DOD Business Systems Modernization:

Further Actions Needed to Address Challenges and Improve Accountability

GAO-13-557: Published: May 17, 2013. Publicly Released: May 17, 2013.

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What GAO Found

The Department of Defense (DOD) continues efforts to establish a business enterprise architecture (a modernization blueprint) and transition plan and modernize its business systems and processes, in compliance with key provisions of the Ronald W. Reagan National Defense Authorization Act for Fiscal Year 2005 and amendments. Nonetheless, long-standing challenges remain. The following reflects the status of DOD’s actions to fulfill selected requirements of the act.

  • Develop a business enterprise architecture
    DOD continues to develop content for its business enterprise architecture, such as business rules, and is proceeding with efforts to extend the architecture to its components. However, even though DOD has spent more than 10 years and at least $379 million on its business enterprise architecture, its ability to use the architecture to guide and constrain investments has been limited by, among other things, the lack of a detailed plan.
  • Develop an enterprise transition plan
    The department’s latest version of its transition plan included data on more than 1,200 covered defense business systems; however, important content, such as time-phased milestones and performance measures, is still needed to address the act’s requirements.
  • Establish an investment approval and accountability structure along with an investment review process
    DOD has taken steps to establish a portfolio-based approach to certifying defense business systems, including the establishment of a corporate-level board to oversee the approach and guidance for selecting, controlling, and evaluating the investment portfolio. However, it has yet to fully establish the foundation for its new portfolio-level investment management process or the criteria and procedures for making portfolio-based investment decisions.
  • Certify any business system program costing in excess of $1 million as compliant with the business enterprise architecture and as having undertaken appropriate business process reengineering
    DOD’s portfolio-based investment approach included reviewing and certifying more than 1,200 business systems for fiscal year 2013, totaling about $6.8 billion in funding. However, while DOD continues to perform compliance assertions, it has not ensured the accuracy of business enterprise architecture alignment through validation of individual investments. Further, appropriate business process reengineering assertions were not completed and the associated results and outcomes have yet to be reported.

In addition, the Office of the Deputy Chief Management Officer has yet to determine and follow a strategic approach to managing its human capital needs, thus limiting its ability to, among other things, effectively address the act’s requirements. Collectively, these limitations put the billions of dollars spent annually on approximately 2,100 business system investments that support DOD functions at risk. GAO’s previous recommendations to the department have been aimed at accomplishing these and other activities related to the business systems modernization. However, to date, the department has not implemented 29 of the 63 recommendations that GAO has made in these areas.

According to DOD officials, recent turnover, changes to the act’s requirements significantly expanding the number of systems subject to certification, and the short time frame for implementing the new investment review process contributed to the aforementioned weaknesses. Until DOD implements GAO recommendations and addresses the weaknesses described in this report, it will be challenged in its ability to manage the billions of dollars invested annually in modernizing its business system investments.

Why GAO Did This Study

GAO designated DOD’s multibillion dollar business systems modernization program as high risk in 1995, and, since then, has provided a series of recommendations aimed at strengthening DOD’s institutional approach to modernization and reducing the risk associated with key investments. The act requires the department to report on actions taken relative to its business systems modernization efforts and GAO to assess DOD’s actions to comply with the act. In evaluating DOD’s compliance, GAO analyzed, for example, the latest version of the business enterprise architecture and enterprise transition plan, investment management policies and procedures, and certification actions for its business system investments.

What GAO Recommends

GAO is making recommendations to help ensure that the department’s modernization program is fully compliant with provisions of the act and to improve the department’s architecture, transition plan, and business system investment management and human capital management within the Office of the Deputy Chief Management Officer. DOD concurred with two recommendations, partially concurred with three, and did not concur with three. GAO continues to believe its recommendations are warranted given the department’s need to more effectively manage its billions of dollars of business system investments and minimize or eliminate system overlap and duplication as appropriate.

For more information, contact Valerie C. Melvin at (202) 512-6304 or melvinv@gao.gov.

Recommendations for Executive Action

  1. Status: Open

    Comments: As we reported in July 2015, the department has taken steps to improve the integration of Business Enterprise Architecture information with other existing information. For example, this integration is to allow the department to identify information such as mapping of existing business systems to individual Business Enterprise Architecture system functions. In addition, officials from the Office of the Deputy Chief Management Officer provided a draft plan for business enterprise architecture federation, which includes steps associated with extending the architecture to all defense components. Nevertheless, officials stated that the plan is not yet complete. Moreover, the department has yet to define by when and how it will develop an architecture that extends to all defense components. Officials from the Office of the Deputy Chief Management Officer stated that they are working to federate Army business architecture information into the Business Enterprise Architecture and that this effort will inform future steps; however, that effort remains a work in progress.

    Recommendation: To effectively implement key components of DOD's business systems modernization program, the Secretary of Defense should direct the Deputy Chief Management Officer to define by when and how the department plans to develop an architecture that would extend to all defense components and include, among other things, (a) information about the specific business systems that support business enterprise architecture (BEA) business activities and related system functions; (b) business capabilities for the Hire-to-Retire and Procure-to-Pay business processes; and (c) sufficient information about business activities to allow for more effective identification of potential overlap and duplication.

    Agency Affected: Department of Defense

  2. Status: Open

    Comments: As we reported in July 2015, the Office of the Deputy Chief Management Officer has taken steps to improve information available about its business systems. More recently, the department has established the Integrated Business Framework-Data Alignment Portal as a repository of automated information available about Functional Strategies, Organizational Execution Plans, and the business architecture. According to officials from the Office of the Deputy Chief Management Officer, this portal will be used to document, among other things, the data that are to be included in Functional Strategies and Organizational Execution Plans. Such a collective set of data may be used to generate transition plan information. However, the full implementation of this new approach remains to be seen. Moreover, the department has not provided a plan that defines when and how it will address the various elements called for in our recommendation.

    Recommendation: To effectively implement key components of DOD's business systems modernization program, the Secretary of Defense should direct the Deputy Chief Management Officer to define by when and how the enterprise transition plan will include, among other things, (a) milestones, performance measures, and funding plans for all business systems expected to be part of the target architecture and each system's risks or challenges to integration; (b) time-phased end dates associated with terminating legacy systems in phases; (c) a listing of all other defense business systems (including systems that are considered to be core systems) that will be a part of the target defense business systems computing environment and a strategy for making modifications to those systems that will be needed to ensure that they comply with the defense BEA, including time-phased milestones, performance measures, and financial resource needs; and (d) information about how systems are to be sequenced according to, among other things, dependencies among investments.

    Agency Affected: Department of Defense

  3. Status: Open

    Comments: As we reported in July 2015, DOD established performance measures in its functional strategies that addressed at least some of the five attributes called for in DOD guidance. For example, all of the fiscal year 2015 functional strategies identified examples of quantitative metrics. However, not all functional strategies identified metrics that addressed the other attributes. Specifically, the strategies did not all include performance measures that addressed the following attributes: (1) data that are tracked incrementally over a specified period, (2) a baseline for each performance measure, (3) a target against the baseline, and (4) a rationale for the identified target. In addition, DOD's fiscal year 2016 functional strategies also lacked such attributes.

    Recommendation: To effectively implement key components of DOD's business systems modernization program, the Secretary of Defense should direct the Deputy Chief Management Officer to ensure that the functional strategies include all of the critical elements identified in DOD investment management guidance, including performance measures to determine progress toward achieving the goals that incorporate all of the attributes called for in the department's guidance.

    Agency Affected: Department of Defense

  4. Status: Open

    Comments: As we reported in July 2015, the department's February 2015 investment management guidance identifies four criteria and specifies the associated assessments that are to be conducted when reviewing and evaluating component-level organizational execution plans in order to make a portfolio-based investment decision. The guidance also provides additional details regarding considering return on investment when assessing program costs. In addition, the guidance states that organizational execution plans will be assessed from various perspectives, including progress toward the target environment, business value, cost, and risk. Nevertheless, the guidance does not specify a process for conducting an assessment or call for the use of actual versus expected performance data and predetermined thresholds. In addition, the guidance does not call for documents provided to the Defense Business Council to include critical information for conducting assessments, such as information about system scalability to support additional users or new features in the future and cost in relationship to return on investment.

    Recommendation: To effectively implement key components of DOD's business systems modernization program, the Secretary of Defense should direct the Deputy Chief Management Officer to select and control its mix of investments in a manner that best supports mission needs by (a) documenting a process for evaluating portfolio performance that includes the use of actual versus expected performance data and predetermined thresholds; (b) ensuring that portfolio assessments are conducted in key areas identified in our IT investment management framework: benefits attained; current schedule; accuracy of project reporting; and risks that have been mitigated, eliminated, or accepted to date; and (c) ensuring that the documents provided to the Defense Business Council as part of the investment management process include critical information for conducting all assessments.

    Agency Affected: Department of Defense

  5. Status: Open

    Comments: As we reported in July 2015, the 2015 Congressional Report on Defense Business Operations included some information consistent with our recommendation. For example, it contained information about weaknesses for systems that were certified with qualifications. In particular, the report stated that the department conditionally approved 29 military department and 30 defense agency requests pending Defense Business Council approval of their problem statements. The report also cited the specific systems that were conditionally approved pending approval of their problem statements. Nevertheless, it did not disclose the results of business enterprise architecture validations that were to occur as part of the certification and approval process for fiscal year 2015. In addition, according to the April 2014 guidance for investment certification and approval, upon receipt of an organization's Organizational Execution Plan, the defense business council chair was to identify generally no more than three defense business systems to be assessed from a component's portfolio. Once notified, the pre-certification authority was to have 5 working days to provide the assessment documentation used to assert business process reengineering or business enterprise architecture compliance. However, the guidance does not specify time frames or milestones for completing these validations. The Office of the Deputy Chief Management Officer also provided data from the system that maintains certification and approval information. These data showed that only two systems were certified and approved for fiscal year 2014 without a business process reengineering assertion. The office also provided additional information about these systems explaining the rationale for not conducting business process reengineering.

    Recommendation: To effectively implement key components of DOD's business systems modernization program, the Secretary of Defense should direct the Deputy Chief Management Officer to implement and use the BEA and business process reengineering compliance assessments more effectively to support organizational transformation efforts by (a) disclosing relevant information about known weaknesses, such as BEA and business process reengineering compliance weaknesses for systems that were not certified or certified with qualifications in annual reports to Congress; (b) establishing milestones by which selected validations of BEA compliance assertions are to be completed; and (c) ensuring that appropriate business process reengineering assertions have been completed on all investments submitted for the fiscal year 2014 certification reviews prior to the certification of funds.

    Agency Affected: Department of Defense

  6. Status: Open

    Comments: As we reported in July 2015, the Office of the Deputy Chief Management Officer has taken some steps to address this recommendation. For example, it has developed a draft resource allocation plan, which identifies staffing profiles for each of the office's directorates and their respective divisions. These profiles cite needed staff competencies and qualifications. However, the department has not developed a skills inventory, gap analysis, or plan to address identified gaps as part of a strategic approach to human capital planning.

    Recommendation: To effectively implement key components of DOD's business systems modernization program, the Secretary of Defense should direct the Deputy Chief Management Officer to develop a skills inventory, needs assessment, gap analysis, and plan to address identified gaps as part of a strategic approach to human capital planning for the Office of the Deputy Chief Management Officer.

    Agency Affected: Department of Defense

  7. Status: Open

    Comments: As we reported in July 2015, DOD has taken some steps to address this recommendation. For example, the department demonstrated that it had completed documentation, such as root cause analyses, assessments of existing interfaces for reuse opportunities, and performance metrics related to the reengineering efforts, and that the documentation was provided as part of the certification and approval process for the Air Force Integrated Personnel and Pay System investment. However, it did not demonstrate that such documentation was fully completed and provided as part of the certification and approval process for other systems. For example, DOD only demonstrated that partial documentation had been completed and provided for the Integrated Electronic Health Record investment.

    Recommendation: The Secretary of Defense should direct the appropriate authority to ensure that complete documentation, such as root cause analyses, assessments of existing interfaces for reuse opportunities, and performance metrics related to the reengineering efforts, is provided as part of the fiscal year 2014 certification and approval process for the Integrated Personnel and Pay System - Army (IPPS-A), Integrated Personnel and Pay System - Navy (IPPS-N), Air Force Integrated Personnel and Pay System (AF-IPPS), and Integrated Electronic Health Record (iEHR) investments.

    Agency Affected: Department of Defense

  8. Status: Closed - Implemented

    Comments: As we reported in July 2015, officials from the Office of the Deputy Chief Management Officer demonstrated that the department has addressed the intent of this recommendation. Specifically, while the department did not concur with the recommendation and did not make the recommended determination, it has taken mitigating steps to help ensure compliance with business process reengineering requirements. For example, officials stated that, as part of the fiscal year 2013 certification and approval process, conditions were imposed by the investment review board requiring all components to submit a plan on how core defense business systems would become compliant with the act's business process reengineering requirement. These officials also provided documentation showing that the department tracked these conditions. In addition, the department has reported much higher levels of compliance with the act's business process reengineering requirements in subsequent annual review cycles. For example, in May 2013, we reported that, according to DOD, appropriate business process reengineering had been undertaken on only about 41 percent of the approximately 1,200 systems for the fiscal year 2013 certification reviews. In contrast, officials from the Office of the Deputy Chief Management Officer stated that only 2 systems were certified and approved during the fiscal year 2014 certification and approval cycle and 6 systems were certified and approved during the fiscal year 2015 certification and approval cycle that did not have complete business process reengineering assertions. Moreover, these officials provided justifications for why each of these systems did not have complete business process reengineering assertions.

    Recommendation: The Secretary of Defense should direct the appropriate authority to determine whether funds were properly obligated under 10 U.S.C. 2222(a)-(b) for systems for which appropriate business process reengineering assertions were not completed.

    Agency Affected: Department of Defense

 

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