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The Defense Department has not satisfied all the requirements for modernizing its business systems outlined in the 2005 Defense Authorization Act, according to the Government Accountability Office.

The department has fully complied with only one of the act's provisions, GAO stated in a recent report (GAO-06-219).

Defense officials have fulfilled the act's requirement to delegate responsibility for information technology systems to specific authorities, the auditors found. But while the department has established structures for reviewing and approving IT purchases, it has yet to put them in place, and some reviews have not followed criteria in the authorization law.

The Pentagon's business systems modernization project has been designated as high risk since 1995 by GAO and will remain that way until Defense complies with the six requirements outlined in the 2005 law, the auditors said. Despite repeated attempts, the Pentagon has yet to "modernize its timeworn business systems," the report stated.

Defense Secretary Donald Rumsfeld estimated that improvements to business systems and operations could generate annual savings of as much as 5 percent of the department's budget. This would amount to more than $20 billion in savings a year, according to GAO.

The Pentagon recently created an agency devoted to business change -- dubbed the Business Transformation Agency -- that will bring departmentwide projects like the Defense Travel System, the Defense Cash Accountability System and the Standard Procurement System under one roof.

The Pentagon's fiscal 2006 budget includes $4.2 billion for business modernization efforts, of which $777.7 million is slated to go to departmentwide projects. The fiscal 2007 budget for business transformation is projected to drop slightly, to $4.19 billion overall, with $739.5 million allocated for departmentwide projects.

In response to the report, Paul Brinkley, Defense deputy undersecretary for business transformation, wrote that he disagreed with some of the GAO findings, including a recommendation to create a current description, or architecture, of the department's business processes and information technology systems.

COMMENTS

• Robert M. has it correct. However, the problem starts in DoD and moves down through the services. DoD defines the policies for the components and the components operate incorrectly because that is what DoD has dictated. We have DoD personnel with no knowledge or experience making policy for things, such as accrual accounting, and they have no idea of what is involved. The DoD policies and lack thereof are the basis for the problems in the modernization program. When the DoD people hit a snag they simply ignore it and say they will take care of that later. Later never comes and they issue bad policy. The people are not bad, they just are ignorant of the facts to determine the best policy for DoD to follow to met the law. Their major interest is to obtain budget authority! The rest is icing and not important to them so it never will get done properly without outside help! Forget the outside help that simply adds cost and the final achievement is still DoD policy that is incorrect. The DoD people do not even know enough to tell the outsiders what to look at or what to do. Taxpayer Posted December 15, 2005 6:46 AM
• "They need to bring in some outside help. They need experts from the business world to come in and start cleaning up a mess that took decades of mismanagement to create. " Oh, really? You mean we should get experts from Enron and WorldCom perhaps? I've seen plenty of recommendations from these so-called "experts" -- from corrupt companies, non-corrupt companies and academia. Almost always they either don't tell you anything you didn't already know, or they have no clue as to what they're talking about. Yes, there are plenty of incompetent people in government. Yes, there are plenty of incompetent people in the higher echelons of government (SES types are certainly not excluded from this list). That said, I get tired of the notion that all government employees are clueless while all people from the private sector belong to Mensa. There are, after all, plenty of incompetent people in the private sector as well. Also, it is a myth to believe that outsourcing every possible government position automatically saves money. It does not. Outsourcing is frequently more expensive than keeping the work in-house. On top of that, it can complicate matters considerably when you outsource an agency's mission to 12 odd companies, each with their own agenda. Everyone has a right to his or her own opinion, but it does not follow that these opinions have even a remote association with reality. David Posted December 15, 2005 11:45 AM
• Aren't we just dancing around the problem? You can't start at the top or the bottom and you can't cut another third of the workforce until you answer one not very simple question. What is the business of the Department of Defense? Once you answer that question, you can develop the business model and processes and you would have a real shot at deciding what kind of a workforce we need to get the job done. For instance: Does DoD have to do accounting and bookkeeping? Probably not. Aren't there enough accountants and auditors in the private sector to do that? What part of financial management is a "core competency" that must be retained in house? Well, retain that part and outsource the rest. Does DoD need to maintain a human resources staff? Probably, but certainly not to the degree we currently staff. What are the "core competencies" of human resource management that must be retained in house? Well, do that and outsource the rest. Painful, yes. But until we decide what the business of DoD really should be, we are not going to score any better because we just keep punching the inside of that paper bag and there's no way out. GovExec.com reader Posted December 13, 2005 6:28 PM