Military braces for roll out of massive ERP projects

Central system to replace one of largest business system conglomerations in the world

For years, defense planners have preached about the benefits of modernizing the Defense Department’s enterprise resource planning (ERP) systems to simplify business operations, optimize processes, and provide accurate accounting. However, DOD's ERP landscape is littered with complex and costly system implementations that don’t perform as advertised and are plagued by delays and cost overruns. At stake is DOD’s financial health and its future goal of business transformation.

Long the target of General Accountability Office reports and congressional hearings, DOD’s business systems modernization is one of the most high risk areas in the federal government. In 2010, GAO reported that six of nine DOD ERP systems had schedule slippages ranging from two to 12 years, and five had incurred cost increases ranging from $530 million to $2.4 billion.


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One ERP system that GAO is keeping close tabs on is the Army’s General Fund Enterprise Business System (GFEBS), the service’s new Web-enabled financial, asset and accounting management system designed to control and account for $140 billion in annual spending. When fully deployed in 2012, GFEBS will replace more than 80 Army legacy accounting, financial and asset management systems and will be one of the largest ERP systems in the world, processing a million transactions per day at more than 200 sites worldwide.

Ready or not

In June, GFEBS received a Full Deployment Decision from the Deputy Chief Management Officer (DCMO) that affirmed the deployment readiness of the ERP system and authorized Armywide system implementation. GFEBS is supposed to “usher in a new era in Army financial management,” but the program is struggling.

A DOD Inspector General's report issued in June, the same month that the DCMO gave the go ahead for full deployment, found that the GFEBS program remained at high risk of incurring additional schedule delays, exceeding planned costs, and not meeting program objectives.

This isn't the first time that DOD's IG has found problems with the program. A 2008 IG report identified GFEBS program planning, acquisition, and justification deficiencies. More than three years later, the Army and DOD have yet to implement seven of the 16 recommendations made by the IG.

The IG’s June report recommended that DOD not approve the deployment of GFEBS to additional users until the Army completes its recommendations and corrects data accuracy, reliability, and timeliness deficiencies identified by the Army Test and Evaluation Command (ATEC). Nevertheless, DCMO Elizabeth McGrath disagreed and stated in a formal response to the IG report that the “material deficiencies identified by [ATEC] have been fully addressed” and that she “determined that the business benefit of GFEBS is greater than reported program risks.”

DEAMS or dreams?

The Army’s GFEBS and the Air Force’s Defense Enterprise Accounting and Management System (DEAMS) have much in common. Both GFEBS and DEAMS attempt to have a single system of record for their service’s respective general funds.

DEAMS, scheduled to be fully deployed by the end of fiscal 2016 to all Air Force bases worldwide, is operational only at Scott Air Force Base and the Defense Finance and Accounting Service. The DOD Milestone Decision Authority directed that DEAMS not be deployed to other bases until known system weaknesses have been corrected and the system has been independently tested to ensure that it is operating as intended.

According to GAO, the DEAMS program experienced a three year schedule slippage due to problems caused by software code defects, integration test delays and to accommodate schedule risk. In addition, DEAMS has also seen its life-cycle cost double from about $1.1 billion to a little more than $2 billion. When pressed for an update on projected life-cycle costs for the program, DEAMS Program Manager Jerry Duke said the latest Air Force cost estimate is “still in the works”.

According to September GAO testimony before Congress, DEAMS requires manual workarounds to process certain accounts receivable transactions due to data not being properly converted from legacy systems. GAO offifcials also testified that DFAS officials have had problems with some system interfaces, and that DEAMS does not provide the capability to produce the ad hoc reports that can be used to perform the data analysis needed for daily operations.

“We’ve seen the [GAO] report, we’re looking into the problems, and we’re addressing them as we find them,” said Duke. “The next milestone decision is Milestone B in December and at that time they will either give us permission to roll out or not. The ultimate goal of DEAMS is to make the Air Force in compliance with the CFO Act and be auditable. We’re progressing very well on both issues.”

The National Defense Authorization Act for Fiscal Year 2010 requires the services to be audit-ready by September 30, 2017. However, in testimony before Congress in September, GAO Director of Financial Management and Assurance Asif Khan said “to the degree that these business systems do not provide the intended capabilities, DOD’s goal of departmentwide audit readiness by the end of fiscal year 2017 could be jeopardized.”

Air Force Comptroller Jamie Morin has conceded the service has a long way to go to meet the 2017 audit deadline. In July, Morin told a Senate subcommittee: “Our ability to achieve audit readiness depends in part on our ability to field our ERPs … these systems are replacing Vietnam-era bookkeeping systems that are not compliant with any of the key requirements that are needed to get to audit readiness. While ERPs are not a panacea and the fielding of them has not been without challenges, there is no alternative to modernizing Air Force financial management systems.”

Don’t blame the software

GFEBS is an SAP-based ERP system while the Air Force’s DEAMS uses Oracle software. But, don’t blame the COTS software or the integrator, Accenture, says Gary Winkler, the Army’s former program executive officer for Enterprise Information Systems (PEO EIS), who served in that position for three and a half years overseeing a portfolio of the service’s ERP programs that included GFEBS.

“An ERP package, whether it’s SAP or Oracle, is built to be configured to an organization’s business processes,” said Winkler, who resigned from federal service at the end of April. “A lot of times what happens with these ERP systems is they get into system development and they either haven’t reengineered the business process or they try and reengineer the business process at the same time and that just causes a whole lot of churn and confusion.”

The other challenges are on the requirements and configuration management side, he said, “if those things aren’t done, it makes it very hard for [program managers] or industry partners to deliver an ERP system that people want, because people haven’t defined what they want.”

Reader Comments

Mon, Nov 7, 2011 Old DOD hand

In Oct 27 testimony before the HASC, Ms. McGrath noted that an independent accounting firm will opine on GFEBS audit readiness by Dec 31 2011. Here's a job listing dated Nov 4, 2011 from "Collins Consulting, Inc." : FULL DESCRIPTION: Description Work Location: Washington DC or Indianapolis, IN Position Category: Team Lead Managing Accountant/Auditor/DoD Financial Management (6 or more years experience) Scope of Services: Audit readiness for GFEBS Statement of Budgetary Resources, and Existence and Completeness of Mission Critical Assets. Requirements: Accounting or finance degree required for the Accountant/Auditor/DoD Financial Management position. CPA, CGFM or equivalent preferred. 4 year college degree required from an accredited university. Desired skills:- CPA- Big 4 Auditing Experience POP is 3 October, 2011 27 September 2012 for OY2 and OY3 is September 28, 2012 -September 27, 2013. Travel: Up to 75% travel CONUS and OCONUS Clearance: Resources must be clearable to the DoD secret level prior to beginning work on the contract. The Government will accept interim DoD Secret clearances. Surely Collins Consulting, Inc is NOT the "independent public accounting firm" that has been hired to opine on GFEBS audit readiness.

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