DoD IG Report to Congress

DOD_IG_REPORTThe DoD Inspector General released the semi-annual required report to Congress on its activities from April through September 2013.  There are plenty of reports with bad news and some not-as-bad news (I don’t think IG reports ever are better than the not-as-bad category, hence the need for an IG, I suppose).  I focused on  the Financial Management section of the report.  The first thing I found interesting is that in the introductory narrative, while acknowledging “some” progress towards audit readiness is being made by the Department, there was no mention of the audit readiness shining star, the US Marine Corps.  Granted, the report doesn’t cover the period in which the announcement of a clean opinion on the 2012 USMC Statement of Budgetary Resources was made, but they were certainly “breathing heavy” and should have been acknowledged in the report.  I guess it will be in the next report to Congress next September, almost a full year after it happened!

Enough of that! The other items mentioned in the financial section related to the Defense Agency Initiative (DAI), Navy Enterprise Resources Planning (ERP) system, Army General Fund Enterprise Business System (GFEBS), excess motor pool vehicles in the DC area, the DISA audit opinion and a few other cats and dogs.  It’s interesting that the most significant problems all involve ERP systems: DAI, Navy ERP and GFEBS.

The costs of these three systems alone is pretty staggering: $426 Million for DAI, at least $2.4 Billion for first increment of Navy ERP and $1.4 Billion for GFEBS.  That doesn’t count all the false starts, legacy phase-out costs, legacy sustainment costs, and the unknown costs of fixing all the problems being identified by the DoD IG and others.  The upcoming audits of the Services Statements of Budgetary Resources (supposedly to be complete by 2014) will identify more problems and throw more costs onto the burgeoning price tag of these expensive systems.

One wonders if DoD will ever see a real return on the investments being made in ERP systems.  Why not?  I think there a several key reasons:

1.  It is taking way too long to implement them.  Navy ERP has been in implementation since 2003  and still has a way to go.  That sort of snail’s pace exacerbates implementation issues, creates software refresh issues, increases reliance on legacy systems, and tends to make them a continually target for budget reductions.  And with long implementation schedules,  the systems will become obsolete before they reach FOC.

2.  Failure to eliminate legacy systems.  We all know they exist and individual fiefdoms throughout the DoD continue to fund them to the detriment of other, needed capabilities.

3. The leadership outside the Financial Management Community doesn’t understand ERPs and they are the ones who make the real budget decisions.  Without a full understanding of what ERPs are and how, properly implemented, they will make more money available for people and weapons, the leadership is likely to defer funding, further compounding problem 1.

So what to do?

  • Make sure the leadership understands ERPs and what they can do for them. Unified support at the top is essential.
  • Don’t use ERPs as bill payers.
  • Be ruthless in the elimination of legacy systems, forcing users to rely on ERPs.  Do it sooner rather than later. No excuses!
  • Put a priority on implementation with deadlines and make program offices accountable.

I admit DoD ERPs are complex.  But no more so than those of major US companies.  We should learn from them.

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Pentagon Wish List

I saw this article in Bloomberg News  on the Pentagon Wish List this morning.  In my days in the Pentagon we always had an unfunded list to share with the Hill.  Inevitably, the day after the President’s Budget was submitted the Hill was asking for the list.  Back then we didn’t share with OSD.  It was all part of the strategy.  There was the regular budget submission (those things that everyone wanted), the Gold Watch list (things we left out but were sure to be included  in law because of Hill support) and the Unfunded list (those things we really wanted but OSD didn’t want us to have).  It was quite a complicated process to get the budget submitted without offending someone!!  Looks like OSD has taken control. I wonder if the Services might have a “secret” wish list?????

Pentagon to Outline How It Would Spend an Additional $26 Billion

By Tony Capaccio January 27, 2014

The Pentagon’s budget plan for the fiscal year starting Oct. 1 will outline how it would spend an additional $26 billion if Congress could find the money, according to U.S. officials.

The White House Office of Management and Budget last week directed the Pentagon to produce the what-if list as part of an “investment fund” it would include when President Barack Obama’s proposed budget is submitted to Congress on March 4.

The Pentagon would present the fund to demonstrate its priorities if more money were added to what was allocated in last month’s congressional budget deal, one of the officials said. The wish list could include weapons, base maintenance, projects to improve readiness or research programs, according to the officials, who asked not to be identified in advance of the budget release.

The White House will say in its budget presentation that the additional money would be offset by cuts in mandatory domestic spending and revenue increases, the officials said.

The “investment fund” is similar to the “unfunded priorities lists” the military services would submit to the House Armed Services Committee for years until then-Defense Secretary Robert Gates discouraged the practice.

The fiscal 2015 total for base defense spending, excluding war operations, is about $498 billion, about $43 billion less than the total projected by the Pentagon last year.

To contact the reporter on this story: Tony Capaccio in Washington at acapaccio@bloomberg.net

To contact the editor responsible for this story: John Walcott at jwalcott9@bloomberg.net

 

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