GAO: DOD business systems need investment policy

Business Systems Modernization: DOD Needs to Fully Define Policies and Procedures for Institutionally Managing Investments

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The Defense Department should set clear policies and guidelines for making investment decisions as part of  its ongoing effort to modernize its business systems, according to a new Government Accountability Office report.

Although Pentagon officials have developed the necessary management structure to oversee investments in business systems, they have yet to develop and issue well-defined and disciplined policies governing those decisions, the GAO report states.

For example, existing policies and procedures for modernization projects do not clearly explain how to coordinate investment selections with the Pentagon’s acquisition and funding processes, GAO auditors wrote.

Furthermore, the Pentagon has yet to issue policies for creating and evaluating DOD’s business systems portfolios as a whole, according to GAO.

“Until DOD fully defines departmentwide policies and procedures for both individual projects and the portfolios of projects, it risks selecting and controlling these business system investments in an inconsistent, incomplete and ad hoc manner, which in turn reduces the chances that these investments will meet mission needs in the most cost-effective manner,” the GAO report states.

DOD officials partially concurred with five of the nine recommendations in the GAO report and disagreed with the remaining four.

For example, DOD officials rejected the recommendation that Deputy Defense Secretary Gordon England oversee post-implementation reviews of investment decisions, arguing that such reviews are already performed at the component level.

“The department will capture and leverage the lessons learned and best management practices from these component-level reviews and make them available...across the components,” wrote Paul Brinkley, deputy undersecretary of Defense for business transformation, in response to GAO’s report.

Brinkley added that officials are in the process of developing and implementing changes to DOD’s investment management practices that address many of the problems GAO identified.

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