After plowing more than $1 billion into a failed logistics modernization effort, the U.S. Air Force has fired the lead contractor and is searching for a new acquisition strategy.
The Air Force is sorting out what can be salvaged from its investment in the Expeditionary Combat Support System (ECSS) and is mapping out a way forward. The service ended its contract with Virginia-based Computer Sciences Corp. in March.
“I am personally appalled at the limited capabilities that program has produced relative to that amount of investment,” Air Force Comptroller Jamie Morin told the Senate Armed Services readiness and management support subcommittee in April.
In charting the way forward, the intent is to deliver “efficient and auditable logistics capabilities to the Air Force at a reasonable cost,” spokeswoman Ann Stefanek wrote in response to questions.
The system is supposed to save billions of dollars by streamlining the Air Force’s supply chain management and providing an integrated approach for buying, moving and managing equipment. It is one of 11 enterprise resource planning systems the Defense Department and the services are counting on to improve accounting and other business operations. In an interview after the hearing, Morin described the new system’s “usable capability” as “negligible.”
“The contractor performance and management of the system have not been up to standard,” Morin said. “It’s disappointing to have to restructure a system this far into a program with so much expended.”
CSC spokeswoman Heather Williams wrote in an email that “CSC demonstrated success in meeting all the major milestones and commitments for the first four years.” She offered no explanation of what happened after that.
The system’s failures are one reason the Air Force is at “moderate risk” of failing to meet deadlines to clean up its financial books, Morin said. The 2010 Defense Authorization Act requires that all military financial statements be fully auditable by fiscal 2017.
Last fall, Defense Secretary Leon Panetta upped the pressure by declaring that one set of financial records — the Statement of Budgetary Resources, which shows the flow of money in and out of the Defense Department — must meet the audit target by fiscal 2014.
“I am reasonably confident that we will meet our goals,” DoD Comptroller Robert Hale said at the same hearing. Army and Navy financial managers also voiced optimism.
In addition to problems plaguing logistics modernization, the Air Force is struggling to find employees with needed skills, Morin said.
A Government Accountability Office reviewer was more skeptical of the Pentagon’s overall headway toward auditability.
“We have found problems that continue to impede progress, including deficiencies in processes and controls, missed interim milestones, and premature assertions of audit readiness,” Asif Khan, GAO’s director of financial management and assurance, said at the Senate hearing.
The ECSS is one of three Air Force enterprise resource planning systems key to “audit readiness.” Of the other two, the Defense Enterprise Accounting and Management System (DEAMS), recently met a major milestone, Morin said, while the Air Force plans to issue a request for proposals next month for a new personnel and pay system.
The ECSS is supposed to remedy long-standing shortcomings in Air Force equipment management. A 2007 GAO review, for example, found that more than half of the service’s spare parts inventory — worth more than $31 billion — was not needed.
The ECSS received its first round of funding in 2005; since then, spending has totaled $1.03 billion, Stefanek said. The program is budgeted for about $196 million this year.
As early as 2008, GAO warned that the Air Force was not managing the program according to “key DoD guidance and best practices for systems acquisitions.” Repeated restructurings followed, but a Defense Acquisition Board review in September found that the program was still not hitting performance goals.
To limit the losses, the Air Force issued a stop-work order to CSC that same month, followed by last month’s contract termination.
Implementation of the new system had hinged on successful fielding of four separate pilots for vehicle maintenance, equipment management, retail supply and mobile supply chain, Stefanek said.
After seven years, only the first two had been completely delivered, while the third had not been fielded and the fourth not completed.