Six U.S. Defense Department modernization projects are a combined $8 billion over budget and are suffering years-long schedule delays — in one case, more than 12 years — a new audit report finds.
The projects, known as enterprise resource planning systems (ERPS), aim to replace numerous small-scale computer systems with departmentwide systems to modernize the management of finances, logistics and other business operations.
The projects are intended to bring greater efficiency and cost savings to DoD’s internal management. The delays not only set back any cost savings, but risk throwing the department behind schedule in its goal to clean up its bookkeeping, the Pentagon’s inspector general said in the report released in July .
The department is racing to meet a statutory September 2017 deadline for passing a full financial audit. Defense Secretary Leon Panetta’s 2014 goal of successfully completing a budget audit — one of four steps involved in meeting the full audit-readiness goal — is also in jeopardy, the report said.
The IG report said defense managers need to be more proactive and provide more oversight of the six projects. In the past year, DoD officials approved almost $303 million in funding for the projects without verifying program managers’ assertions that the money would be spent effectively, the report said.
The Air Force’s Defense Enterprise Accounting and Management System (DEAMS), for example, was supposed to be fully deployed by October 2009. That milestone has slipped to April 2017, while the projected price tag has quintupled from $420 million to almost $2.2 billion.
Similarly, the Army’s Logistics Modernization Program is expected to be fully deployed in September 2016 — more than 12 years later than originally scheduled.
In both cases, program managers blamed the delays on the challenge of customizing commercial off-the-shelf software. DEAMS managers cited the need to address more than 3,400 “problem reports” in testing.
Of the remaining four information technology systems, the Army’s General Fund Enterprise Business System (GFEBS) is scheduled for full deployment this month; the U.S. Navy’s Enterprise Resource Planning system, in August 2013; the DoD Enterprise Business System, in June 2014; and the Defense Agencies Initiative, in January 2016.
Prime contractors on the projects were generally tight-lipped on the overruns and schedule slippages.
Computer Sciences Corp. developed the Logistics Modernization Program “and delivers the services in accordance with government-directed requirements,” a spokesman wrote in an email.
At Accenture, which has the lead for GFEBS, DEAMS and the DoD’s Enterprise Business System, spokeswoman Joanne Veto referred questions about the audit to the Pentagon. GFEBS, however, has led to the retirement of 20 older systems and is processing more than 1 million transactions daily, she said.
Spokeswomen for IBM and CACI, the prime contractors for the Navy ERP and the Defense Agencies Initiative respectively, either had no comment or could not be reached.
The IG report echoes the findings of a February review by the Government Accountability Office, which warned that DoD risks throwing away money without getting improvements in business operations.
The Pentagon’s deputy chief management officer, Beth McGrath, who is responsible for the projects, did not respond to the IG report.