DOD Business Systems Modernization: Important Management Controls Being Implemented on Major Navy Program, but Improvements Needed in Key Areas
GAO-08-896
Published: Sep 08, 2008. Publicly Released: Sep 08, 2008.
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Highlights
The Department of Defense (DOD) has long been challenged in implementing key information technology (IT) management controls on its thousands of business system investments. For this and other reasons, GAO has designated DOD's business systems modernization efforts as high-risk. One of the larger business system investments is the Department of the Navy's Enterprise Resource Planning (Navy ERP) program. Initiated in 2003, the program is to standardize the Navy's business processes, such as acquisition and financial management. It is being delivered in increments, the first of which is to cost about $2.4 billion over its useful life and be fully deployed in fiscal year 2013. GAO was asked to determine whether key IT management controls are being implemented on the program. To do this, GAO analyzed, for example, requirements management, economic justification, earned value management, and risk management.
Recommendations
Recommendations for Executive Action
| Agency Affected | Recommendation | Status |
|---|---|---|
| Department of Defense | To strengthen Navy ERP management control and better provide for the program's success, and to improve the reliability of Navy ERP benefit estimates and cost estimates, the Secretary of Defense should direct the Secretary of the Navy, through the appropriate chain of command, to ensure that future Navy ERP estimates include uncertainty analyses of estimated benefits, reflect the risks associated with not having cost data for comparable ERP programs, and are otherwise derived in full accordance with the other key estimating practices, and economic analysis practices discussed in this report. |
The department has taken actions to address the intent of our recommendation. Specifically, the July 2011 economic analysis for the program's full deployment decision applied uncertainty analyses in estimating benefits, including those benefits associated with legacy system retirements. Further, the economic analysis used a risk-adjusted life-cycle cost estimate. In addition, the department reported that its cost estimate used over 5 years of Navy ERP historical data, including detailed cost information for deployment to four system commands, and over 3 years of sustainment cost data.
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| Department of Defense | To strengthen Navy ERP management control and better provide for the program's success, and to enhance Navy ERP's use of earned value management (EVM), the Secretary of Defense should direct the Secretary of the Navy, through the appropriate chain of command, to ensure that (1) an integrated baseline review on the last two releases of the first increment is conducted, (2) compliance against the 32 accepted industry EVM practices is verified, and (3) a plan to have an independent organization perform surveillance of the program's EVM system is developed and implemented. | The department has taken actions to address the first element of the recommendation. Specifically, to its credit, in August 2008, the program office conducted an integrated baseline review of its second release, Release 1.1, which resulted in recommendations to mature and implement EVM processes. (Note: the third release, Release 1.2, is no longer part of the program.) However, it has yet to address the remaining two elements associated with verifying that the program is in compliance with the 32 accepted industry EVM practices and having an independent organization perform surveillance of the program's EVM system. In July 2011, the Department of the Navy's Center for Earned Value...
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| Department of Defense | To strengthen Navy ERP management control and better provide for the program's success, and to increase the quality of the program's integrated master schedule, the Secretary of Defense should direct the Secretary of the Navy, through the appropriate chain of command, to ensure that the schedule (1) includes the logical sequencing of all activities, (2) reflects whether all required resources will be available when needed, (3) defines a critical path that integrates all three releases, (4) allocates reserve for the high-risk activities on the entire program's critical path, and (5) incorporates the results of a schedule risk analysis for all three releases and recalculates program cost and schedule variances to more accurately determine a most likely cost and schedule overrun. | DOD has taken actions that address the intent of our recommendation. First, the program began using metrics to track and logically link most of the program activities. Second, the schedule now accounts for resources at the lowest level of detailed activity, and the department reported that, through mitigation planning, it ensured that resources were allocated to the critical activities. Third, the department has replaced its release development schedules with an integrated master schedule for the remaining deployment and sustainment activities. Fourth, the department reported, in July 2010, that its actions to ensure the schedule allocates reserve for high-risk activities include...
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| Department of Defense | To strengthen Navy ERP management control and better provide for the program's success, and to improve Navy ERP's management of program risks, the Secretary of Defense should direct the Secretary of the Navy, through the appropriate chain of command, to ensure that (1) the plans for mitigating the risks associated with converting data from legacy systems to Navy ERP and positioning the commands for adopting the new business processes embedded in the Navy ERP are re-evaluated in light of the recent experience with Naval Air Systems Command (NAVAIR) and adjusted accordingly, (2) the status and results of these and other mitigation plans' implementation are periodically reported to program oversight and approval authorities, (3) these authorities ensure that those entities responsible for implementing these strategies are held accountable for doing so, and (4) each of the risks discussed in this report are included in the program's inventory of active risks and managed accordingly. | The department has taken actions to address the intent of this recommendation. First, the program office reevaluated its plans for mitigating risks associated with data conversion and adopting new business processes. Second, the program manager and System Command officials report monthly to the Navy Enterprise Resource Planning (ERP) Systems Integration Board (NESIB) on performance, and periodically brief oversight and approval authorities on the implementation of risk mitigation plans. Third, the NESIB requires actionable reporting on performance by the program manager and System Command officials, and the program manager is to report to the Milestone Decision Authority on...
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Cost analysisCost overrunsDefense capabilitiesDefense cost controlEarned value management systemsEnterprise architectureFinancial management systemsInformation systems investmentsInformation technologyInternal controlsIT investment managementNaval procurementPerformance measuresProcurement planningProgram managementRisk managementSchedule slippagesStandardsSystems conversionsBusiness planningBusiness transformationCost estimatesProgram implementation