 
problems raised by DFAS, were also reported in an April 2011 external 
review of the DEAMS program.[Footnote 46] The report noted that for 
instructor-led training, 53 percent of the system users that responded 
to the survey indicated that the training did not prepare them for 
using DEAMS. For web-based training, 40 percent of the users indicated 
that the training did not prepare them to use DEAMS. 

To address the training problems, DFAS is in the process of developing 
training courses and desk guides that would be more beneficial to DFAS 
employees who have to use GFEBS and DEAMS on a day-to-day basis. DFAS 
is in the process of developing 4 specific courses related to GFEBS. 
Besides the courses, DFAS is also in the process of developing desk 
guides for use by DFAS personnel. These guides are intended to explain 
further how an individual is to perform an assigned task within GFEBS 
and DEAMS. Because DFAS is developing these training courses and the 
operational materials on its own, the cost incurred by DFAS will be 
billed to the Army and the Air Force through the prices they charge 
for the services provided. As a working-capital-fund entity, DFAS is 
required to recover all costs incurred; therefore, the annual amounts 
billed to the Army and the Air Force for services provided may be 
higher than anticipated because of the additional training DFAS is 
developing. As a result, it is incumbent upon the Army and the Air 
Force to ensure that the training provided to DFAS users of GFEBS and 
DEAMS prepares them to perform their day-to-day mission effectively. 
Without this knowledge base and proficiency in the operation of the 
systems, some of the benefits that were intended with the 
implementation of GFEBS and DEAMS may not be achieved. 

Conclusions: 

Modernizing DOD's business systems is a critical part of transforming 
DOD's business operations, providing more accurate and reliable 
financial information to DOD management on the results of the 
department's operations, and providing the processes and data 
reliability that DOD needs to produce auditable financial statements. 
Successful implementation can help to standardize and streamline DOD's 
financial management and accounting systems, logistics systems, and 
finance processes, provide asset visibility for accountable items, and 
integrate personnel and pay systems. 

DOD is currently in the midst of implementing numerous ERPs that are 
critical to improving its business operations and achieving 
auditability. During its implementation efforts, the department has 
identified system weaknesses. It is critical that these problems be 
corrected as early as possible to help ensure that the billions of 
dollars spent annually are used effectively and to achieve effective 
implementation of the ERPs so that DOD can begin to fully realize the 
systems' intended benefits. 

The monitoring of the status of DOD's ERPs implementation efforts is 
an essential part of helping to ensure that the billions of dollars 
being invested provide the intended capabilities. The MDA for GFEBS 
and DEAMS has taken steps to help ensure that identified system 
weaknesses are resolved before full deployment of the systems. The 
action by the MDA provides an opportunity to prevent known weaknesses 
from persisting into deployment and negatively affecting the 
efficiency and effectiveness of the systems in operation. It is 
equally important that the Army and the Air Force establish time lines 
and monitor the status of the corrective actions to help ensure that 
the issues identified by DFAS users are resolved in a timely manner. 
The implementation of the ERPs is a long-term endeavor that will 
require the sustained and active involvement of senior management at 
all levels of the department. 

The training provided to DFAS users did not adequately demonstrate how 
users were to perform their expected duties using the systems. While 
the training explained how the systems were different than the 
existing legacy systems, it did not completely provide them with the 
skills needed to perform their day-to-day operations. 

In light of the Secretary of Defense's recent decision that the 
Statement of Budgetary Resources is to be audit ready by fiscal year 
2014, it is critical that the department have effective business 
systems in place to support its auditability goals. If these business 
systems do not provide the intended capabilities by the expected 
deadlines, DOD's goal of improving financial management operations and 
becoming audit ready could be jeopardized. 

Recommendations for Executive Action: 

To help provide for the successful implementation of Army and Air 
Force ERPs, and to help ensure that DFAS users have the training 
needed, we recommend that the Secretary of Defense take the following 
five actions: 

* Direct that the MDA for GFEBS, GCSS-Army, DEAMS, and ECSS ensure 
that any future system deficiencies identified through independent 
assessments are resolved or mitigated prior to further deployment of 
the systems. 

* Direct the Secretary of the Army to ensure that time lines are 
established and monitored for those issues identified by DFAS that are 
impacting their efficient and effective use of GFEBS. 

* Direct the Secretary of the Air Force to ensure that time lines are 
established and monitored for those issues identified by DFAS that are 
impacting their efficient and effective use of DEAMS. 

* Direct the Secretary of the Army to improve training for GFEBS users 
by providing training on actual job processes in a manner that allows 
users to understand how the new processes support their job 
responsibilities and the work they are expected to perform. 

* Direct the Secretary of the Air Force to improve training for DEAMS 
users by providing training on actual job processes in a manner that 
allows users to understand how the new processes support their job 
responsibilities and the work they are expected to perform. 

Agency Comments and Our Evaluation: 

DOD concurred with four and partially concurred with one of the 
recommendations in our draft report. In regard to the four 
recommendations with which the department concurred, DOD identified 
specific actions that it has completed, underway, or planned to 
establish time lines for addressing GFEBS and DEAMS issues identified 
by DFAS users and for improving training provided to GFEBS and DEAMS 
users. For example, with respect to our recommendations concerning the 
establishment of time lines for GFEBS and DEAMS issues, the department 
cited actions taken or underway to provide for greater DFAS 
involvement in the ERP systems' implementation. Also, regarding 
recommendations to improve training provided to GFEBS and DEAMS users, 
DOD cited actions taken or underway to provide additional or expanded 
user training on roles and job responsibilities under the new ERP 
systems' environments. 

DOD partially concurred with our recommendation that the Milestone 
Decision Authority for GFEBS, GCSS-Army, DEAMS, and ECSS ensure that 
any future system deficiencies identified through independent 
assessments are resolved or mitigated prior to further deployment of 
the systems. The department agreed that high severity system 
deficiencies identified through independent assessments should be 
resolved or mitigated prior to deployment. DOD cited Army and Air 
Force progress towards the resolution of the deficiencies noted in our 
report. For example, DOD stated that the Air Force is aggressively 
resolving the 245 DEAMS deficiencies identified in the January 2011 
independent assessment. However, it also commented that all system 
deficiencies are not required to be remediated prior to deployment. In 
this regard, DOD commented that lower severity level deficiencies may 
be deferred, if an acceptable workaround exists, to avoid schedule 
slippages and added cost. 

Prioritization is an important part of an effective risk-based process 
for addressing deficiencies. As such, the most severe deficiencies 
should be fully addressed prior to deployment. To the extent that any 
deficiencies are designated as "lower priority" and allowed to 
continue, at a minimum, acceptable short-term workarounds should be in 
place to mitigate the impact on operational efficiency. However, as 
discussed in our report, it is also essential that corrective actions 
for all identified deficiencies include specific time lines for 
tracking and monitoring progress. Consequently, we continue to believe 
that comprehensive corrective actions should be established for all 
identified deficiencies. Until DOD takes such action to fully address 
all identified deficiencies, the department's ERP systems are at risk 
of not being implemented on schedule, within budget, or with the 
intended capabilities. The written comments on a draft of this report 
received from the Department of Defense Deputy Chief Management 
Officer are reprinted in appendix I. 

As agreed with your offices, unless you publicly announce the contents 
of this report earlier, we plan no further distribution until 30 days 
from the report date. At that time, we will send copies of this report 
to the Secretary of Defense; the Secretary of the Army; the Secretary 
of the Air Force; the Deputy Secretary of Defense; the Deputy Chief 
Management Officer; the Under Secretary of Defense (Comptroller); the 
Under Secretary of the Army and the Under Secretary of the Air Force, 
in their capacity as the Chief Management Officer of their respective 
service; the program management office for each business system that 
was included in the audit; and other interested congressional 
committees and members. This report also is available at no charge on 
the GAO website at [hyperlink, http://www.gao.gov. 

Please contact Asif A. Khan at (202) 512-9869 or khana@gao.gov or 
Nabajyoti Barkakati at (202) 512-4499 or barkakatin@gao.gov if you or 
your staff have questions on matters discussed in this report. Contact 
points for our Offices of Congressional Relations and Public Affairs 
may be found on the last page of this report. Key contributors to this 
report are listed in appendix III. 

Signed by: 

Asif A. Khan: 
Director: 
Financial Management and Assurance: 

Signed by: 

Nabajyoti Barkakati: 
Chief Technologist: 
Applied Research and Methods: 
Center for Science, Technology, and Engineering: 

List of Requesters: 

The Honorable Thomas R. Carper: 
Chairman: 
The Honorable Scott Brown: 
Ranking Member: 
Subcommittee on Federal Financial Management, Government Information, 
Federal Services, and International Security: 
Committee on Homeland Security and Governmental Affairs: 
United States Senate: 

The Honorable Claire McCaskill: 
Chairman: 
Subcommittee on Contracting Oversight: 
Committee on Homeland Security and Governmental Affairs: 
United States Senate: 

The Honorable Tom Coburn: 
Ranking Member: 
Permanent Subcommittee on Investigations: 
Committee on Homeland Security and Governmental Affairs: 
United States Senate: 

The Honorable John McCain: 
United States Senate: 

[End of section] 

Appendix I: Comments from the Department of Defense: 

Deputy Chief Management Officer: 
9010 Defense Pentagon: 
Washington, DC 20301-9010: 

February 6, 2012: 

Mr. Asif A. Khan: 
Director, Financial Management and Assurance: 
U.S. Government Accountability Office: 
441 G Street, NW: 
Washington, DC 20548: 

Dear Mr. Khan, 

This is the Department of Defense (DoD) response to the Government 
Accountability Office (GAO) draft report GAO-12-134, "DOD Financial 
Management: Implementation Weaknesses in Army and Air Force Business 
Systems Could Jeopardize DOD's Auditability Goals," dated December 22, 
2011, (GAO Code 197095). The Department partially concurs with the 
first recommendation and concurs with the other four recommendations 
contained in the draft report. 

The Department appreciates the opportunity to respond to your draft 
report. We look forward to your continued cooperation and dialog 
toward our common goal of improving business systems throughout the 
Departments of Army and Air Force, and ultimately throughout the 
Department of Defense. Should you have any questions, please contact 
Mr. Bryan Kitchens, 571-371-3182, bryan.kitchens@osd.mil. 

Sincerely, 

Signed by: 

Elizabeth A. McGrath: 

Enclosures: As stated. 

[End of letter] 

GAO DRAFT REPORT DATED DECEMBER 22, 2011: 
GAO-12-134 (GAO CODE 197095): 

"DOD Financial Management: Implementation Weaknesses In Army And Air 
Force Business Systems Could Jeopardize DOD's Auditability Goals" 

Department Of Defense Comments To The GAO Recommendations: 

Recommendation 1: The GAO recommends that the Secretary of Defense 
direct that the MDA for GFEBS, GCSS-Army, DEAMS, and ECSS ensure that 
any future system deficiencies identified through independent 
assessments are resolved or mitigated prior to further deployment of 
the systems. 

DoD Response: The DoD partially concurs with this recommendation. 

DoD concurs that high severity and showstopper (high priority) system 
deficiencies identified through independent assessments should be 
resolved or mitigated; DoD has documented practices/policies similar 
to software industry procedures that assess severity levels and apply 
prioritization. Accordingly, all system deficiencies are not required 
to be remediated prior to deployment. It is DoD's existing practice to 
close all severity one (Sev 1) deficiencies prior to implementation. 
Lower severity level deficiencies may be deferred if an acceptable 
work-around exists that allows the process to continue. If remediation 
of all deficiencies is required before deployment of a system, then 
unnecessary schedule slips and additional costs are incurred. 

Since initiation of the GAO survey, the Army and Air Force have made 
significant strides towards the resolution of the deficiencies noted 
in the report. The Army initiated a series of independent public 
accountant (IPA) assessments and plans to address identified critical 
items for GFEBS before the next assessment targeted for June 2012, 
prior to entering into an operational assessment. The Air Force has
been aggressively resolving the DEAMS deficiencies identified in the 
January 2011 independent assessment and as of December 30, 2011, 156 
of the 245 system changes have been resolved or mitigated with a plan 
to implement the remaining changes by the end of April 2012. The MDA 
will continue to evaluate results of the independent assessments and 
take appropriate corrective actions based on the severity and 
materiality of the system deficiencies. 

Recommendation 2: The GAO recommends that the Secretary of Defense 
direct the Secretary of the Army to ensure that timelines are 
established and monitored for those issues identified by DFAS that are 
impacting their efficient and effective use of GFEBS. 

DoD Response: The DoD concurs with this recommendation. 

The Army has established a collaborative relationship with DFAS 
leadership and functional representatives. To date, DFAS personnel 
have actively participated in all software design, development, test 
and implementation activities which have significantly influenced how 
business processes are implemented to include DFAS operations. 
Additionally, DFAS is a voting member in numerous oversight bodies and 
functional forums for GFEBS. The oversight bodies include: Executive
Steering Committee, Process Owners Group, Council of Colonels, 
Functional Governance Board, and GFEBS-DFAS weekly synchronization 
meetings. 

Recommendation 3: The GAO recommends that the Secretary of Defense 
direct the Secretary of the Air Force to ensure that timelines are 
established and monitored for those issues identified by DFAS that are 
impacting their efficient and effective use of DEAMS. 

DoD Response: DoD concurs with this recommendation. 

The Air Force has established a collaborative relationship with DFAS 
leadership and representatives. To date, DFAS personnel have actively 
participated in all software design, development, test and 
implementation activities which have significantly influenced how 
business processes are implemented to include DFAS operations. 

The Air Force has also implemented controls and oversight bodies to 
ensure all issues are identified and resolved/mitigated in a timely 
manner. Below are some of the actions the Air Force has taken to 
address this recommendation: 

* A collaborative team consists of representatives from the User 
Community, DFAS Enterprise Readiness Office (ERO), DEAMS Functional
Management Office (FMO), SAF/FMP, and the DEAMS Program
Management Office was formed to prioritize system patches identified 
to resolve known system deficiencies. 

- Prioritization efforts focused initially on requirements to improve
fiscal year end processing capabilities. Improvements were recognized 
in the assessment report for FY2011 Fiscal Year End (FYE) issued by 
the Air Force Operational Test and Evaluation Center (AFOTEC). 

- Daily Triage and Prioritization meetings are conducted by the FMO
and focus on user-identified issues submitted via the Help Desk. 

- An Air Force stabilization plan is under development. Plan places a
focus on metrics reporting, accurate general ledger posting of 
transactions required to produce reliable trial balances, and 
reduction of manual workarounds. 

Recommendation 4: The GAO recommends that the Secretary of Defense 
direct the Secretary of the Army to improve training for GFEBS users 
by providing training on actual job processes in a manner that allows 
users to understand how the new processes support their job 
responsibilities and the work they are expected to perform. 

DoD Response: The DoD concurs with this recommendation. 

The GFEBS project has focused on the "roles" necessary to accomplish 
all the tasks associated with entering transactions, approval and 
oversight of these transactions, and subsequently pulling reports from 
the system. GFEBS currently provides training on 159 roles. The GFEBS 
Operations & Support team and the Functional team also conduct 
supplemental training activities for end users and respond to specific 
requests to provide additional self-help training for Army and
GFEBS end users. Additional training includes Refresher Training, 
Functional Forums, and Day in the Life examples of end-to-end 
operations and all of the additional training provides scenarios and 
tools related to the work users perform. 

Recommendation 5: The GAO recommends that the Secretary of Defense 
direct the Secretary of the Air Force to improve training for DEAMS 
users by providing training on actual job processes in a manner that 
allows users to understand how the new processes support their job 
responsibilities and the work they are expected to perform. 

DoD Response: DoD concurs with this recommendation. 

The Air Force has expanded the training capabilities for DEAMS with 
support provided by the DFAS Enterprise Readiness Office (ERO) and the 
DEAMS Functional Management Office (FMO). The Air Force has also 
implemented processes and controls to ensure DEAMS User training 
requirements are developed to address specific job responsibilities.
In fact, a training team was formed at DFAS Limestone, Maine which 
conducted 4 On-the-Job training sessions for the General Accounting; 
and 9 Classroom training sessions, 7 for General Accounting and 2 for 
Procure to Pay. They also developed and deployed 11 Reference Guides 
that incorporated manual workarounds as necessary. In addition, the 
Air Force developed a plan and introduced a team to support 
development and deployment of training guides as requirements and 
functionality changes are identified. 

This Training Team is deployed to perform training classes at 
Limestone on specific DFAS processes. In addition to the Desk-Top 
Training Guides, FMO SMEs developed 32 process-specific desktop 
guides. They converted User training guides and desktop guides to 
Oracle's User Productivity Kit. They also updated the training 
prerequisites and added Project, Task, Expenditure, Organization
(PTEO) training to assist in familiarization of terms and lines of 
accounting used in DEAMS. 

[End of section] 

Appendix II: Six ERPs Not Discussed In This Report: 

Provided below is a brief description of the six critical enterprise 
resource planning (ERP) systems for addressing long-standing 
weaknesses in financial management and resolving weaknesses in other 
high-risk areas such as business systems modernization and supply 
chain management. (See the background section of this report for brief 
descriptions of the four ERPs discussed in this report.) 

* The Logistics Modernization Program (LMP) was initiated in December 
1999 and is intended to provide order fulfillment, demand and supply 
planning, procurement, asset management, material maintenance, and 
financial management capabilities for Army's working capital fund. The 
third and final deployment occurred in October 2010. 

* The Navy Enterprise Resource Planning System (Navy ERP) was 
initiated in July 2003 and is intended to standardize the acquisition, 
financial, program management, maintenance, plant and wholesale 
supply, and workforce management capabilities at Navy commands. 

* The Global Combat Support System-Marine Corps (GCSS-MC) was 
initiated in September 2003 and is intended to provide the deployed 
warfighter with enhanced capabilities in the areas of warehousing, 
distribution, logistical planning, depot maintenance, and improved 
asset visibility. 

* Each of the military departments is in the process of developing its 
own Service Specific Integrated Personnel and Pay System. The military 
departments' integrated personnel and pay systems replace the Defense 
Integrated Military Human Resources System that was initiated in 
February 1998 and intended to provide a joint, integrated, 
standardized personnel and pay system for all military personnel. 

* The Defense Agencies Initiative (DAI) was initiated in January 2007 
and is intended to modernize the defense agencies' financial 
management processes by streamlining financial management capabilities 
and transforming the budget, finance, and accounting operations. When 
DAI is fully implemented, it is expected to have the capability to 
control and account for all appropriated, working capital, and 
revolving funds at the defense agencies implementing the system. 

* The Enterprise Business System (EBS) is the second phase of the 
Defense Logistics Agency's (DLA) Business System Modernization (BSM) 
effort, which was initiated in November 1999 and implemented in July 
2007. BSM focused on DLA's operations in five core business processes: 
order fulfillment, demand and supply planning, procurement, technical/ 
quality assurance, and financial management. In September 2007, the 
name of the program was changed to Enterprise Business System as it 
entered the second phase, and according to the agency, EBS will 
further enhance DLA's supply chain management of nearly 6 million 
hardware and troop support items. 

[End of section] 

Appendix III: GAO Contacts and Staff Acknowledgments: 

GAO Contacts: 

Asif A. Khan, (202) 512-9869 or khana@gao.gov: 

Nabajyoti Barkakati, (202) 512-4499 or barkakatin@gao.gov: 

Staff Acknowledgments: 

In addition to the contacts named above, the following individuals 
made key contributions to this report: J. Christopher Martin, Senior-
Level Technologist; Darby Smith, Assistant Director; Beatrice Alff; 
Jacquelyn Hamilton; Maxine Hattery; Jeffrey Isaacs; Jason Kirwan; 
Katherine Lenane; Julia Matta; and Brian Paige. 

[End of section] 

Footnotes: 

[1] DOD excludes from its business systems those designated as 
national security systems under section 2222(j) of Title 10, United 
States Code. National security systems are information systems where 
the function, operation, or use of which involves intelligence 
activities, cryptologic activities related to national security, 
command and control of military forces, equipment that is an integral 
part of a weapon or weapon system or is critical to the direct 
fulfillment of military or intelligence missions (unless used for 
routine administrative and business applications), or is protected at 
all times by classification procedures in the interest of national 
defense or foreign relations, as authorized by law or executive order. 

[2] GAO, High-Risk Series: An Update, [hyperlink, 
http://www.gao.gov/products/GAO-11-278] (Washington, D.C.: February 
2011). 

[3] An ERP solution is an automated system using commercial off-the-
shelf (COTS) software consisting of multiple, integrated functional 
modules that perform a variety of business-related tasks such as 
general ledger accounting, payroll, and supply chain management. 

[4] These areas were designated as high risk in 1995 and 1990, 
respectively. 

[5] Pub. L. No. 111-84, § 1003(a), (b), 123 Stat. 2190, 2439-40 (Oct. 
28, 2009). 

[6] The Statement of Budgetary Resources is designed to provide 
information on authorized budgeted spending authority and links to the 
Budget of the United States Government (President's Budget), including 
budgetary resources, availability of budgetary resources, and how 
obligated resources have been used. 

[7] GAO, Defense Logistics: Actions Needed to Improve Implementation 
of the Army Logistics Modernization Program, [hyperlink, 
http://www.gao.gov/products/GAO-10-461] (Washington, D.C.: Apr. 30, 
2010); DOD Business Systems Modernization: Important Management 
Controls Being Implemented on Major Navy Program, but Improvements 
Needed in Key Areas, [hyperlink, 
http://www.gao.gov/products/GAO-08-896] (Washington, D.C.: Sept. 8, 
2008); DOD Business Transformation: Air Force's Current Approach 
Increases Risk That Asset Visibility Goals and Transformation 
Priorities Will Not Be Achieved, [hyperlink, 
http://www.gao.gov/products/GAO-08-866] (Washington, D.C.: Aug. 8, 
2008); DOD Business Systems Modernization: Key Marine Corps System 
Acquisition Needs to Be Better Justified, Defined, and Managed, 
[hyperlink, http://www.gao.gov/products/GAO-08-822] (Washington, D.C.: 
July 28, 2008); and DOD Business Transformation: Lack of an Integrated 
Strategy Puts the Army's Asset Visibility System Investments at Risk, 
[hyperlink, http://www.gao.gov/products/GAO-07-860] (Washington, D.C.: 
July 27, 2007). 

[8] GAO, DOD Business Transformation: Improved Management Oversight of 
Business System Modernization Efforts Needed, [hyperlink, 
http://www.gao.gov/products/GAO-11-53] (Washington, D.C.: Oct. 7, 
2010). 

[9] The Deputy Chief Management Officer of the department assists the 
Chief Management Officer (CMO), who is responsible for strategic 
planning, performance management, process improvement, and defense 
business system oversight. The individual military services each have 
a CMO and DCMO, as well. 

[10] [hyperlink, http://www.gao.gov/products/GAO-11-53]. 

[11] The six ERPs are Army--Logistics Modernization Program (LMP); 
Navy--Navy Enterprise Resource Planning System (Navy ERP) and Global 
Combat Support System-Marine Corps (GCSS-MC); Defense--Service 
Specific Integrated Personnel and Pay Systems; Defense Agencies 
Initiative (DAI); and Defense Logistics Agency--Enterprise Business 
System (EBS). 

[12] An agency's general fund accounts are those accounts in the U.S. 
Treasury holding all federal money administered by an agency that is 
not allocated by law to any other fund account. 

[13] According to the GFEBS PMO, once the system is fully operational, 
the Army will assess the feasibility of GFEBS becoming the system of 
record for the Corps of Engineers. 

[14] A life-cycle cost estimate provides an accounting of all 
resources and associated cost elements required to develop, produce, 
deploy, and sustain a particular program. The life-cycle cost estimate 
encompasses all past, present, and future costs for every aspect of 
the program, regardless of funding source. 

[15] Prior to the initiation of the current ERP effort, the Army had 
been developing custom software since May 1997. 

[16] DOD defines total asset visibility as the capability to provide 
timely, accurate information on the location, movement, status or 
condition, and identity of units, personnel, equipment, and supplies 
DOD-wide, and having the capability to act on that information. 

[17] The National Defense Authorization Act for Fiscal Year 2010, Pub. 
L. No. 111-84, div. A, § 841, 123 Stat. 2190, 2418 (Oct. 28, 2009), 
directed that the term "full operational capability" be changed to 
"full deployment." Full deployment means, with respect to a major 
automated information system program, the fielding of an increment of 
the program in accordance with the terms of a full deployment 
decision--the final decision made by the Milestone Decision Authority 
authorizing an increment of the program to deploy software for 
operational use. 

[18] The program received Milestone C approval, which authorizes entry 
of the system into the production and deployment phase or into limited 
deployment in support of operational testing. 

[19] ATEC was established in October 1999. It is responsible for 
planning, integrating, and conducting independent operational testing, 
evaluations, and assessments of acquisition programs to provide 
essential information to decision makers. ATEC develops the strategy, 
test design and evaluations to address operational effectiveness, 
suitability and survivability of systems. 

[20] AFOTEC was established in January 1974 as the Air Force's 
independent test center responsible for testing, under operationally 
realistic conditions, new systems being developed for Air Force and 
multiservice use. Test teams conduct tests at selected sites; collect, 
analyze and evaluate the data; and prepare formal reports. 

[21] GAO, Defense Logistics: Actions Needed to Improve Implementation 
of the Army Logistics Modernization Program, [hyperlink, 
http://www.gao.gov/products/GAO-10-461] (Washington, D.C.: Apr. 30, 
2010); and Army Depot Maintenance: Ineffective Oversight of Depot 
Maintenance Operations and System Implementation Efforts, [hyperlink, 
http://www.gao.gov/products/GAO-05-441] (Washington, D.C.: June 30, 
2005). 

[22] U.S. Army Test and Evaluation Command, Operational Test Agency 
Evaluation Report for the General Fund Enterprise Business System 
(Alexandria, Va.: Dec. 16, 2009). 

[23] The GFEBS Release 1.3 will replace the Standard Army Finance 
Information System and the Standard Operations and Maintenance Army 
Research and Development System. 

[24] The Limited User Test (LUT) addresses a limited number of 
operational issues. The LUT is a user test conducted that does not 
address all of the effectiveness, suitability, and survivability 
issues and is therefore limited in comparison to an initial 
operational test (IOT) that must address all effectiveness, 
suitability, and survivability issues. The LUT may be conducted to 
provide a data source for system assessments in support of the 
Milestone C decision and for reviews conducted before IOT. The LUT may 
be conducted to verify fixes to problems discovered in IOT that must 
be verified prior to fielding. 

[25] U.S. Army Test and Evaluation Command, Operational Test Agency 
(OTA) Follow-on Evaluation Report (OFER) for the General Fund 
Enterprise Business System (GFEBS) (Alexandria, Va.: Nov. 19, 2010). 

[26] The Milestone Decision Authority is the senior DOD official who 
has overall authority to approve entry of an acquisition program into 
the next phase of the acquisition process and is accountable for cost, 
schedule, and performance reporting, including congressional reporting. 

[27] Trouble tickets represent user questions and problems with 
transactions or system performance that have not been resolved. 

[28] Office of Federal Financial Management, Core Financial System 
Requirements (Washington, D.C.: January 2006), states that a core 
financial system must deliver workflow capabilities including 
integrated workflow, workflow process definition, and processing 
exception notices. 

[29] Office of Federal Financial Management, Core Financial System 
Requirements (Washington, D.C.: January 2006), states that a core 
financial system must provide an integrated ad hoc query capability to 
support agency access to and analysis of system-maintained financial 
data. 

[30] Office of Federal Financial Management, Core Financial System 
Requirements (Washington, D.C.: January 2006), states that a core 
financial system must be able to provide interoperability. 

[31] U.S. Army Test and Evaluation Command, Operational Test Agency 
(OTA) Milestone Assessment Report (OMAR) for the Global Combat Support 
System (GCSS-Army) (Aberdeen Proving Ground, Md.: Apr. 13, 2011). 

[32] GCSS-Army Release 1.1 functionality includes maintenance, supply, 
property book, and finance. 

[33] The term "operationally effective" is the overall degree of 
mission accomplishment of a system when used by representative 
personnel in the environment planned or expected for operational 
deployment of the system. The term "operationally suitable" is the 
degree to which a system can be placed satisfactorily in production 
given such factors as availability, compatibility, interoperability, 
reliability, maintainability, and supportability. The term 
"operationally survivable" is the capability of a system to avoid or 
withstand a man-made hostile environment without suffering an abortive 
impairment of its ability to accomplish its designated mission. 

[34] The Standard Financial Information Structure is intended to 
provide a standard financial management data structure and uniformity 
throughout DOD in reporting on the results of operations. 

[35] Pub. L. No. 104-208, div. A, title VIII, § 803, 110 Stat. 3009, 
3009-390 (Sept. 30, 1996). FFMIA requires certain federal agencies, 
including DOD, to implement and maintain financial management systems 
that comply substantially with federal financial management systems 
requirements, applicable federal accounting standards, and the United 
States Government Standard General Ledger at the transaction level. 

[36] DOD Operational Test and Evaluation, Defense Enterprise 
Accounting and Management System, (Washington, D.C.: Jan. 13, 2011). 

[37] Office of Federal Financial Management, Core Financial System 
Requirements (Washington, D.C.: January 2006), states that a core 
financial system must "generate an accounts receivable aging report," 
and DOD Financial Management Regulation 7000.14-R, Volume 4, Chapter 
3, Receivables, sec. 030504 (Nov. 2009), states "Accounts receivable 
must be aged. Aging allows for management of collection actions." 

[38] Office of Federal Financial Management, Core Financial System 
Requirements (Washington, D.C.: January 2006), states that a core 
financial system financial transactions can be originated using 
multiple external feeder applications. These feeder systems and the 
core financial system must interface seamlessly so that data can move 
effectively between them. The core financial system must be able to 
process and validate the data independent of origination. There must 
also be a process for handling erroneous input and correction. 

[39] Assistant Secretary of the Air Force Financial Management and 
Comptroller Testimony before the Subcommittee on Federal Financial 
Management, Government Information, Federal services and International 
Security, Senate Committee on Homeland Security and Government Affairs 
(September 15, 2011). 

[40] Office of Federal Financial Management, Core Financial System 
Requirements (Washington, D.C.: January 2006), states that a core 
financial system financial transaction must deliver an integrated ad 
hoc query capability to support agency access to and analysis of 
system maintained financial data. 

[41] Booz/Allen/Hamilton, Defense Enterprise Accounting and Management 
System (DEAMS) Spiral 2 Post-Deployment End-User Survey Report 
(Fairview Heights, Ill.: Apr. 13, 2011). 

[42] Air Force Operational Test and Evaluation Center, Expeditionary 
Combat Support System (ECSS) Release 1 (R1) Early Operational 
Assessment (EOA) Report (Kirtland Air Force Base, N. Mex.: Apr. 20, 
2010). 

[43] Release 1 provides the initial operational capability to support 
tools, equipment, vehicle, and base level materiel management, into 
three incremental pilot releases (Pilots A, B, and C). 

[44] Air Force Deputy Chief Management Officer's Testimony before the 
Panel on Defense Financial Management and Auditability Reform, 
Committee on Armed Services, House of Representatives, (Oct. 27, 2011). 

[45] GAO, Standards for Internal Control in the Federal Government, 
[hyperlink, http://www.gao.gov/products/GAO/AIMD-00-21.3.1] 
(Washington, D.C.: November 1999). 

[46] Booz/Allen/Hamilton, Defense Enterprise Accounting and Management 
System (DEAMS) Spiral 2 Post-Deployment End-User Survey Report 
(Fairview Heights, Ill.: Apr. 13, 2011). 

[End of section] 

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