Army overestimated enterprise e-mail savings

The Army's estimated cost savings from its enterprise e-mail initiative were significantly higher than the reality, report from CIO reveals.

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.”

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