GAO: Defense finance systems $6.9 billion over budget, years behind schedule

After a $5.8 billion investment, six out of nine Defense IT systems critical to the department's ability to achieve a financial audit are two to 12 years behind schedule. In addition, the systems collectively have experienced cost overruns of at least $6.9 billion, according to a review by the Government Accountability Office.

Asif Khan, director of financial management and assurance at GAO, told the Senate Homeland Security and Governmental Affairs Committee on Wednesday only one of 10 enterprise resource planning systems essential to transforming business operations at Defense has been completed.

The ERP systems are intended to replace more than 500 legacy systems that now cost hundreds of millions of dollars to operate annually, according to GAO. The successful implementation is essential to the department's ability to meet statutory requirements for financial management and auditing.

Congress required Defense, which is responsible for more than half the federal government's discretionary spending, to achieve an independent audit by 2017, a goal the department is not likely to meet. To date, no military service has been audited, although the Marine Corps is undergoing an audit.

Sen. Tom Carper, D-Del., chairman of the Subcommittee on Federal Financial Management, Government Information, Federal Services and International Security, said it is critical the department be ready for an audit by 2017.

"Not only will an audit help the Department of Defense ensure that billions of tax dollars are being spent properly, but it will help make certain that our troops have the equipment they need when and where they need it," he said.

Sen. John McCain, R-Ariz., noted, "If this were a corporation in America, the shareholders would have fired management long ago." In 2009, Defense changed its approach to improving financial management by focusing on two specific areas: budget data and information about mission-critical assets. By making those the top priorities, officials believe they can leverage efforts more effectively across the department to meet the most critical financial management data needs, while continuing to work toward being able to audit the department's financial records -- an approach endorsed by GAO, Khan said.

"Our business systems are not conducive to audits," Defense Comptroller Robert Hale told lawmakers.

"The Department of the Navy is a leader here -- the Marine Corps particularly," he said. While the Marine Corps audit is not due to be completed until Nov. 15, Hale said it's clear the service won't be able to meet that deadline.

"The Marine Corps will get a disclaimer," he said. Nonetheless, the exercise has been invaluable in developing lessons for all the services. For example, the audit has shown steps Defense entities must take to meet audit requirements in areas such as closing out contracts and reconciling accounts with the Treasury Department, he said.

"It's not sexy stuff. It's blocking and tackling," Hale said. "We've just got to get better at it."

Stay up-to-date with federal news alerts and analysis — Sign up for GovExec's email newsletters.
FROM OUR SPONSORS
JOIN THE DISCUSSION
Close [ x ] More from GovExec
 
 

Thank you for subscribing to newsletters from GovExec.com.
We think these reports might interest you:

  • Sponsored by Brocade

    Best of 2016 Federal Forum eBook

    Earlier this summer, Federal and tech industry leaders convened to talk security, machine learning, network modernization, DevOps, and much more at the 2016 Federal Forum. This eBook includes a useful summary highlighting the best content shared at the 2016 Federal Forum to help agencies modernize their network infrastructure.

    Download
  • Sponsored by CDW-G

    GBC Flash Poll Series: Merger & Acquisitions

    Download this GBC Flash Poll to learn more about federal perspectives on the impact of industry consolidation.

    Download
  • Sponsored by One Identity

    One Nation Under Guard: Securing User Identities Across State and Local Government

    In 2016, the government can expect even more sophisticated threats on the horizon, making it all the more imperative that agencies enforce proper identity and access management (IAM) practices. In order to better measure the current state of IAM at the state and local level, Government Business Council (GBC) conducted an in-depth research study of state and local employees.

    Download
  • Sponsored by Aquilent

    The Next Federal Evolution of Cloud

    This GBC report explains the evolution of cloud computing in federal government, and provides an outlook for the future of the cloud in government IT.

    Download
  • Sponsored by Aquilent

    A DevOps Roadmap for the Federal Government

    This GBC Report discusses how DevOps is steadily gaining traction among some of government's leading IT developers and agencies.

    Download
  • Sponsored by LTC Partners, administrators of the Federal Long Term Care Insurance Program

    Approaching the Brink of Federal Retirement

    Approximately 10,000 baby boomers are reaching retirement age per day, and a growing number of federal employees are preparing themselves for the next chapter of their lives. Learn how to tackle the challenges that today's workforce faces in laying the groundwork for a smooth and secure retirement.

    Download
  • Sponsored by Hewlett Packard Enterprise

    Cyber Defense 101: Arming the Next Generation of Government Employees

    Read this issue brief to learn about the sector's most potent challenges in the new cyber landscape and how government organizations are building a robust, threat-aware infrastructure

    Download
  • Sponsored by Aquilent

    GBC Issue Brief: Cultivating Digital Services in the Federal Landscape

    Read this GBC issue brief to learn more about the current state of digital services in the government, and how key players are pushing enhancements towards a user-centric approach.

    Download
  • Sponsored by CDW-G

    Joint Enterprise Licensing Agreements

    Read this eBook to learn how defense agencies can achieve savings and efficiencies with an Enterprise Software Agreement.

    Download
  • Sponsored by Cloudera

    Government Forum Content Library

    Get all the essential resources needed for effective technology strategies in the federal landscape.

    Download

When you download a report, your information may be shared with the underwriters of that document.