Getting back on track

DOD business modernization plan switches priorities in response to stinging criticism

When Defense Department officials launched a plan in the 1990s to modernize the military's business processes and related computer systems, they had one goal in mind: to balance the department's accounting books.

Fifteen years later, amid criticism of wasteful spending and the realization that they might not achieve the goal of a clean financial audit by 2007, DOD officials recast the effort, known as the Business Management Modernization Program (BMMP), with the broader, more practical objective of improving support for warfighters.

Officials think that the new strategy, officially under way since March, will get BMMP back on track. The multibillion-dollar initiative is aimed at streamlining DOD's more than 4,000 financial, logistics, personnel and travel systems, including the ambitious Defense Travel System and the Defense Integrated Military Human Resources System.

"It's now about capabilities, not systems," said Elizabeth McGrath, deputy director for BMMP. "There's a big shift in focus in how we're approaching this."

How much help this course correction will give to the troubled program remains to be seen, but so far — and it is still early — the changes have not stemmed a series of critical reports.

Recent moves

Two months ago, DOD officials took some public steps in revamping the program. On March 15, they issued the first of five annual reports to lawmakers on the status of BMMP. They also reorganized the program by putting it under the control of the department's top acquisition official, instead of the comptroller.

The reorganization included the establishment of the new Defense Business Systems Management Committee, a governing and oversight group led by the deputy secretary of Defense and the department's top acquisition official. The commitee includes the service secretaries and other DOD leaders.

"We believe the work forms a foundation of information required to define quickly and implement transformative DOD-wide business capabilities on a rapid schedule," said Michael Wynne, acting undersecretary of Defense for acquisition, technology and logistics, in the March 15 report titled "Status of the Department of Defense's Business Management Modernization Program."

In the report, Wynne cited six recent accomplishments under BMMP, including developing an initial version of a business enterprise architecture and preparing for a business mission area transition plan. He also identified 19 goals they need to reach this year to achieve better business and combat support systems for warfighters, including completing the transition plan this spring and a new architecture this fall.

DOD officials also may create a program executive office to guide BMMP, McGrath said, speaking at an industry event last month. She became the program's deputy director in January 2004 and assists Paul Tibbits, BMMP's director, who was appointed in April 2004.

Pushed to act

The annual reports and the commitee's creation were not DOD officials' ideas. Lawmakers mandated the measures in the 2005 National Defense Authorization Act.

The directives mark the second consecutive year that Congress enacted legislation for stricter oversight of DOD business processes and systems. Lawmakers declared in the 2004 National Defense Authorization Act that department officials must approve expenditures of $1 million or more on business systems, excluding expenses for routine maintenance and operation.

Lawmakers hope these steps demonstrate that they will hold DOD officials accountable for ignoring business systems statutes and not meeting program schedules, said Rep. Todd Platts (R-Pa.), chairman of the House Government Reform Committee's Government Efficiency and Financial Management Subcommittee.

"There are now consequences," Platts said. "We want a little more oversight related to DOD business systems because we want to make sure taxpayers' funds are wisely invested."

The Government Accountability Office continues to support lawmakers' efforts to straighten out BMMP by highlighting problems and recommending changes in recent reports. GAO first designated DOD's business systems modernization program as high risk in 1995. The office put the same label on the department's approach to business transformation in its Jan. 25 report on high-risk areas.

Congress "put into law a series of steps to get control around the billions of dollars DOD spends annually on its business systems," said Randy Hite, director of information technology architecture and systems at GAO. "We made a lot of recommendations over the past four years to put in place an entity that has accountability and authority to guide, direct and approve modernization activities."

Last month, Congress' watchdog agency issued the second report this year on DOD's business transformation. It criticizes the department for wasteful spending and poor oversight.

The April 13 report, "DOD's High-Risk Areas: Successful Business Transformation Requires Sound Strategic Planning and Sustained Leadership," proposes that department officials devise a strategic plan, streamline systems investments and create the position of deputy secretary of Defense for management or chief management officer. The last provision is particularly needed, Hite said.

U.S. Comptroller General David Walker issued that April 13 report in conjunction with a hearing on the subject held by the Senate Armed Services Committee's Readiness and Management Support Subcommittee.

GAO's Jan. 25 report was one of its biannual reports on government programs most susceptible to waste, fraud and mismanagement. Eight of the 30 programs cited are run by the military.

"Senior leaders have shown commitment to business transformation through individual initiatives in acquisition reform, business modernization and financial management, among others, but little tangible evidence of actual improvement has been seen in DOD's business operations to date," Walker wrote, in the January report.

In yet another report, issued last July and called "DOD Business Systems Modernization: Billions Continue to be Invested with Inadequate Management Oversight and Accountability," GAO criticizes DOD officials for not establishing an effective structure for controlling business systems investments.

Last year, GAO reported that $19 billion of the $27 billion DOD received for IT spending in fiscal 2004 went to operating, maintaining and updating its business systems. Auditors also counted 2,274 DOD business systems, including 35 travel and 452 personnel systems. Many of them are redundant. The number of systems has grown to 4,150 since then.

Former DOD Comptroller Dov Zakheim thinks the department has made progress on BMMP despite the ongoing criticism from lawmakers and GAO officials. During the four years he oversaw the program, he said, DOD officials improved how they track and validate expenditures and adopted a more nuanced management approach that recognizes that financial accounting goals are only one of the program's objectives.

For example, Zakheim noted the creation of domain groups for each of BMMP's various subsets, such as financial management, travel and logistics. He said this made the program easier to manage and better positioned for success.

"We won some support," said Zakheim, now a vice president at the consulting firm Booz Allen Hamilton. "We made some progress."

More to come

After the flurry of negative reports on BMMP, McGrath said she yearned "for a neutral report someday."

But that may take time. Wynne said he reviewed a draft of a March 16 GAO report titled "DOD Business Systems Modernization: Billions Being Invested Without Adequate Oversight" that contains more criticism.

And Hite said he continues to work on another report on the program's business enterprise architecture.

Last year, GAO reported that DOD spent $203 million during the past three years but "had not developed a business enterprise architecture containing sufficient scope and detail to guide and constrain its departmentwide systems modernization and business transformation," the report states.

"DOD is not where it needs to be in respect to defining and implementing the business enterprise architecture and controlling ongoing investments," Hite said.

He said DOD needs a blueprint that addresses specifics. Hite said it needs to document existing systems, show the information flow among them, define future systems and explain the transition between the old and the new business enterprisearchitectures.

"BMMP is a very complex program," Hite said. "You have to be careful to not talk about it in a simplistic way. There are hundreds of aspects, including people and systems."

DTS gets new software drop

The Defense Department's Defense Travel System (DTS) reached an important milestone last month with the installation of the fourth of six planned software upgrades aimed at drastically improving a number of DTS' financial processes.

The new software release, called Madison, simplifies travel funding from the military services and DOD agencies for a single trip and provides comprehensive tracking and reporting of transactions to supporting financial systems.

With the latest release, DTS now consists of more than 6 million lines of computer code and connects to 30 systems, said Air Force Col. Brandy Johnson, program manager for DTS.

Plans call for the system to move to the fifth version of the software, called Monroe, later this year, and then to the final release, called Quincy Adams, in 2006, all prior to DTS becoming fully operational.

Those upgrades include more tools for arranging group travel and trips associated with foreign military sales. Additional links to military and civilian personnel systems will better validate personal information, Johnson said.

DTS represents an eight-year, $474 million initiative to build a comprehensive, paperless travel system designed to cut administrative costs. DOD's 35 existing travel systems rely on printed orders, paper vouchers, receipts and other documents to manage travel requests. The process involves about 40 steps and takes 11 days for reimbursement.

DTS uses a version of Gelco's Travel Manager software modified by North-rop Grumman. The software automates authorizations, reservations, processing, accounting, payments and archiving of transactions. The new online system involves about 21 steps and takes five days for reimbursement.

"DTS is very different from the online commercial travel reservation and procurement services used daily by millions of Americans," Johnson said. "The only similarity between commercial systems and DTS is the visible travel arrangements module, but even those function differently."

The system now works at 4,450 DOD sites here and abroad and will become operational at 225 popular travel destinations by the end of the year. It should be deployed to 11,000 locations by late 2006.

About 154,000 people have already used DTS at least once and about 530,000 have registered with the system. That number should increase to 1.5 million users by the end of the year. As of March, the system processed more than 485,000 travel requests, handling about 2,000 vouchers per day, Johnson said.

DOD officials expect DTS to substantially reduce travel voucher processing costs. For example, the Defense Finance and Accounting Service (DFAS) charges about $32.50 for each voucher processed by existing systems. DTS should cut that fee to about $5.25 when fully deployed, Johnson said.

But officials at the Citizens Against Government Waste remain skeptical of DTS. They issued a Sept. 28 report, "Defense Travel System: The Twilight Zone of Travel," characterizing the program as a waste of taxpayer money.

Of particular concern to the watchdog group was the 2002 reworking of the contract between DOD and Northrop Grumman so that taxpayers would bear the system's development costs instead of the company, a change made after company officials realized the challenging nature of the project, the group's report states.

"The manner in which the contract was reworked in the middle of the night, we have some problem with," said Tom Schatz, president of Citizens Against Government Waste.

Schatz said DOD officials awarded a $263.7 million contract to build DTS in 1998 to BDM, which was acquired by TRW, which in turn was bought by Northrop Grumman. He said the system has now cost more than $400 million. One military estimate puts the final cost at $537 million.

Johnson confirmed that DOD officials restructured the contract because of the "more challenging developmental nature of the project and the dependence of DTS functionality on successful interfaces with essential department systems." But she said they neither reduced the program's risk between the department and Northrop Grumman nor its end date of September 2006.

DOD officials have allocated $356 million to DTS to date and they expect to spend $118 million more through 2006, bringing the initiative's total to $474 million.

"This figure includes the total estimated original contract costs for Northrop Grumman of $264 million," Johnson said. "The DTS contract has not exceeded its original estimated cost, and DTS is operating within approved performance, schedule and cost parameters."

Army officials gave DTS a vote of confidence when they required all personnel who have access to the system to use it for their travel as of May 1.

From October 2004 through February, they said DTS had processed about 84,000 Army transactions at a cost of almost $186,480, compared with DFAS' handling of nearly 177,000 service transactions at a cost of more than $6 million.

DTS "reduces the Army's cost of travel administration significantly," wrote Valerie Baldwin, the Army's assistant secretary for financial management and comptroller, in an April 13 memorandum.

— Frank Tiboni

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