DOD Business Transformation: Air Force's Current Approach
Increases Risk That Asset Visibility Goals and Transformation
Priorities Will Not Be Achieved (08-AUG-08, GAO-08-866).
The Department of Defense (DOD) established a goal to achieve
total asset visibility over 30 years ago. This initiative aims to
provide timely, accurate information on the location, movement,
status, and identity of equipment and supplies. To date, the
effort has been unsuccessful. GAO was requested to determine (1)
the implementation status of the Air Force's business system
initiatives to achieve total asset visibility, and whether the
Air Force has implemented related best practices, and (2) whether
the Air Force's business transformation efforts to achieve total
asset visibility are aligned within the Air Force and with DOD's
broader business transformation priorities. GAO interviewed Air
Force officials and reviewed Air Force documentation to obtain an
understanding of the Air Force's system initiatives and strategy
for achieving total asset visibility and to identify areas for
improvement.
-------------------------Indexing Terms-------------------------
REPORTNUM: GAO-08-866
ACCNO: A83401
TITLE: DOD Business Transformation: Air Force's Current Approach
Increases Risk That Asset Visibility Goals and Transformation
Priorities Will Not Be Achieved
DATE: 08/08/2008
SUBJECT: Accountability
Air defense systems
Assets
Best practices
Cost analysis
Enterprise architecture
Equipment management
Federal agency reorganization
Financial disclosure
Financial management
Financial management systems
Funds management
Information management
Logistics
Management information systems
Military forces
Program management
Risk management
Strategic planning
Systems evaluation
Systems integration
Systems management
Systems testing
Business planning
Business transformation
Government and business
Air Force Defense Enterprise Accounting
and Management System
Air Force Expeditionary Combat Support
System
GAO High Risk Series
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GAO-08-866
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Report to the Subcommittee on Readiness and Management Support,
Committee on Armed Services, U.S. Senate:
United States Government Accountability Office:
GAO:
August 2008:
DOD Business Transformation:
Air Force's Current Approach Increases Risk That Asset Visibility Goals
and Transformation Priorities Will Not Be Achieved:
GAO-08-866:
GAO Highlights:
Highlights of GAO-08-866, a report to the Subcommittee on Readiness and
Management Support, Committee on Armed Services, U.S. Senate.
Why GAO Did This Study:
The Department of Defense (DOD) established a goal to achieve total
asset visibility over 30 years ago. This initiative aims to provide
timely, accurate information on the location, movement, status, and
identity of equipment and supplies. To date, the effort has been
unsuccessful. GAO was requested to determine (1) the implementation
status of the Air Force�s business system initiatives to achieve total
asset visibility, and whether the Air Force has implemented related
best practices, and (2) whether the Air Force�s business transformation
efforts to achieve total asset visibility are aligned within the Air
Force and with DOD�s broader business transformation priorities. GAO
interviewed Air Force officials and reviewed Air Force documentation to
obtain an understanding of the Air Force's system initiatives and
strategy for achieving total asset visibility and to identify areas for
improvement.
What GAO Found:
The Air Force has identified the Expeditionary Combat Support System
(ECSS) and the Defense Enterprise Accounting and Management System
(DEAMS) as key technology enablers of the Air Force's efforts to
transform its logistics and financial management operations and achieve
total asset visibility�a key DOD priority.
* ECSS is expected to provide a single, integrated logistics system,
including transportation, supply, maintenance and repair, and other key
business functions directly related to logistics such as engineering
and acquisition. Additionally, ECSS will perform financial management
and accounting for the Air Force working capital fund operations. ECSS
is expected to be fully operational in fiscal year 2013, and replace
about 250 legacy logistics and procurement systems.
* DEAMS is expected to provide the entire spectrum of core financial
management capabilities, including collections, commitments/
obligations, cost accounting, general ledger, funds control, receipts
and acceptance, accounts payable and disbursement, billing, and
financial reporting for the Air Force general fund operations. DEAMS is
expected to replace seven legacy systems and be fully operational in
fiscal year 2014.
GAO identified several areas in which the Air Force had not fully
implemented best practices related to risk management and system
testing. These findings increase the risk that these business system
initiatives will not meet their stated functionality, cost, and
milestone goals, thereby limiting the Air Force�s efforts to achieve
total asset visibility and other DOD business transformation
priorities.
Further, key Air Force business transformation strategic plans and
documents were not aligned within the Air Force nor with DOD�s broader
business transformation priorities. While each individual Air Force
plan was intended to support the Air Force�s business transformation
efforts, the plans did not reflect a coordinated effort toward
achieving a stated Air Force or DOD goal. For example, neither the Air
Force's Military Equipment Accountability Improvement Plan for
supporting DOD�s military equipment valuation effort, nor the Air Force
Logistics Enterprise Architecture Concept of Operations, its key
strategic transformation plan for logistics, identified a shared
relationship, including metrics, in supporting Air Force and DOD
logistics and financial management transformation goals. As a result,
neither the Air Force nor DOD will have the performance data needed to
oversee efforts intended to improve the Air Force�s ability to locate,
manage, and account for assets throughout their life cycle.
What GAO Recommends:
GAO makes three recommendations to DOD to improve the Air Force's risk
management process and system testing related to ECSS and DEAMS, and
integration of transformation plans for achieving business
transformation and goals, including total asset visibility. DOD
concurred with the recommendations and identified specific actions that
it will take to implement them.
To view the full product, including the scope and methodology, click on
[hyperlink, http://www.gao.gov/cgi-bin/getrpt?GAO-08-866]. For more
information, contact Paula M. Rascona at (202) 512-9095 or
[email protected].
[End of section]
Contents:
Letter:
Results in Brief:
Background:
Improvements Are Needed in the Air Force's Approach for Acquiring and
Implementing ECSS and DEAMS:
Better Integration Is Needed to Ensure That the Air Force's Business
Transformation Plans Support DOD Business Transformation Priorities and
Total Asset Visibility:
Conclusion:
Recommendations for Executive Action:
Agency Comments and Our Evaluation:
Appendix I: Scope and Methodology:
Appendix II: Comments from the Department of Defense:
Appendix III: GAO Contacts and Staff Acknowledgments:
Figures:
Figure 1: ECSS Timeline and Funding:
Figure 2: DEAMS Timeline and Funding:
Abbreviations:
DOD: Department of Defense:
DEAMS: Defense Enterprise Accounting and Management System:
ECSS: Expeditionary Combat Support System:
FIAR: Financial Improvement and Audit Readiness:
SFIS: Standard Financial Information Structure:
[End of section]
United States Government Accountability Office:
Washington, DC 20548:
August 8, 2008:
The Honorable Daniel K. Akaka:
Chairman:
The Honorable John Thune:
Ranking Member:
Subcommittee on Readiness and Management Support:
Committee on Armed Services:
United States Senate:
Over 30 years ago, the Department of Defense (DOD) established a goal
to achieve total asset visibility in recognition of its importance to
successful operations. To date, DOD's efforts have been unsuccessful.
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. If the information
contained in the asset accountability systems is not accurate,
complete, and timely, DOD's day-to-day operations could be adversely
affected by, for example, investing in inventory that is not needed to
meet current needs.
Asset visibility is one of three focus areas identified by the
department as critical to effective and efficient supply chain
management operations.[Footnote 1] The other two focus areas are
inventory management and distribution. Collectively, these three areas
are integral to department logistical operations[Footnote 2] and
improvements are needed in each to address the problems associated with
DOD's supply chain management, which has been on our high-risk list
since 1990.[Footnote 3] Of the 27 areas on our high-risk list,[Footnote
4] DOD has 8 high-risk areas of its own,[Footnote 5] and shares
responsibility for 7 governmentwide high-risk areas.[Footnote 6] The
nature and severity of DOD's deficiencies in these high-risk areas
impedes the ability of DOD managers to receive the full range of
information needed to effectively manage day-to-day operations. DOD's
efforts to achieve total asset visibility should assist the department
in addressing several of its high-risk areas, including supply-chain
management, business system modernizations, and financial management by
providing DOD management and the Congress with more accurate and
reliable information for decision making purposes.
Similar to the department as a whole, the Air Force continues to
struggle to achieve and maintain efficient and effective management
control over the hundreds of billions of dollars in inventory and other
assets with which it is entrusted. For example, in 1996, we reported
that information systems do not always provide Air Force managers and
employees with accurate, real-time data on the cost, amount, location,
condition, and usage of inventory--elements that are required to
successfully plan, control, and measure inventory management.[Footnote
7] Furthermore, in April 2007 we reported that more than half of the
Air Force's spare parts inventory worth an average of $31.4 billion was
not needed.[Footnote 8] Our report further noted that the Air Force has
continued to purchase unneeded inventory because its policies do not
provide incentives to manage the amount of inventory on order that may
not be needed to support its logistics operations. The Air Force has
acknowledged that its logistics operations have largely been
reactionary, rather than anticipatory, because stovepiped business
processes and systems impede visibility. Importantly, Air Force
logisticians have historically met the challenge of fulfilling their
mission within the constraints of archaic business processes and
nonintegrated systems, through increased personnel and financial
resources.
The Air Force's vision for transforming its logistics operations to
meet both the current and future threat environment is broad in scope
and touches on all logistics functions, including transportation,
maintenance, procurement, inventory management, and product life-cycle
management, and crosses all commodity lines (such as fuel, munitions,
aircraft, and vehicles) and organizational boundaries.[Footnote 9] The
Air Force has determined that logistics must operate with an enterprise
(Air Force-wide) view, across integrated processes, while optimizing
resources and leveraging integrated technology "to deliver the right
support, to the right place, at the right time, every time."[Footnote
10] The Air Force has a number of ongoing technology, policy,
organization, and process engineering initiatives to enhance asset
visibility. Among these are asset marking and tracking initiatives,
which are intended to enable more accurate and timely recording of
asset information such as location, condition, and status through the
use of unique item identification and radio frequency identification of
individual or groups of assets. In addition, the Air Force has
undertaken two business system initiatives, the Expeditionary Combat
Support System (ECSS) and the Defense Enterprise Accounting and
Management System (DEAMS) that it has identified as key to its efforts
to transform its logistics and financial management operations, and
achieve total asset visibility. ECSS will primarily be responsible for
performing the logistical functions for both the Air Force's
general[Footnote 11] and working capital[Footnote 12] funds and the
financial management functions for the Air Force's working capital
funds. DEAMS will perform the financial management functions for the
Air Force's general funds. Although ECSS and DEAMS are important
technology enablers, their ability to provide the information intended
by Air Force to support total asset visibility, including asset
accountability and decision making support, is largely dependent upon
the Air Force's success in integrating, managing, and completing other
transformation initiatives outlined in a variety of Air Force strategic
plans and documents.
This report provides information in support of your continuing
oversight of DOD's progress towards resolving the department's long-
standing problems in achieving total asset visibility. In July 2007, we
reported on the Army's efforts to achieve total asset visibility.
[Footnote 13] Our objectives were to determine (1) the implementation
status of the Air Force's current business system initiatives to
achieve total asset visibility, and whether the Air Force has
implemented related best practices, and (2) whether the Air Force's
business transformation efforts to achieve total asset visibility are
aligned within the Air Force and with DOD's broader business
transformation priorities.[Footnote 14]
To address the first objective, we analyzed documentation and met with
Air Force and DOD Business Transformation Agency officials to identify
and determine the implementation status of key Air Force business
system initiatives intended to support the Air Force's goal of
achieving total asset visibility. Further, we interviewed and obtained
briefings from Air Force logistics and financial management officials
and others on ECSS and DEAMS program management and oversight.
Specifically, we obtained and reviewed documentation related to each
system initiative, including costs, implementation schedules, and risk
management programs, to assess their acquisition status and to
determine whether improvements were needed in the Air Force's approach
for acquiring and implementing these systems. We did not review ECSS
and DEAMS compliance with the Air Force's enterprise architecture
because our related work focused on ascertaining the status of the
military services' efforts to develop and use an enterprise
architecture. The results of this work are discussed in our May 2008
report, which noted that while the Air Force's efforts to develop an
enterprise architecture were ahead of the Army's and the Navy's
efforts, the Air Force's architecture was not sufficiently developed to
guide and constrain its business systems modernization investments.
[Footnote 15] To address the second objective, we obtained and analyzed
key Air Force business transformation strategic plans to assess
integration and utilization of metrics in supporting and managing the
Air Force's efforts to transform its business operations and achieve
total asset visibility. Additionally, we compared key Air Force
business transformation plans with DOD's Enterprise Transition Plan to
determine if DOD's business enterprise transformation priorities were
incorporated into the Air Force's plans.
We conducted this performance audit from July 2007 through August 2008
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 objectives. Details on our scope and
methodology are included in appendix I. We requested comments on a
draft of this report from the Secretary of Defense or his designee. We
received written comments from the Deputy Under Secretary of Defense
(Business Transformation), which are reprinted in appendix II.
Results in Brief:
The Air Force has identified ECSS and DEAMS as key technology enablers
to the Air Force's efforts to transform its logistics and financial
management operations and achieve total asset visibility. According to
the Air Force, ECSS is expected to provide a single, integrated
logistics system, including transportation, supply, maintenance and
repair, and other key business functions, such as engineering and
acquisition, directly related to logistics. Additionally, ECSS is
expected to perform financial management and accounting functions for
working capital fund operations.[Footnote 16] As of December 2007, the
Air Force reported that it had obligated a total of $250 million for
ECSS. Due to delays as a result of two contract award protests, the Air
Force expects ECSS to reach full operational capability in fiscal year
2013. When fully implemented, ECSS is expected to replace about 250
legacy logistics and procurement (acquisition) systems and support over
250,000 users Air Force-wide. DEAMS is expected to provide financial
management and accounting functions for Air Force general fund
operations. As of December 2007, the Air Force reported that it had
obligated a total of $119 million for DEAMS. Cost information was not
specifically identified by DOD as an element for achieving total asset
visibility. However, there is a growing recognition within the
department, including the Air Force, of the importance of cost
information to effectively and efficiently manage business operations,
including logistics management. Lack of integration between business
systems, including logistics and financial management, has adversely
affected the ability of DOD and the Air Force to ensure basic
accountability, anticipate future costs and claims on the budget,
measure performance, maintain funds control, and prevent fraud. If the
information contained in asset and financial accountability systems is
not accurate, complete, and timely, the Air Force's day-to-day
operations could be adversely affected by, for example, investing in
inventory that is not needed to meet current needs or for which the Air
Force had not allocated sufficient resources or authority to purchase.
Both physical and financial accountability are essential to achieving
total asset visibility and DOD's objective of providing information to
support decision making. When fully implemented, DEAMS is expected to
replace seven legacy systems and reach full operational capability by
fiscal year 2014.
The Air Force has not fully managed ECSS and DEAMS programs in
accordance with key DOD guidance and best practices for systems
acquisition. More specifically, at the time of our review, neither the
ECSS nor DEAMS program management office had used a comprehensive and
fully integrated risk management process that provides the program
management office clear visibility or linkages to risk management
activities occurring within various subordinate program groups or
activities. Visibility of activities occurring within the program is
needed to help program management and other senior leaders ensure
appropriate actions are taken to identify, analyze, and mitigate risks
throughout the program, rather than within a single group or activity.
In regard to system testing, the DEAMS program management office's
field testing of DEAMS did not initially consider the impact that
different computer desktop configurations would have on their ability
to successfully deploy DEAMS at its first deployment location--Scott
Air Force Base, Illinois. As a result, the DEAMS program management
office had to delay further implementation of DEAMS at Scott Air Force
Base because it unexpectedly encountered different computer desktop
configurations that required a series of "system patches" to address
software and connectivity issues before implementation could be
completed. The delay at Scott Air Force Base underscores how the
importance of obtaining a comprehensive understanding of a location's
current operating environment is essential to the successful
implementation of a system. Although we found that neither DEAMS's nor
ECSS's risk management programs had identified the possibility of
encountering different computer desktop configurations in use at
deployment locations as a potential program risk for mitigation, they
both acknowledged that future deployment of either system could be
adversely affected by a lack of, or incomplete understanding of, the
operating environment currently in use at a deployment location.
Officials in both the DEAMS and ECSS program management offices stated
that in the future, they intend to test computer desktop configurations
at each location prior to deployment.
The Air Force's transformation efforts do not reflect a coordinated,
concerted effort or strategy for transforming its business operations
and achieving stated Air Force or DOD enterprise goals, such as total
asset visibility. For example, the Air Force Military Equipment
Accountability Improvement Plan for supporting the department's
military equipment valuation effort was not linked to the Air Force
Logistics Enterprise Architecture Concept of Operations--the key
business transformation plan for Air Force logistics.[Footnote 17]
Additionally, the various Air Force plans generally did not include any
metrics for measuring transformation progress. For instance, the Air
Force Logistics Enterprise Architecture Concept of Operations
identified two goals--increase equipment availability by 20 percent no
later than fiscal year 2011 and reduce annual operating and support
costs by 10 percent no later than fiscal year 2011. While these are
notable goals, the plan did not identify any metrics for assessing
incremental progress made in achieving these two goals or DOD business
transformation priorities. Additionally, the Air Force has not
established metrics to measure, monitor, and reliably report
incremental progress in improving its ability to locate, manage, and
account for assets throughout their life cycle.
We are making three recommendations to the Secretary of Defense to
improve the department's efforts to achieve total asset visibility,
further enhance its efforts to improve control and accountability over
business system investments, and achieve its business transformation
priorities. Specifically, we recommend that the Secretary of Defense
(1) direct the Air Force to provide risk management visibility at the
ECSS and DEAMS program level to facilitate oversight and monitoring of
risk management activities occurring throughout the programs; (2)
direct the Air Force to direct ECSS and DEAMS program management
offices to identify and mitigate key ECSS and DEAMS implementation
risks before deployment, such as testing ECSS and DEAMS on relevant
computer desktop configurations prior to deployment at a given
location; and (3) direct the Air Force transformation activities to
align their business transformation plans, including efforts aimed at
achieving total asset visibility, with priorities included in DOD's
Enterprise Transition Plan.
We received written comments on a draft of this report from the Deputy
Under Secretary of Defense (Business Transformation), which are
reprinted in appendix II. DOD concurred with our recommendations and
identified specific actions it plans to take to implement these
recommendations.
Background:
In April 2003, the Secretary of Defense charged the military services
with supporting six transformational objectives.[Footnote 18] These
objectives not only included a reiteration of the department's goal to
fully implement total asset visibility, but also clearly reflected a
growing recognition of the importance of cost information in fulfilling
the logistics mission. Further, when DOD released its first Enterprise
Transition Plan in 2005, these objectives, including the importance of
financial information visibility for use in decision making, were
embodied into the department's six strategic business enterprise
transformation priorities.[Footnote 19] Both DOD and the Air Force have
initiatives under way to improve their ability to link financial
resources to associated assets, programs, and activities or missions.
For example, both the department and the Air Force have efforts
underway, such as the Unique Item Identification and Radio Frequency
Identification initiatives and the Standard Financial Information
Structure (SFIS) initiative, to improve their ability to identify and
track assets, including costs, throughout their life cycle.[Footnote
20]
The Air Force, as a DOD component, is confronted with similar
management challenges that must be effectively resolved if it is to
improve its business operations and in turn provide better support to
the warfighter. The following highlights some of the asset management
challenges the Air Force is attempting to resolve to achieve total
asset visibility.
Excess inventory. We have previously reported that more than half of
the Air Force's secondary inventory (spare parts), worth an average of
$31.4 billion, was not needed to support required on-hand and on-order
inventory levels from fiscal years 2002 through 2005.[Footnote 21] The
Air Force has continued to purchase unneeded on-order inventory because
its policies do not provide incentives to reduce the amount of
inventory on order that is not needed to support requirements.
Financial management and reporting. The DOD Inspector General reported
in November 2007, and the Air Force acknowledged, that the Air Force
continues to have significant internal control deficiencies that impede
the ability of its general and working capital funds to produce
accurate and reliable information on the results of their operations.
Deficiencies were found in the following areas: (1) financial
management systems, (2) government furnished and contractor-acquired
materiel (general fund), (3) environmental liabilities, (4) operating
materials and supplies, (5) accounting entries, (6) property, plant,
and equipment, and (7) in-transit inventory (working capital fund).
[Footnote 22]
Deployed assets. In January 2007, the Air Force Audit Agency reported
that the Air Force had lost control and accountability over 5,800
assets, valued at approximately $108 million, in part because its
logistical systems did not provide Air Force personnel with the
capability to effectively manage, track, and monitor deployed assets.
[Footnote 23] For example, the system incorrectly reported that assets
were deployed to closed bases. Additionally, the systems did not
provide reliable asset information, such as asset quantities and
location. As a result of these weaknesses, Air Force management did not
have total asset visibility and was not able to determine if the right
assets were at the right location to meet mission requirements.
Government furnished material. In January 2007, the Air Force Audit
Agency also reported that the Air Force did not effectively manage
government furnished material.[Footnote 24] More specifically, the Air
Force Audit Agency reported that the Air Force logistics personnel
inappropriately provided government furnished material to contractors
that were not authorized by contract documentation to receive this
material. This problem could adversely affect mission support if the
Air Force loses assets that should be in inventory. In addition, poor
accountability controls increase the Air Force's susceptibility to
fraud and misuse of government resources.
Key DOD and Air Force Business Transformation Plans:
Successful transformation of DOD's business operations, including the
achievement of total asset visibility, will require a multifaceted,
cross-organizational approach that addresses the contribution and
alignment of key elements, including strategic plans, people,
processes, and technology. The following highlights key DOD and Air
Force transformation plans that are aimed at enhancing business
operations and supporting the department's total asset visibility goal.
Enterprise Transition Plan. DOD guidance states that the Enterprise
Transition Plan is intended to provide a road map for achieving DOD's
business transformation through technology, process, and governance
improvements. According to DOD, the Enterprise Transition Plan is
intended to summarize all levels of transition planning information
(milestones, metrics, resource needs, and system migrations) as an
integrated product for communicating and monitoring progress--
resulting in a consistent framework for setting priorities and
evaluating plans, programs, and investments. DOD updates the Enterprise
Transition Plan twice a year, once in March as part of DOD's annual
report to Congress and again in September. Although the Enterprise
Transition Plan provides an overall strategy and corresponding metrics
for achieving each of the department's six business enterprise
priorities, DOD officials have acknowledged improvements are needed in
the plan to provide a clearer assessment of the department's
transformation effort. DOD officials have also acknowledged the need
for an integrated planning process and results-oriented measures to
assess overall business transformation.
Financial Improvement and Audit Readiness (FIAR) Plan. A major
component of DOD's business transformation effort is the Defense FIAR
Plan. The FIAR Plan is updated twice a year and is intended to provide
DOD components with a framework (audit readiness strategy) for
resolving problems affecting the accuracy, reliability, and timeliness
of financial information and obtaining clean financial statement audit
opinions. The FIAR Plan's audit readiness strategy consists of six
phases: (1) discovery and correction, (2) segment assertion, (3) audit
readiness validation, (4) audit readiness sustainment, (5) financial
statement assertion, and (6) financial statement audit. Each military
service is required to develop subordinate plans that are to support
the FIAR Plan in achieving its objectives.
Air Force Financial Management Strategic Plan for Fiscal Years 2007-
2012. This plan identifies seven financial management goals for
transforming the Air Force's financial management operations. Those
goals are (1) foster mutual respect and integrity, (2) reduce Air Force
cost structure, (3) expand partnership in strategic Air Force
decisions, (4) recruit, prepare, and retain a well-trained and highly
educated professional team for today and tomorrow, (5) provide
customers with world-class financial services, (6) implement open,
transparent business practices, and achieve a clean financial statement
audit, and (7) continuously streamline financial management processes
and increase capabilities. In addition, the plan also identifies
specific objectives for each goal, some of the actions that will be
taken to accomplish the objectives, and 13 financial management
metrics.
Air Force Logistics Enterprise Concept of Operations. This document
presents a collection of high-level requirements for transforming Air
Force logistics. It establishes the process framework, standards, and
guidelines to define the environment in which future logistics systems
can be identified, acquired, or built. Further, it aims to serve as a
catalyst for developing doctrine, policies, and organizational
structure consistent with the vision outlined in the Air Force
Expeditionary Logistics for the 21st Century Campaign Plan, needed to
enable logistics transformation.
Air Force Information Reliability and Integration Action Plan/
Financial Improvement Plan. This plan describes actions planned to
identify and address impediments to the Air Force's ability to achieve
clean financial statement audit opinions. The Air Force Information
Reliability and Integration Action Plan, commonly referred to as the
Air Force Financial Improvement Plan, includes specific tasks,
completion dates, start dates, owner/lead components, and points of
contact for addressing weaknesses adversely affecting the reliability
of individual Air Force financial statement line items and is intended
to support the department's FIAR Plan.
Air Force Military Equipment Accountability Improvement Plan. This plan
is intended to define how the Air Force will implement measures to
properly collect, account for, track, and report military equipment
values. This plan is intended to identify the actions required to
resolve any existing problems or impediments to achieving auditable
values for military equipment items. The Air Force Military Equipment
Accountability Improvement Plan is intended to be incorporated into the
Air Force's Financial Improvement Plan and DOD's FIAR Plan.
Improvements Are Needed in the Air Force's Approach for Acquiring and
Implementing ECSS and DEAMS:
ECSS and DEAMS are two business systems initiatives identified by the
Air Force that are intended to help it address asset accountability
weaknesses and achieve its total asset visibility goal. While these
programs are intended to provide the Air Force with the full spectrum
of logistics and financial management capabilities, our review
identified areas where the Air Force had not fully implemented key best
practices related to risk management for ECSS and DEAMS and system
testing for DEAMS.
ECSS and DEAMS Are Intended to Help the Air Force Achieve Total Asset
Visibility:
ECSS and DEAMS are intended to support the Air Force's efforts to
transform its business operations and provide accurate, reliable, and
timely information to support decision making and management of the Air
Force's business operations, including total asset visibility. The ECSS
program was initiated in January 2004 and is expected to provide a
single, integrated logistics system, including transportation, supply,
maintenance and repair, and other key business functions directly
related to logistics, such as engineering and acquisition, at a total
life-cycle cost over $3 billion. Initially, the Air Force anticipated
achieving full operational capability of ECSS during fiscal year 2012.
Due to delays as a result of two contract award protests, the Air Force
now expects ECSS to reach full operational capability in fiscal year
2013. When fully implemented, ECSS is expected to replace about 250
legacy logistics and procurement (acquisition) systems and support over
250,000 users Air Force-wide. ECSS is considered a key element in the
Air Force's efforts to reengineer and transform its supply chain
operations from a reactive posture to a more predictive posture that
facilitates greater effectiveness and efficiency in the Air Force's
logistics operations that support the warfighter.
ECSS is intended to interface with DEAMS to provide the Air Force with
improved financial visibility over Air Force assets. Additionally,
implementation of ECSS is expected to address long-standing weaknesses
in supply chain management, a DOD issue that has been on our high-risk
list since 1990. In this regard, the redesign of the Air Force's supply
chain operations, in part through implementation of ECSS, is expected
to address four broad Air Force logistical issues: (1) lack of an
enterprise view, (2) fragmented planning processes, (3) lack of process
integration, and (4) no enterprise-level systems strategy. Figure 1
provides information related to ECSS's timeline for implementation and
funding.
Figure 1: ECSS Timeline and Funding:
[See PDF for image]
This figure is a combination line graph and timeline depicting the
following data:
January 2004: Project initiation;
December 2007: Amount obligated: $250 million;
April 2010: Initial operational capability;
June, 2013: Full operational capability;
2023: Life cycle cost estimate: $3 billion.
Source: GAO based on information provided by Air Force.
[End of figure]
Currently, the program is undergoing a process referred to as
"blueprinting" to identify needed interfaces and data requirements.
After blueprinting is completed in fiscal year 2009, the Air Force will
begin system testing and initial implementation of ECSS. As of December
2007, the Air Force reported that approximately $250 million had been
obligated in total for the ECSS effort.
As shown in figure 1, the Air Force estimates a total life-cycle cost
of $3 billion; however, the total life-cycle cost of ECSS is likely to
increase due to an Air Force decision to add functionality. In January
2008, Air Force ECSS program management officials informed us that ECSS
would assume financial management control and accountability, including
invoice processing and financial reporting responsibility, for the Air
Force's working capital fund operations. Prior to this decision, the
Air Force had designated DEAMS as the business system initiative it
intended to use to improve the financial management capabilities of
both the Air Force's working capital and general funds. The Air Force
is currently in the process of determining the cost of this decision
and how much it will add to its already recognized funding shortfall
for ECSS of approximately $697 million. According to ECSS program
management office officials, ECSS's funding shortfall resulted from
contract order award protests that caused stop-work actions. As a
result of the stop-work actions, the ECSS program management office was
not able to spend money for work as planned, which caused the Air Force
to reallocate the money to other Air Force requirements, ultimately
resulting in unfunded ECSS requirements.
The DEAMS program was initiated in August 2003 and is expected to
provide general fund accounting for the entire Air Force at a total
life-cycle cost of over $1 billion.[Footnote 25] In the past, lack of
integration between business systems, including logistics and financial
management, have adversely affected the ability of DOD and the Air
Force to control costs, ensure basic accountability, anticipate future
costs and claims on the budget, measure performance, maintain funds
control, and prevent fraud. If the information contained in asset and
financial accountability systems is not accurate, complete, and timely,
the Air Force's day-to-day operations could be adversely affected by,
for example, investment in inventory that is not needed to meet current
needs or for which the Air Force had not allocated sufficient resources
or authority to purchase. Both physical and financial accountability
are essential to achieving total asset visibility and DOD's objective
of providing information to support decision making.
According to Air Force officials, DEAMS will replace seven legacy
accounting systems.[Footnote 26] As depicted in figure 2, Air Force
program management officials expect DEAMS to reach initial operational
capability[Footnote 27] during fiscal year 2011 and full operational
capability[Footnote 28] by fiscal year 2014 with a total life-cycle
cost of about $1.1 billion. DOD defines total life-cycle cost as the
total cost to the government of acquisition and ownership of that
system over its useful life. It includes the cost of acquisition,
operations, and support (to include manpower), and where applicable,
disposal. Figure 2 provides information related to DEAMS's timeline for
implementation and funding.
Figure 2: DEAMS Timeline and Funding:
[See PDF for image]
This figure is a combination line graph and timeline depicting the
following data:
August 2003: Project initiation;
December 2007: Amount obligated: $119 million;
February 2011: Initial operational capability;
February 2014: Full operational capability;
2021: Life cycle cost estimate: $1.1 billion.
Source: GAO based on information provided by Air Force.
[End of figure]
The DEAMS business system initiative was approved by the Office of the
Secretary of Defense Business Management Modernization Program's
Financial Management Transformation Team[Footnote 29] as a joint United
States Transportation Command (Transportation Command), Defense Finance
and Accounting Service, and Air Force project. According to Air Force
officials, DEAMS will be implemented in two increments--the first at
the Transportation Command and the second at the Air Force.
During the first incremental deployment of DEAMS, which began at Scott
Air Force Base, Illinois, on July 27, 2007, approximately 200 users
within the Transportation Command, the Air Force's Air Mobility Command
component, and other selected tenant organizations at Scott Air Force
Base, began to receive limited accounting capabilities (starting with
commitment accounting). As of December 2007, the Air Force reported
that approximately $119 million had been obligated for this system. By
the end of the increment 1 deployment phase, which is expected to be
completed by December 2010, DEAMS is intended to provide Scott Air
Force Base with the entire spectrum of core financial management
capabilities, including collections, commitments/obligations, cost
accounting, general ledger, funds control, receipt and acceptance,
accounts payable and disbursement, billing, and financial reporting.
Deployment of DEAMS to an estimated 28,000 users at other Air Force
locations will occur during the DEAMS increment 2 deployment phase.
ECSS and DEAMS Programs Did Not Fully Embrace or Implement Key Business
System Best Practices:
The Air Force had not yet fully embraced or implemented key business
system best practices in several areas. Best practices are tried and
proven methods, processes, techniques, and activities that
organizations define and use to minimize program risks and maximize the
chances of a program's success.[Footnote 30] Collectively, these
practices are intended to reasonably ensure that the investment in a
given system represents the right solution to fill a mission need--and
if the solution is right, that acquisition and deployment are done the
right way, meaning that they maximize the chances of delivering defined
system capabilities on time and within budget. Specifically, we found
that the Air Force had not fully implemented key best practices related
to risk management for ECSS and DEAMS and system testing for DEAMS.
These findings increase the risk that these two business systems will
not meet their stated functionality, cost, and milestone goals or
effectively further the Air Force's efforts to achieve total asset
visibility.
ECSS and DEAMS Risk Management Programs Are Not Comprehensive and Do
Not Provide Sufficient Detail to Effectively Oversee the Programs:
The Air Force did not have reasonable assurance that its risk
management process would accomplish its primary purpose--managing a
program's risks to acceptable levels by taking the actions necessary to
identify and mitigate the adverse effects of risks before they affect
the program.[Footnote 31] The objective of a well-managed risk
management program is to provide a repeatable process for balancing
cost, schedule, and performance goals within program funding. According
to DOD's Risk Management Guide for DOD Acquisition, risk management is
most effective if it is fully integrated within a program.[Footnote 32]
Our analysis of the ECSS and DEAMS risk management programs found that
neither program used a comprehensive and fully integrated risk
management process. Program risk was monitored, overseen, and managed
independently by various groups or activities within the program
without adequate visibility, at the program management level. Without
adequate visibility of risk management activities programwide, the
program management office has little assurance of the sufficiency of
actions taken by its subordinate groups or activities to identify,
analyze, and mitigate risk that may affect other groups or the program
itself. A single risk management process for each program with clear
linkages to subordinate risk management activities throughout the
program would provide greater visibility and assurance that appropriate
actions are taken to identify and address risks. Acquiring software is
a risky endeavor and risk management processes are intended to help the
program manager and senior leadership ensure that actions are taken to
mitigate the adverse effects of each determined program risk. If
program risks are not effectively communicated and managed, then the
risks will manage the program, potentially leading to increased costs
to ultimately address the impact of a realized risk or implement a
program that does not provide the intended capabilities. The following
highlights specific risk management issues that we identified within
the Air Force's current approach.
Interfaces. Our analysis of ECSS and DEAMS risk management processes
found that even when risks were identified at lower levels within a
program, the level of detail at the program level was not always
sufficient to provide program managers with the visibility needed to
effectively assess and manage certain risks at those levels. Although
the ECSS and DEAMS program management offices identified interfaces as
potential areas of risk at lower levels within the program, we found
that neither program management office consistently identified
interfaces as a risk at the program level. In the case of DEAMS, the
information in the program level risk management system did not
disclose that 70 key interfaces must be dealt with in order to
implement the system, even though this level of detail was maintained
at a lower level by the DEAMS Interface and Conversion Group. Without
visibility of risks identified at all levels of a program, it is
difficult, if not impossible, for the program manager or other senior-
level officials to ascertain if the various risks that are associated
with a program of this magnitude are effectively identified and
managed. We have previously reported that interfaces are critical
elements necessary to successfully implement a new system and failure
to properly address risk in interface areas has contributed to the
system failures of previous agency efforts.[Footnote 33]
Data conversion. In implementing ECSS and DEAMS, the Air Force will
have to expend considerable resources to clean-up and transfer the data
in the existing legacy systems to ECSS or DEAMS. However, we found that
only the ECSS risk management program identified data quality as an
issue in its discussion of data conversion. Much like system
interfaces, each effort to convert data needs to be separately
identified and managed so that (1) the risks associated with a given
effort can be identified, (2) adequate mitigating actions can be
developed for those risks, and (3) the effectiveness of the mitigating
actions can be monitored. For example, in June 2005, we reported that
data conversion problems seriously affected the Army's ability to
implement its Logistics Modernization Program at the Tobyhanna Army
Depot, Tobyhanna, Pennsylvania.[Footnote 34] These problems affected
reporting of revenue earned, accountability over orders received from
customers, and prepared billings. As discussed in our July 2007 report,
the Army and its contractor still had not resolved the issues of
customers being improperly billed.[Footnote 35]
Change management. The DEAMS program management office did not identify
change management as a risk in its risk management system; however, it
was included as a risk by the ECSS program management office. Change
management is the process of preparing users for the changes that
should occur with the implementation of a new system. It involves
engaging users and communicating the nature of anticipated changes to
system users through training on how jobs will change. This is
necessary because commercial products are created with the developers'
expectations of how they will be used, and the products' functionality
may require the organization implementing the system to change existing
business processes. However, neither the ECSS or DEAMS program had
identified training as a potential change management risk at the
program level. As discussed previously, the lack of sufficient
transparency of risks identified by the lower levels at the program
level may impede the ability of ECSS and DEAMS program managers and
senior-level officials to ensure that risks are effectively mitigated.
Further, the lack of centralized visibility may also minimize program
efficiencies that could be gained through shared knowledge of risks
identified by other groups within the program and actions planned or
taken to mitigate them. As we have previously reported, having staff
with the appropriate skills is a key element for achieving financial
management improvement.[Footnote 36] The implementation of a new system
is intended to bring about improvements in the way an entity performs
its day-to-day business operations. We have issued several reports that
associated the lack of effective change management to program schedule
slippages.[Footnote 37] Unless those intended changes are clearly
identified and communicated to the affected employees, the changes in
the organization's business processes may not occur or be less
effective and efficient than envisioned.
Contractor oversight. The Air Force's ability to manage these two
programs--including oversight of contractors--is critical to reducing
the risks to acceptable levels. Both ECSS and DEAMS program management
officials identified staffing shortfalls within their respective
offices as program risks. In addition, both offices identified actions
needed to mitigate the impact the shortfalls may have on their
programs. However, neither program management office considered whether
their programs had staff with the appropriate skill sets to effectively
oversee and manage their respective contractors. Since the contractors
for each program are performing many of the key tasks, including how
the system will perform and what information or capabilities it will
provide, it is critical that the Air Force have an effective monitoring
process to oversee the contractors and ensure that the project
management processes employed by contractors were effectively
implemented.
During discussions on their respective programs, in March 2008, both
ECSS and DEAMS program management officials stated that they thought
their existing risk management programs provided adequate visibility
over risks within their respective programs. However, after discussing
our concerns with the program management officials, they agreed with us
that their program level risk management programs could be improved to
provide better links to the various risks identified and the risk
management processes used by the groups within their programs. They
also agreed that this would help them achieve reasonable assurance that
their decentralized risk management program is achieving the objectives
of a more traditional centralized risk management process.
More Robust Testing of the Operating Environments at Planned Deployment
Locations Is Needed to Minimize Delays:
A limited version of DEAMS was deployed at Scott Air Force Base in July
2007. A follow-on deployment[Footnote 38] intended to provide DEAMS
functionality to additional users, originally scheduled for October
2007, was placed on hold to address a series of software and
connectivity issues that were identified after the initial deployment.
[Footnote 39] According to Air Force DEAMS program management
officials, DEAMS was functioning as intended on the older Air Force
standard computer desktop configuration; however, problems occurred
when the system was deployed to offices that were utilizing a newer
computer desktop configuration than the one the program management
office had utilized in its initial tests. Air Force DEAMS program
management officials stated that they did not include the potential of
encountering different operating environments at deployment locations
as a potential program risk because they thought that there was a
standard computer desktop configuration across the Air Force and
therefore the risk was remote. DEAMS program management officials
acknowledged that the standardization of computer desktops across the
Air Force is a major challenge and that encountering it during the
DEAMS deployment at Scott Air Force Base was a "lessons learned."
Further, DEAMS program management officials stated that system
"patches" to address the problem have been tested on multiple computer
desktop configurations at Scott Air Force Base to ensure that DEAMS
operates as intended at that location. According to DEAMS program
management officials, they started the redeployment of DEAMS at the end
of March 2008, and they do not anticipate that this will result in a
significant delay, if any, toward achieving full deployment of DEAMS
within fiscal year 2014.
However, unless the DEAMS program management office obtains a clear
understanding of the environment in which DEAMS will be deployed, DEAMS
will likely suffer additional implementation delays. Further, ECSS is
also likely to encounter nonstandardized computer desktop
configurations during its deployment. Both ECSS and DEAMS program
management officials acknowledged that nonstandardized computer desktop
configurations will continue to represent a potential program risk and
indicated that they intend to test desktop configurations at each
deployment location in the future. DEAMS program management officials
are working with its contractor and other Air Force personnel to
develop a long-term solution for the DEAMS program.
Better Integration Is Needed to Ensure That the Air Force's Business
Transformation Plans Support DOD Business Transformation Priorities and
Total Asset Visibility:
Viewed from a broad perspective, the Air Force does not have a single
comprehensive plan or integrated set of plans to support DOD business
transformation priorities, transform Air Force business operations, and
achieve total asset visibility. Rather, the Air Force is utilizing
several individual business transformation plans and efforts. Our
analysis of these plans disclosed that they are neither fully
integrated with each other nor are they fully aligned with business
transformation priorities and related performance measures or metrics
outlined in DOD's Enterprise Transition Plan. Integration and
coordination of improvement efforts within a component and clear
alignment of those efforts with DOD's Enterprise Transition Plan is
necessary to achieve both the components' and DOD's business
transformation priorities and goals, including total asset visibility.
Without clear alignment of transformation plans, priorities, and
metrics, both DOD and the Air Force will have difficulty (1) ensuring
that transformation efforts, such as ECSS and DEAMS, are efficiently
and effectively directed at achieving DOD's business transformation
priorities/goals, including total asset visibility, and (2) measuring
and reporting on progress toward the capabilities necessary for
achieving an intended business transformation priority, such as
financial and materiel visibility. Air Force officials acknowledged
that integration of their plans within the Air Force and with the DOD's
Enterprise Transition Plan could be improved and indicated that they
intend to make improvements to their plans. By not fully aligning and
integrating these transformation strategies and plans, the Air Force
risks falling short of significantly enhancing its ability to provide
the right equipment and materiel, in the right condition, at the
correct place, when needed to support the warfighter.
DOD Business Priorities Are Not Clearly Identified in Key Air Force
Business Transformation Plans:
Our review of several Air Force strategic documents and plans, such as
its Financial Management Strategic Plan, Accountability Improvement
Plan, and Logistics Enterprise Architecture Concept of Operations,
found that the plans were not clearly linked to each other or with
DOD's Enterprise Transition Plan.
Air Force Financial Management Strategic Plan. This plan outlines seven
goals for transforming Air Force financial management.[Footnote 40]
However, the plan contains no reference to the priorities, objectives,
or capabilities identified in DOD's Enterprise Transition Plan.
Additionally, the Air Force Financial Management Strategic Plan does
not identify any performance measures or metrics that the Air Force
intends to use to measure incremental progress toward achieving its own
stated financial management goals or DOD's business transformation
priorities. It is also unclear how certain Air Force financial
management goals, such as to "foster mutual respect and integrity" or
"recruit, prepare, and retain a well-trained and highly educated
professional team for today and tomorrow," specifically relate to
achieving the four financial visibility objectives identified in DOD's
Enterprise Transition Plan: (1) produce and interpret relevant,
accurate, and timely financial information that is readily available
for analyses and decision making, (2) link resource allocation to
planned and actual business outcomes and warfighter missions, (3)
produce comparable financial information across organizations, and (4)
achieve audit readiness and prepare auditable financial statements.
Air Force Military Equipment Accountability Improvement Plan. This plan
is intended to support the department's valuation of military equipment
and the Air Force's and DOD's goal to obtain auditable financial
statements. However, the relationship between the Air Force Military
Equipment Accountability Improvement Plan to other Air Force
transformation plans or initiatives, such as the Air Force Logistics
Enterprise Architecture Concept of Operations, in transforming the Air
Force's business operations is not articulated in the plan. For
example, although the Under Secretary of Defense for Acquisition,
Logistics, and Technology tasked the Air Force and other military
components with preparing a military equipment accountability
improvement plan, the plan does not explain how resolution of these
problems will support the Air Force's logistics goals to improve
operational capability, while minimizing the cost to deliver
capability. Further, the Air Force Military Equipment Accountability
Improvement Plan does not discuss how its efforts contribute,
individually or as part of a collective Air Force effort, to
incremental and measurable improvements in the visibility of Air Force
logistical and financial information for decision making, analysis, and
reporting--a key transformation priority identified in DOD's Enterprise
Transition Plan.
The Air Force Lacks Business Transformation Performance Metrics
Consistent with DOD's Enterprise Transition Plan:
None of the various Air Force strategic plans we analyzed included
performance measures or metrics that could be used to systematically
assess and report on transformation progress. Without adequate metrics,
both Air Force and DOD management face a difficult challenge in
monitoring implementation of Air Force plans and assessing the Air
Force's progress in improving its processes, controls, and systems and
achieving DOD's business transformation priorities, including total
asset visibility. Our prior work has identified at least four
characteristics common to successful hierarchies of performance
measures or metrics: (1) demonstrated results, (2) limited to a vital
few, (3) corresponding to multiple priorities, and (4) linked to
responsible programs.[Footnote 41] Simply stated, performance measures
should tell each organizational level how well it is achieving its own
and shared goals and priorities. Examples of the lack of consistent
metrics follow.
Air Force Logistics Enterprise Architecture Concept of Operations. None
of the six materiel visibility business capability improvement metrics
included in the DOD Enterprise Transition Plan are identified in the
Air Force Logistics Enterprise Architecture Concept of Operations.
Further, the Air Force Logistics Enterprise Architecture Concept of
Operations identified only two measures or goals: (1) increase
equipment availability by 20 percent no later than fiscal year 2011 and
(2) reduce annual operating and support cost by 10 percent no later
than fiscal year 2011. While these are notable goals, these metrics do
not provide a means to measure incremental progress in improving the
Air Force's ability to locate and account for materiel assets
throughout their life cycle.
Air Force Financial Management Strategic Plan. This plan identified 13
metrics, some of which pertained to reducing interest penalties paid,
lost discounts, and unmatched disbursements, to support an assessment
of the current state of the Air Force's financial management. However,
the Air Force Financial Management Strategic Plan did not include
metrics that the Air Force can use to measure the progress of its
various financial management initiatives in transforming the Air
Force's financial management and related business operations and
achieving DOD business transformation priorities. For example, none of
the 13 metrics outlined in the Air Force Financial Management Strategic
Plan could be used to measure, monitor, or report incremental progress
toward producing and interpreting relevant, accurate and timely
financial information that is readily available for analyses and
decision making--a key financial visibility objective identified in
DOD's Enterprise Transition Plan.
Air Force Military Equipment Accountability Improvement Plan and its
Financial Improvement Plan. Neither plan included performance metrics
to measure the effectiveness of planned actions to resolve identified
weaknesses that have adversely affected the reliability of reported
financial and physical accountability information. Specifically, we
found that the Air Force's status reporting for both initiatives
consisted primarily of the completion of milestone dates associated
with steps outlined by DOD in its FIAR Plan for achieving auditability
of its financial statements. As a result, the Accountability
Improvement Plan and the Financial Improvement Plan provide little
information on incremental improvements made in the Air Force's
financial management capabilities, including decision making support.
Moreover, when we compared the Financial Improvement Plans dated August
1, 2007, and October 11, 2007, we identified numerous inconsistencies
that raise concerns regarding the oversight and monitoring provided to
these plans and their reported progress. For example, we found:
* 211 of the total 1,762 tasks in the October 2007 Financial
Improvement Plan had completion dates identified as prior to October 1,
2007; however, the reported progress toward completion for each of
these tasks was identified as zero, and:
* 61 of the total 1,279 tasks that were included in both the August
2007 and October 2007 Financial Improvement Plans showed a decline in
the percentage completion total reported for the same tasks between the
two plans.
Conclusion:
The Air Force's efforts to transform its logistics and financial
management operations through system, process, and control changes are
being guided by numerous strategies and plans that are not fully
integrated within the Air Force and with DOD's business enterprise
transformation priorities. As the Air Force deploys ECSS and DEAMS, it
is important that it utilize a comprehensive and integrated risk
management process to identify, analyze, and mitigate risks and
configuration issues that may impede successful deployment of these
systems throughout the Air Force, such as testing computer desktop
configurations at each deployment location. Additionally, successful
transformation will require a comprehensive plan or integrated set of
plans and effective processes and tools, such as results-oriented
performance measures that link enterprise and unit goals and
expectations, for measuring, monitoring, and reporting progress in
accomplishing the department's priorities. Until the Air Force's
efforts are aligned within the Air Force and with DOD's business
transformation priorities, and best practices are fully adopted to
minimize risk and maximize chances for success, the risk increases that
billions of dollars will be wasted and the efforts will not achieve the
transformation envisioned for the future.
Recommendations for Executive Action:
To improve the department's efforts to achieve total asset visibility
and further enhance its efforts to improve control and accountability
over business system investments and achieve its business
transformation priorities, we recommend that the Secretary of Defense
direct the Secretary of the Air Force to take the following three
actions:
* Direct Air Force program management officials for ECSS and DEAMS to
ensure that risk management activities at all levels of the program are
identified and communicated to program management to facilitate
oversight and monitoring. Key risks described at the appropriate level
of detail should include and not be limited to risks associated with
interfaces, data conversion, change management, and contractor
oversight.
* Direct the Air Force program management offices to test ECSS and
DEAMS on relevant computer desktop configurations prior to deployment
at a given location.
* Direct Air Force organizations responsible for the business
transformation plans discussed in this report to align their respective
plans, including efforts aimed at achieving total asset visibility,
with priorities included in DOD's Enterprise Transition Plan. Further,
these plans should include metrics to measure, monitor, and report
progress in accomplishing the business priorities identified in DOD's
Enterprise Transition Plan.
Agency Comments and Our Evaluation:
We received written comments on a draft of this report from the Deputy
Under Secretary of Defense (Business Transformation), which are
reprinted in appendix II. DOD concurred with our recommendations and
identified specific actions it plans to take to implement these
recommendations. For example, the ECSS program management office has
added GAO-identified risks to its inventory of program risks.
Additionally, the DEAMS program management office intends to centralize
two subordinate risk management activities into a single program-level
risk management process. Further, in its rewrite of the DEAMS program
charter for the department's Business Capability Lifecycle process, the
DEAMS program management office stated its intent to implement a
program-based risk management process that addresses all risk areas
noted by GAO. In addition, the department noted that the Air Force is
updating its Financial Improvement Plan to assure alignment with the
department's Financial Improvement and Audit Readiness plan. DOD stated
that the Air Force will ensure that the Financial Improvement Plan is
aligned to the Air Force Financial Management Strategic Plan and DOD's
Enterprise Transition Plan.
We are sending copies of this report to the Secretary of Defense;
Secretary of the Air Force; Deputy Under Secretary of Defense (Business
Transformation); Assistant Secretary of the Air Force (Financial
Management and Comptroller); Air Force Chief Information Officer; Air
Force Deputy Chief of Staff (Logistics); and other interested
congressional committees and members. Copies of this report will be
made available to others upon request. In addition, this report is
available at no charge on the GAO Web site at [hyperlink,
http://www.gao.gov].
Please contact Paula M. Rascona at (202) 512-9095 or [email protected],
Nabajyoti Barkakati at (202) 512-4499 or [email protected], or William
M. Solis at (202) 512-8365 or [email protected] 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:
Paula M. Rascona:
Director, Financial Management and Assurance:
Signed by:
Nabajyoti Barkakati:
Acting Chief Technologist:
Applied Research and Methods:
Center for Technology and Engineering:
Signed by:
William M. Solis:
Director, Defense Capabilities and Management:
[End of section]
Appendix I: Scope and Methodology:
In order to determine the implementation status of the Air Force's
current business system initiatives to achieve total asset visibility,
and whether the Air Force has implemented related best practices,
[Footnote 42] we reviewed Air Force business system budget
documentation and met with Air Force Chief Information Officer
personnel and DOD Business Transformation officials. Most of the
financial information in this report related to ECSS and DEAMS was
obtained from the respective program management offices and is
presented for informational purposes only; it was not used to develop
our findings and recommendations. We interviewed, obtained briefings,
and reviewed documentation provided by ECSS and DEAMS Air Force program
management officials, Business Transformation Agency officials, and Air
Force Financial Management and Comptroller officials to further our
understanding of the intended purpose of each system and their
respective roles in supporting the Air Force's efforts to achieve total
asset visibility and transform its business operations. During this
audit, we did not review ECSS and DEAMS compliance with the Air Force's
enterprise architecture because of ongoing GAO work focused on
ascertaining the status of the military services' efforts to develop
and utilize an enterprise architecture. The results of our work are
discussed in our May 2008 report,[Footnote 43] which noted that while
the Air Force's efforts to develop an enterprise architecture were
further ahead of Army and Navy efforts, the Air Force's architecture
was not sufficiently developed to guide and constrain its business
systems modernization investments.
To determine whether any improvements were needed in the Air Force's
approach for acquiring and implementing these business systems, we
evaluated the ECSS and DEAMS risk management programs, reviewed Air
Force guidance related to risk management, and obtained an explanation
from each program management office on how they managed their
respective risk management program. Additionally, we analyzed risk
management reports that were prepared by each program management office
and reviewed risk management briefings that were presented to senior
Air Force management. We compared risk management reports for both
programs with applicable Air Force guidance to ascertain if each
program identified the risks that are associated with the acquisition
and implementation of a system.[Footnote 44]
To determine whether the Air Force's business transformation efforts to
achieve total asset visibility are aligned within the Air Force and
with DOD's broader business transformation priorities, we interviewed
officials from the Air Force's Financial Management and Comptroller
Office and the Air Force Logistics Enterprise Architecture and ECSS
Transformation Management Division. There are many DOD and Air Force
transformation plans and initiatives, such as DOD's Enterprise
Transition Plan and Quadrennial Defense Review Report, and the Air
Force Strategic Plan and the Air Force Smart Operations for the 21st
Century. However, following discussions with Air Force officials, we
focused our review on the Air Force Financial Management Strategic Plan
for fiscal years 2007-2012, Logistics Enterprise Architecture Concept
of Operations, Financial Improvement Plan for August 2007 and October
2007, and Military Equipment Accountability Improvement Plan issued in
December 2006 because they are more directly related to total asset
visibility and related business transformation efforts. We analyzed and
compared these documents to assess consistency among the plans and
approaches both within the Air Force and with DOD's Enterprise
Transition Plan's business transformation priorities and metrics.
We conducted this performance audit from July 2007 through August 2008
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 objectives. Most of the financial
information in this report related to the ECSS and DEAMS programs was
obtained from the respective program management offices and is
presented for informational purposes only and was not used to develop
our findings and recommendations. To assess the reliability of the
funding data, we interviewed Air Force program management office
officials knowledgeable about funding and reviewed budgetary data on
the Air Force's investment in ECSS and DEAMS. We conducted our work at
the DOD Business Transformation Agency, the Air Force Chief Information
Officer Office, the Air Force Financial Management and Comptroller
Office, and the Air Force Logistics Enterprise Architecture and ECSS
Transformation Management Division in Arlington, Virginia.
Additionally, we made site visits to the Air Force program management
offices for ECSS and DEAMS at Wright-Patterson Air Force Base in
Dayton, Ohio. We requested comments on a draft of this report from the
Secretary of Defense or his designee. We received written comments from
the Deputy Under Secretary of Defense (Business Transformation), which
are reprinted in appendix II.
[End of section]
Appendix II: Comments from the Department of Defense:
Office Of The Under Secretary Of Defense:
Acquisition Technology And Logistics:
3000 Defense Pentagon:
Washington, DC 20301-3000:
July 30, 2008:
Ms. Paula M. Rascona:
Director, Financial Management and Assurance:
U.S. Government Accountability Office:
441 G Street, N.W.
Washington, DC 20548:
Dear Ms. Rascona:
This is the Department of Defense (DoD) response to the GAO draft
report GAO-08-866, "DOD Business Transformation: Air Force's Current
Approach Increases Risk that Asset Visibility Goals and Transformation
Priorities Will Not be Achieved," dated June 23, 2008 (GAO Code
195116). Detailed comments on the report recommendations are enclosed.
DoD concurred with the three recommendations issued by GAO. Overall,
the Department considers the recommendations to be representative of
best practices that are currently being followed by the Air Force. The
Air Force is currently taking additional steps to address some of GAO's
specific findings, to include strengthening existing risk management
processes, and revising its plans as appropriate to better reflect
alignment with priorities defined in the Department's Enterprise
Transition Plan (ETP).
We welcome the GAO's insight on the Department's progress with its
business transformation efforts and continue to value our partnership.
Sincerely,
Signed by:
Paul A. Brinkley:
Deputy Under Secretary of Defense (Business Transformation):
Enclosure: As stated:
GAO Draft Report Dated June 23, 2008:
GAO-08-866 (GAO Code 195116):
"DOD Business Transformation: Air Force's Current Approach Increases
Risk That Asset Visibility Goals And Transformation Priorities Will Not
Be Achieved"
Department Of Defense Comments To The GAO Recommendations:
Recommendation 1: The GAO recommends that the Secretary of Defense
direct the Secretary of the Air Force to direct Air Force program
management officials for Expeditionary Combat Support System (ECSS) and
Defense Enterprise Accounting and Management System (DEAMS) to ensure
that risk management activities at all levels of the program are
identified and communicated to program management to facilitate
oversight and monitoring. Key risks described at the appropriate level
of detail should include and not be limited to interfaces, data
conversion, change management, and contractor oversight. (Page 37/GAO
Draft Report)
DOD Response: Concur. While both the ECSS and DEAMS program offices
have already implemented risk management processes that include
identifying and communicating program risks to program management, they
are currently taking steps to further strengthen their existing
processes. For example, the ECSS program office has added GAO-
recommended risks to its inventory, and the DEAMS program office
intends to centralize two subordinate risk management programs
(Increments 1 and 2) into a single program-level Risk Management
Program that will be managed by a Government employee accountable to
the DEAMS Deputy Program Manager. Further, in its rewrite of the DEAMS
Program Charter for the Department's Business Capability Lifecycle
(BCL) process, the DEAMS program office intends to codify a program-
based risk management process which addresses all risk areas noted by
the GAO.
Recommendation 2: The GAO recommends that the Secretary of Defense
direct the Secretary of the Air Force to direct the Air Force program
management offices to test ECSS and DEAMS on relevant computer desktop
configurations prior to deployment at a given location. (Page 37/GAO
Draft Report)
DOD Response: Concur. As a sound management practice, prior to
deployment go-live, the DEAMS program office tested the program on all
user desktop configurations. Additionally, informal unit desktop
testing was conducted prior to each unit's initial deployment. As a
result of the informal testing, the standard desktop configuration
(SDC)-DEAMS conflict that GAO noted in its report was discovered one
week prior to the Air National Guard Wave-2 deployment of DEAMS and
action was taken to mitigate the issue and reduce the likelihood of its
future occurrence. However, the SDC conflict was a minimal risk, and
the Department views the issue as a "lesson learned" for future
Enterprise Resource Planning (ERP) implementation.
Recommendation 3: The GAO recommends that the Secretary of Defense
direct the Secretary of the Air Force to direct Air Force organizations
responsible for the respective business transformation plans discussed
in this report to align their respective plans, including efforts aimed
at achieving total asset visibility, with priorities included in DoD's
Enterprise Transition Plan. (Page 38/GAO Draft Report)
DOD Response: Concur. The ETP and Business Enterprise Architecture
(BEA) guide the Air Force's efforts to transform its logistics and
financial management operations, and the Air Force identifies and
corrects anomalies within its business transformation plans to better
demonstrate alignment with ETP priorities as needed, to include working
with Department organizations at the Office of the Secretary of Defense
(OSD)-level to resolve issues that impact the accurate reporting of key
milestones and metrics.
Currently, the Air Force is updating its Financial Improvement Plan
(FIP) to assure alignment with the new OSD Financial Improvement and
Readiness (FIAR) plan. The Air Force will ensure that the FIP is
aligned to the Office of the Secretary of the Air Force/Financial
Management (SAF/FM) Strategic Plan, the ETP, and the updated OSD
policy.
[End of section]
Appendix III: GAO Contacts and Staff Acknowledgments:
GAO Contacts:
Paula M. Rascona, (202) 512-9095 or [email protected]:
Nabajyoti Barkakati, (202) 512-4499 or [email protected]:
William M. Solis, (202) 512-8365 or [email protected]:
Acknowledgments:
In addition to the above contacts, the following individuals made key
contributions to this report: J. Christopher Martin, Senior-Level
Technologist; Darby Smith, Assistant Director; Evelyn Logue, Assistant
Director; F. Abe Dymond, Assistant General Counsel; Beatrice Alff;
Harold Brumm, Jr.; Francine DelVecchio; Jason Kelly; Jason Kirwan;
Chanetta Reed; Debra Rucker; and Tory Wudtke.
[End of section]
Footnotes:
[1] Supply chain management is the management of all processes or
functions to satisfy a customer's product or service order.
[2] DOD defines logistics as the science of planning and carrying out
the movement and maintenance of forces. Logistics includes the aspects
of military operations that deal with (1) design and development
acquisition, storage, movement, distribution, maintenance, evacuation,
and disposition of materiel; (2) movement, evacuation, and
hospitalization of personnel; (3) acquisition or construction,
maintenance, operation, and disposition of facilities; and (4)
acquisition or furnishing of services.
[3] GAO, High-Risk Series: An Update, [hyperlink,
http://www.gao.gov/cgi-bin/getrpt?GAO-07-310] (Washington, D.C.:
January 2007).
[4] [hyperlink, http://www.gao.gov/cgi-bin/getrpt?GAO-07-310].
[5] The eight specific DOD high-risk areas are (1) business
transformation, (2) business systems modernization, (3) contract
management, (4) financial management, (5) personnel security clearance,
(6) supply chain management, (7) support system infrastructure, and (8)
weapon systems acquisition.
[6] The seven high-risk areas that DOD shares responsibility for are
(1) disability programs, (2) information sharing for homeland security,
(3) information security and critical infrastructure, (4) interagency
contracting, (5) human capital, (6) real property, and (7) technologies
critical to national security.
[7] GAO, Best Management Practices: Reengineering the Air Force's
Logistics Systems Can Yield Substantial Savings, [hyperlink,
http://www.gao.gov/cgi-bin/getrpt?GAO/NSIAD-96-5] (Washington, D.C.:
Feb. 21, 1996).
[8] GAO, Defense Inventory: Opportunities Exist to Save Billions by
Reducing Air Force's Unneeded Spare Parts Inventory, [hyperlink,
http://www.gao.gov/cgi-bin/getrpt?GAO-07-232] (Washington, D.C.: Apr.
27, 2007).
[9] Air Force, Air Force Expeditionary Logistics for the 21st Century
Campaign Plan.
[10] Air Force, Air Force Expeditionary Logistics for the 21st Century
Campaign Plan.
[11] The general fund can be defined as the fund into which all
receipts of the United States government are deposited, except those
from specific sources required by law to be deposited into other
designated funds and from which appropriations are made by Congress to
carry on the general and ordinary operations of the government.
[12] A working capital fund is an intragovernmental revolving fund that
conducts continuing cycles of business-like activity mainly within and
between government agencies, in which the fund charges for the sale of
products or services and uses the proceeds to finance its spending,
usually without requirement for annual appropriations.
[13] GAO, DOD Business Transformation: Lack of an Integrated Strategy
Puts the Army's Asset Visibility Systems Investments at Risk,
[hyperlink, http://www.gao.gov/cgi-bin/getrpt?GAO-07-860] (Washington,
D.C.: July 27, 2007).
[14] Basis for best practices were derived from the following
publications: Steve McConnell, Rapid Development: Taming Wild Software
Schedules (Redmond, WA: Microsoft Press, 1996), Hubert F. Hofmann,
Deborah K. Yedlin, John W. Mishler, and Susan Kushner, CMMI for
Outsourcing: Guidelines for Software, Systems, and IT Acquisition, SEI
Series in Software Engineering (Boston, MA: Addison-Wesley
Professional, 2007), Department of Defense, Risk Management Guide for
DOD Acquisition, Sixth Edition, Version 1.0, (August 2006), and GAO,
Information Technology: DOD's Acquisition Policies and Guidance Need to
Incorporate Additional Best Practices and Controls, GAO-04-722
(Washington, D.C.: July 30, 2004).
[15] GAO, DOD Business Systems Modernization: Military Departments Need
to Strengthen Management of Enterprise Architecture Programs,
[hyperlink, http://www.gao.gov/cgi-bin/getrpt?GAO-08-519] (Washington,
D.C.: May 12, 2008).
[16] This includes financial management and related business
capabilities, such as collections, commitment/obligations, cost
accounting, general ledger, funds control, receipt and acceptance,
accounts payable, disbursements, and billings.
[17] Air Force, United States Air Force Military Equipment
Accountability Improvement Plan, (December 2006).
[18] The six transformational objectives are (1) optimize support to
the warfighter, (2) improve strategic mobility to meet operations
requirements, (3) implement customer wait time as a cascading metric,
(4) fully implement total asset visibility, (5) reengineer applicable
processes and systems to increase overall communication and operational
situational awareness, and (6) achieve best-value logistics while
meeting requirements at reduced operating costs.
[19] The six DOD business transformation priorities are (1) personnel
visibility, (2) acquisition visibility, (3) common supplier engagement,
(4) materiel visibility, (5) real property accountability, and (6)
financial visibility.
[20] SFIS is intended to provide a standardized DOD-wide financial
information structure to facilitate improved cost accounting, analysis,
and reporting.
[21] [hyperlink, http://www.gao.gov/cgi-bin/getrpt?GAO-07-232].
[22] DOD Inspector General, Independent Auditor's Report on the FY 2007
Air Force General Fund Financial Statements, Report No. D2008-010
(Arlington, VA: Nov. 8, 2007) and Independent Auditor's Report on the
Air Force FY 2007 Working Capital Fund Financial Statements, Report No.
D2008-011 (Arlington, VA: Nov. 8, 2007).
[23] Air Force Audit Agency, Deployed Assets, F2007-0004-FC4000
(Washington, D.C.: Jan. 26, 2007).
[24] Air Force Audit Agency, Government Furnished Material, F2007-0003-
FC4000 (Washington, D.C.: Jan. 26, 2007).
[25] General fund accounting includes such financial management and
related business capabilities as collections, commitment/obligations,
cost accounting, general ledger, funds control, receipt and acceptance,
accounts payable, disbursements, and billings.
[26] DEAMS is intended to replace the following legacy accounting
systems: (1) Cargo and Billing System, (2) Transportation Financial
Management System-Military Traffic Management Command, (3) Airlift
Services Industrial Fund Integrated Computer System, (4) Automated
Business Services System, (5) Base Accounts Receivable System, (6)
General Accounting and Finance System (Base-level/rehost), and (7)
Integrated Accounts Payable System.
[27] Initial operational capability is achieved when a system is
implemented with some minimal capabilities and additional capabilities
are planned before the system is determined to have reached full
operational capability.
[28] Full operational capability means that the system has been
deployed as intended to all planned locations.
[29] The Business Management Modernization Program was the approval
authority for business systems investment efforts in 2003. Currently,
the Defense Business Systems Management Committee is the approval
authority for business systems investments.
[30] Best practices associated with risk management programs and system
testing were derived from the following publications: Department of
Defense, Risk Management Guide for DOD Acquisition, sixth edition,
Version 1.0, (August 2006), Steve McConnell, Rapid Development: Taming
Wild Software Schedules (Redmond, WA: Microsoft Press, 1996), Hubert F.
Hofmann, Deborah K. Yedlin, John W. Mishler, and Susan Kushner, CMMI
for Outsourcing: Guidelines for Software, Systems, and IT Acquisition,
SEI Series in Software Engineering (Boston, MA: Addison-Wesley
Professional, 2007), and GAO-04-722.
[31] Acceptable levels refer to the fact that any systems acquisition
effort will have risks and will suffer the adverse consequences
associated with defects resulting from system acquisition and
implementation processes. However, effective implementation of
disciplined processes reduces the possibility of the potential risks
actually occurring and prevents significant defects from materially
affecting the cost, timeliness, and performance of the program.
[32] Department of Defense, Risk Management Guide for DOD Acquisition,
sixth edition Version 1.0, (August 2006).
[33] GAO, Financial Management Systems: Additional Efforts Needed to
Address Key Causes of Modernization Failures, [hyperlink,
http://www.gao.gov/cgi-bin/getrpt?GAO-06-184] (Washington, D.C.: Mar.
15, 2006).
[34] GAO, Army Depot Maintenance: Ineffective Oversight of Depot
Maintenance Operations and System Implementation Efforts, [hyperlink,
http://www.gao.gov/cgi-bin/getrpt?GAO-05-441] (Washington, D.C.: June
30, 2005).
[35] [hyperlink, http://www.gao.gov/cgi-bin/getrpt?GAO-07-860].
[36] GAO, Financial Management Systems: Lack of Disciplined Processes
Puts Implementation of HHS' Financial System at Risk, [hyperlink,
http://www.gao.gov/cgi-bin/getrpt?GAO-04-1008] (Washington, D.C.: Sept.
23, 2004) and [hyperlink, http://www.gao.gov/cgi-bin/getrpt?GAO/AIMD-00-
134].
[37] GAO, Office of Personnel Management: Retirement Systems
Modernization Program Faces Numerous Challenges, [hyperlink,
http://www.gao.gov/cgi-bin/getrpt?GAO-05-237] (Washington, D.C.: Feb.
28, 2005); Information Technology Management: Customs Automated
Commercial Environment Program Progressing, but Need for Management
Improvements Continues, [hyperlink, http://www.gao.gov/cgi-
bin/getrpt?GAO-05-267] (Washington, D.C.: Mar. 14, 2005); and Executive
Guide: Creating Value Through World-class Financial Management,
[hyperlink, http://www.gao.gov/cgi-bin/getrpt?GAO/AIMD-00-134]
(Washington, D.C.: April 2000).
[38] The second deployment was to include Headquarters, Air Mobility
Command, the 375th Airlift Wing, and two Air National Guard wings. This
deployment would have increased the total number of users to
approximately 800.
[39] A computer desktop configuration conflict caused Air Force
desktops using Internet Explorer 7.0 to fail when connecting with the
core applications within DEAMS. This problem did not affect Air Force
desktops using Internet Explorer 6.0. The Air Force identified the
problem in November 2007 after it deployed DEAMS to approximately 200
users and as user desktops were simultaneously being upgraded from
Internet Explorer 6.0 to Internet Explorer 7.0 as part of the normal
technology refresh process (i.e., the Internet Explorer 7.0 upgrade was
not driven by DEAMS). In December 2007, it was decided to (1) keep the
200 existing DEAMS users on Internet Explorer 6.0 and (2) stop
deployment for the remaining 400 new users until a viable Internet
Explorer 7.0 connectivity solution was in place.
[40] The Air Force Financial Management Strategic Plan identifies seven
goals: (1) foster mutual respect and integrity, (2) reduced Air Force
cost structure, (3) expand partnership in strategic Air Force
decisions, (4) recruit, prepare, and retain a well-trained and highly
educated professional team for today and tomorrow, (5) provide our
customers with world-class financial services, (6) implement open,
transparent business practices and achieve a clean audit opinion, and
(7) continuously streamline financial management processes and increase
capabilities.
[41] GAO, Agencies' Annual Performance Plans Under the Results Act: An
Assessment Guide to Facilitate Congressional Decisionmaking,
[hyperlink, http://www.gao.gov/cgi-bin/getrpt?GAO/GGD/AIMD-10.1.18S]
(Washington, D.C.: February 1998).
[42] Best practices and relevant DOD guidance were derived from the
following publications: Steve McConnell, Rapid Development: Taming Wild
Software Schedules (Redmond, WA: Microsoft Press, 1996), Hubert F.
Hofmann, Deborah K. Yedlin, John W. Mishler, and Susan Kushner, CMMI
for Outsourcing: Guidelines for Software, Systems, and IT Acquisition,
SEI Series in Software Engineering (Boston, MA: Addison-Wesley
Professional, 2007), GAO, Information Technology: DOD's Acquisition
Policies and Guidance Need to Incorporate Additional Best Practices and
Controls, [hyperlink, http://www.gao.gov/cgi-bin/getrpt?GAO-04-722]
(Washington, D.C.: July 30, 2004), and Department of Defense, Risk
Management Guide for DOD Acquisition, sixth edition, Version 1.0,
(August 2006).
[43] GAO, DOD Business Systems Modernization: Military Departments Need
to Strengthen Management of Enterprise Architecture Programs,
[hyperlink, http://www.gao.gov/cgi-bin/getrpt?GAO-08-519] (Washington,
D.C.: May 12, 2008).
[44] U.S. Air Force Materiel Command Pamphlet 63-101, Acquisition: Risk
Management (July 9, 1997).
[End of section]
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