Deca dumps commissary upgrade plan

A plan to modernize the Defense Commissary Information System (DCIS) suffered a fatal blow last month when the Defense Commissary Agency (Deca) canceled the program in the face of rising Year 2000 costs and an inability to accommodate commercial best practices and systems.

The contract, awarded to Computer Sciences Corp. in 1995, called for re-engineering Deca's business practices and installing a retail grocery system developed and used by Shaw Supermarkets Inc., an East Bridgewater, Mass.-based supermarket chain with more than 90 stores in the northeastern United States. DCIS was designed to streamline deliveries, inventory and labor scheduling at some 300 of Deca's commissaries.

"At each decision point, we had reasonable expectations that DCIS would succeed. In the end, DCIS became another example where the government is unable to shift its business practices to accommodate commercial off-the-shelf systems," a Deca spokesperson said.

The original DCIS plan called for new electronic data interface transaction sets to be used between Deca and its commissary trading partners. However, when those partners expressed concerns over what a spokesperson characterized as "significant changes from the current transaction sets," Deca announced that it would modify DCIS so that the changes would not be necessary.

Officials from CSC said the government fumbled the contract requirements and did not adopt a commercial approach. "The contract requirements were modified and changed by the government from a commercial approach to a more proprietary internal government software solution," a CSC spokesman said last week.

However, in a statement issued shortly after the decision was made to allow the contract to expire, Maj. Gen. Richard E. Beale Jr., Deca's director, said the agency "can't afford it. I decided this as a result of fiscal constraints associated with our Year 2000 efforts and surcharge accounts."

DCIS was being funded through Deca's surcharge account, which is funded by a 5 percent tax added to purchases made at every commissary around the world and used to fund various operational expenses, such as supplies, equipment upgrades and renovations.

A spokesman for the National Grocers Association, a trade organization representing more than 15,000 retail and wholesale supermarkets, said, "I'm baffled. All you need to do is walk into almost any supermarket and see how they have their systems set up. There are [supermarkets] doing this all over the place."

Bob Dornan, senior vice president of Federal Sources Inc., a federal market consulting firm in McLean, Va., said the original statement of work for the contract clearly spelled out a movement to commercial practices. Deca "looked like they were doing the right thing by hiring somebody to show them the light," he said. "We talk about [business process re-engineering], but when it comes time to actually implement that, there's a lot of inertia that has to be overcome."

To date, Deca has sunk $48.8 million into the DCIS program, the Deca spokesperson said. To see DCIS through to completion— and allowing CSC to complete work on the five remaining option years of the contract— Deca estimates would cost the agency $127 million. However, the cost of making all of the agency's legacy systems Year 2000-compliant "is well below the estimated DCIS continuation costs," the spokesperson said.

Concerns Are Expressed

Beale's decision comes on the heels of a stinging indictment issued by the House National Security Committee in its report on the fiscal 1999 Defense authorization bill. In the report, the committee expressed concern about Deca's management of DCIS, pointing out that there have been $20 million in cost overruns, delays in fielding of up to 40 months and delays in meeting critical Year 2000 software adjustments.

According to the committee's report, "The development of this system has cost significantly more than originally expected and has taken considerably longer to develop than planned."

To date, CSC has recorded about $40 million in revenue from the DCIS contract, primarily from software development work and license fees.

Deca officials have not provided details of how the agency plans to continue the modernization effort or how the agency will integrate the hardware and software that has already been installed. According to the Deca spokesperson, "We will review the hardware and software pieces that we have purchased through the DCIS contract for possible incorporation into our business systems. Together with these pieces, we will continue to review advances in technology.... As to COTS, we'll consider all possibilities."

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