Report: DOD underestimated personnel system cost

DOD needs bettern internal controls over NSPS costs

The Defense Department has been underestimating the cost of its new personnel system, the Government Accountability Office concluded in a report released July 19.

In November 2005, DOD estimated it would cost $158 million to implement its National Security Personnel System, which incorporates a performance-based approach to pay. But GAO auditors found that the figure doesn’t include the full costs of deploying NSPS.

Moreover, the total amount of money DOD spent on NSPS between 2005 and 2006 can’t be determined because the department hasn’t established an oversight framework to capture the full costs associated with NSPS.

The report states that DOD’s $158 million estimate included some direct costs, such as $51 million for an NSPS program executive office. But it didn’t identify other direct costs, such as salaries for civilian and military personnel who support NSPS deployment departmentwide, according to GAO.

To get NSPS financial management on track, DOD needs to define all the costs relating to NSPS and construct a comprehensive oversight mechanism to ensure that those costs are fully captured and reported, GAO recommended.

NSPS program executive officer Mary Lacey said in a letter to GAO that “generally, we believe the report adequately portrays our efforts to capture costs” associated with NSPS. Lacey largely concurred with GAO’s recommendations in the report.

The findings of the report came as no surprise to the government’s labor unions, said Richard Brown, president of the National Federation of Federal Employees.

“We have been asking for a realistic estimate of the cost to implement NSPS since the plan’s inception but the department would not give it to us,” he said.

Under DOD plans, NSPS will replace the General Schedule personnel system for most of the department’s civilian employees.

The report was another setback on the financial-management front for the department. “DOD’s pervasive financial-management deficiencies have been the basis for GAO’s designation of this as a high-risk area since 1995,” GAO auditors said.

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