Army overestimated enterprise e-mail savings

Army estimates of the expected cost savings from deployment of its enterprise e-mail initiative were exaggerated, reveals a report from the Army CIO to Congress that was released to the public on April 2.

The report, which was submitted to Congress in February, outlines costs and analyses performed to establish the Defense Department interagency program. The Army CIO and congressional committees handling military affairs had failed to respond to media requests for the report after it was delivered to Congress.

An Army Audit Agency review of the enterprise e-mail program, which is a partnership with the Defense Information Systems Agency (DISA) as the managed service provider, revealed that the program's savings were overstated by nearly 25 percent.

“[P]rojected cost savings did not include all necessary factors. As a result, savings claimed (originally more than $100 million per year), though still significant, were overstated.”

After adjustments made following the review, the DISA-led option, which is already well underway, is estimated to save $76 million in fiscal 2013, and a total of $380 million through fiscal 2017.

The report also touts the benefits of the Army’s approach to enterprise e-mail, describing how the Army came to choose DISA over commercial options, Army Knowledge Online and the e-mail system that was already in use.

Provisions in the 2012 National Defense Authorization Act ordered the Secretary of the Army to assess cost savings over alternative e-mail solutions and detail the service’s acquisition strategy and use of fair and open competition.

According to the report, on Jan. 18 a business-systems IT working group chaired by the DOD deputy chief management officer “unanimously concluded that the cost-benefit analysis for enterprise e-mail was sufficient for making an acquisition decision, and unanimously confirmed the requirements document.” Two days later, the working group’s conclusion was validated by the Army Systems Acquisition Review Council (ASARC).

The business systems IT executive steering group and the ASARC were established as two bodies that will provide oversight on enterprise services decisions, a move made in response to NDAA orders for formal acquisition oversight.

The report notes that given the established oversight, the overseeing bodies’ approval of cost benefits, and security capabilities that received a go-ahead from the National Security Agency, the DISA-led approach is better than a commercial service.

Still, the NDAA provisions also mandated maximum use of open competition, which the report states the Army and DISA have complied with by using full and open competition and small-business set-asides in support services such as enterprise infrastructure.

Since the Dec. 31 enactment of NDAA, the Army has spent close to $78 million on enterprise e-mail, and will require another $12.7 million for completion. Another $42 million will be spent on “sustainment through Sept. 30, 2012.”

About the Author

Amber Corrin is a former staff writer for FCW and Defense Systems.

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Reader comments

Thu, Apr 5, 2012

Did the cost comparison/savings include the AKO option? From what I heard, the AKO option is cheaper. Shouldn't the press expose all the facts?

Thu, Apr 5, 2012

When NDAA mandated the use of "open competition" they didn't mean just for support contracts, the intent was that the entire system (including software) be bid out, not just sole-sourced to DISA using a certain technology stack. Congress erred in only requiring that a report be generated - they should have blocked the funds until Congress received *and accepted the findings* of the report. I suspect the appropriations committee is not amused and I expect to see more on this topic in the future.

Thu, Apr 5, 2012

Indeed, this whole debacle seems like it was orchestrated from the start by the CIO/G6 office in order to ensure there was no threat to Microsoft's business. They did try to compete the solution, and even went so far as to specify a Microsoft solution in the RFP (which is an acquisitions no-no.) When industry responded with an almost-universal "you can't do that", they pulled the RFP back and sole-sourced to DISA, with the stipulation that they use their "pre-existing" Microsoft Exchange licenses. of course Microsoft was more than willing to bend over backwards to allow this to happen (normally this would not be allowed.) And I bet you dollars to donuts that they avoid doing a fair and open solution competition once those Microsoft ELAs are up for renewal as well. This is the kind of Fraud, Waste, and Abuse that people in government are supposed to go to jail for - is the administration asleep at the switch?

Wed, Apr 4, 2012 EagleEye

I've been observing this whole escapade for the last year and must say the Army did not compete E-mail. What is missing in the above numbers is the hundreds of millions of dollars the Army is paying Microsoft for E-mail in a non-competitive environment.

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