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i 

71–454 2012

[H.A.S.C. No. 112–83] 

DOD’S ENTERPRISE RESOURCE PLANNING 

(ERP) SYSTEM IMPLEMENTATION 

EFFORTS 

HEARING 

BEFORE THE

PANEL ON DEFENSE FINANCIAL MANAGEMENT 

AND AUDITABILITY REFORM 

OF THE

COMMITTEE ON ARMED SERVICES 

HOUSE OF REPRESENTATIVES 

ONE HUNDRED TWELFTH CONGRESS 

FIRST SESSION 

HEARING HELD 

OCTOBER 27, 2011 
(II) 

PANEL ON DEFENSE FINANCIAL MANAGEMENT 

AND AUDITABILITY REFORM 

K. MICHAEL CONAWAY, Texas, Chairman 

SCOTT RIGELL, Virginia 

STEVEN PALAZZO, Mississippi 

TODD YOUNG, Indiana 

ROBERT ANDREWS, New Jersey 

JOE COURTNEY, Connecticut 

TIM RYAN, Ohio 

PAUL FODERARO, Professional Staff Member 

WILLIAM JOHNSON, Professional Staff Member 

LAUREN HAUHN, Research Assistant 
(III) 

C O N T E N T S 

CHRONOLOGICAL LIST OF HEARINGS 

2011 

Page 

HEARING: 

Thursday, October 27, 2011, DOD’s Enterprise Resource Planning (ERP) System Implementation Efforts ................................................................................ 1 

APPENDIX: 

Thursday, October 27, 2011 .................................................................................... 23 

THURSDAY, OCTOBER 27, 2011 

DOD’S ENTERPRISE RESOURCE PLANNING (ERP) SYSTEM 

IMPLEMENTATION EFFORTS 

STATEMENTS PRESENTED BY MEMBERS OF CONGRESS 

Andrews, Hon. Robert, a Representative from New Jersey, Ranking Member, 

Panel on Defense Financial Management and Auditability Reform ................ 2 

Conaway, Hon. K. Michael, a Representative from Texas, Chairman, Panel 

on Defense Financial Management and Auditability Reform .......................... 1 

WITNESSES 

Fanning, Eric, Deputy Under Secretary of the Navy and Deputy Chief Management Officer, U.S. Navy ................................................................................. 6 

Khan, Asif A., Director, Financial Management and Assurance, Government 

Accountability Office ............................................................................................ 9 

Lewis, Mark, Deputy Chief Management Officer, U.S. Army ............................. 4 

McGrath, Hon. Elizabeth, Deputy Chief Management Officer, U.S. Department of Defense .................................................................................................... 3 

Tillotson, David, III, Deputy Chief Management Officer, U.S. Air Force ........... 8 

APPENDIX 

PREPARED STATEMENTS: 

Conaway, Hon. K. Michael .............................................................................. 27 

Fanning, Eric .................................................................................................... 47 

Khan, Asif A. ..................................................................................................... 62 

Lewis, Mark ...................................................................................................... 38 

McGrath, Hon. Elizabeth ................................................................................. 29 

Tillotson, David, III .......................................................................................... 54 

DOCUMENTS SUBMITTED FOR THE RECORD: 

‘‘Best Practices in Data Conversion,’’ by the DOD Office of the Deputy 

Chief Management Officer ........................................................................... 83 

WITNESS RESPONSES TO QUESTIONS ASKED DURING THE HEARING: 

Mr. Andrews ..................................................................................................... 99 

Mr. Young ......................................................................................................... 99 

QUESTIONS SUBMITTED BY MEMBERS POST HEARING: 

Mr. Conaway ..................................................................................................... 103 

(1) 

DOD’S ENTERPRISE RESOURCE PLANNING (ERP) 

SYSTEM IMPLEMENTATION EFFORTS 

HOUSE OF REPRESENTATIVES, COMMITTEE ON ARMED SERVICES, PANEL ON DEFENSE FINANCIAL MANAGEMENT AND

AUDITABILITY REFORM, 

Washington, DC, Thursday, October 27, 2011. 

The panel met, pursuant to call, at 8:00 a.m. in room 2212, Rayburn House Office Building, Hon. K. Michael Conaway (chairman 

of the panel) presiding. 

OPENING STATEMENT OF HON. K. MICHAEL CONAWAY, A REPRESENTATIVE FROM TEXAS, CHAIRMAN, PANEL ON DEFENSE FINANCIAL MANAGEMENT AND AUDITABILITY REFORM 

Mr. CONAWAY. Well, good morning, everybody. We will go ahead 

and start. The clock on the back of the wall has officially gone to 

8:00. I would like to welcome each of our witnesses to the hearing 

this morning on Enterprise Resource Planning Systems, the implementation efforts. In all of our previous hearings, regardless of 

topic, ERP [Enterprise Resource Planning] systems are always an 

integral part of the discussion. 

Whether the discussion is centered around the skills needed 

within the management workforce, accountability of assets or the 

controls needed to prevent potential Antideficiency Act violations. 

So it is fitting that the panel today hold a separate hearing on the 

Department of Defense Enterprise Resource Planning Systems. 

Today we will examine the scope of the ERP efforts and the status of implementation of the ERPs and their ability to improve the 

Department’s financial management. According to DOD [Department of Defense], the successful implementation of the ERPs is a 

key element to addressing longstanding weaknesses in financial 

management and achieving audit readiness. Yet, GAO [Government Accountability Office] has reported over the years that the 

Department has not effectively employed acquisition management 

controls to ensure the ERPs deliver the promised capabilities on 

time and within budget. 

The GAO has also reported that delays in the successful implementation of ERPs have extended the use of existing systems and 

continue the funding of these legacy systems longer than was 

planned. The Department of Defense OIG [Office of Inspector General] noted in its testimony before the Panel in September, that the 

development, implementation and effectiveness of these ERP systems are questionable at this point. 
2 

With billions of taxpayer dollars at stake, it is critical that the 

Department of Defense take the necessary actions to ensure that 

ERPs are successfully implemented. The Secretary of Defense directed the Department to move up the audit readiness date of the 

statement of budgetary resources from 2017 to 2014. However, certain of the ERPs are not scheduled to be fully deployed until near 

or during 2017. 

In order to meet the 2014 deadline, will the Department move 

up the ERP deployment dates, make enhancements to the existing 

legacy systems, improve manual controls or some combination of 

the three? Also will the DOD need additional resources for these 

efforts? We will be interested in getting some insight today for the 

Department of Defense’s approach to accomplishing this goal. 

One of the key responsibilities of the Department of Defense deputy CMO [Chief Management Officer] and the military department 

CMOs and their respective deputies is to support business system 

modernization efforts in a manner that synchronizes these efforts 

with the financial improvement activities of the reporting entities. 

This becomes all the more important as DOD works toward achieving audit readiness of the SBR [Statement of Budgetary Resources] 

by 2014, while also keeping on track to achieve auditability for the 

full set of financial statements by 2017. 

I want to thank our witnesses for coming today. We have with 

us today the Honorable Elizabeth McGrath, Deputy Chief Management Officer, Department of Defense, Mark Lewis, Deputy Chief 

Management Officer of the United States Army, Eric Fanning, 

Deputy Undersecretary of the Navy and Deputy Chief Management 

Officer for the United States Navy, David Tillotson, III, Deputy 

Chief Management Officer for the United States Air Force and Asif 

Khan, Director, Financial Management and Assurance, GAO. 

Rob, any comments you would like to make before we start? 

[The prepared statement of Mr. Conaway can be found in the Appendix on page 27.] 

STATEMENT OF HON. ROBERT ANDREWS, A REPRESENTATIVE 

FROM NEW JERSEY, RANKING MEMBER, PANEL ON DEFENSE FINANCIAL MANAGEMENT AND AUDITABILITY REFORM 

Mr. ANDREWS. Well good morning, Mr. Chairman. Good morning 

to my colleagues and to the panel this morning. We really appreciate the seriousness and devotion that members of this panel have 

given to this joint enterprise. You have all contributed in a very 

valuable way already and we are anxious to hear from you this 

morning. 

The problem with the enterprise systems is the best case study 

as to why we need auditable financial statements. We spend a lot 

of money, a lot of time, very mixed results and we really can’t quite 

figure out why. Now people have theories and they have ideas, but 

one of the reasons we can’t really quite figure out why is because 

the data that would lead us to the conclusions as to why we have 

had trouble, aren’t themselves reliable because we don’t have a system that can generate the right data. 

It is a classic chicken-and-egg problem. You can’t figure out why 

we couldn’t get the enterprise systems right until you have a sys-
3 

tem that tells you what happened. And you can’t have a system 

that tells you what happened until you get the enterprise systems 

right. So I am glad that we have identified the problem. I am quite 

confident that the men and women that we have working on solving the problem have very high skills and very good intentions and 

are very devoted to the cause. 

So we are very glad to hear from you this morning, but several 

of the panel members have said a number of times, how do I explain to people back in my district what we are trying to do here 

and what the problem is? And the way I look at boiling this down 

to its most simplistic form is that over the last decade or so, I guess 

longer, the taxpayers have spent billions of dollars to collapse dozens or hundreds of systems that aren’t compatible into 10 that— 

I guess it is 10, that work. 

And we are not quite there yet. And there are a lot of bumps in 

the road and they would be astonished at that. They wouldn’t be 

very happy about that. And I don’t think anybody here is either. 

So, our collective mission is to figure out where we are, how to get 

to where we need to be and I think our job as members of Congress 

is to give you the tools and resources to get you there. 

So I look forward to hearing the testimony this morning and asking questions. And I thank you Mr. Chairman for calling the hearing. 

Mr. CONAWAY. Thanks, Rob. I appreciate that. 

Ms. McGrath. Your opening statement. 

STATEMENT OF HON. ELIZABETH MCGRATH, DEPUTY CHIEF 

MANAGEMENT OFFICER, U.S. DEPARTMENT OF DEFENSE 

Ms. MCGRATH. Good morning. Chairman Conaway, Congressman 

Andrews, other members of the panel, thank you for the opportunity to return to this panel and discuss the role of the Enterprise 

Resource Planning Systems in achieving our audit readiness goals 

at DOD. Secretary of Defense Panetta recently highlighted the importance of auditability for the Department. 

He discussed it earlier this month in his testimony before the full 

House Armed Services Committee, also in his October 13th policy 

memorandum to the Department, which mandated the acceleration 

of certain aspects of the Department’s Financial Improvement and 

Audit Readiness plan in order to ensure we achieve the Congressionally mandated audit of 2017. 

He noted auditability is a goal every commander, manager, functional specialist must understand and embrace to improve efficiency and accountability. DOD has made substantial progress over 

the last 2 years to improve its business processes, financial controls, workforce and defense business systems. But a significant 

amount of work still lies ahead. 

Implementation of systems to include ERPs is an important component of our progress as the chairman noted. As Secretary Panetta said, while the department systems do tell us where we are 

spending taxpayer funds, we do not yet have the details and controls necessary in place to pass an audit. The Secretary’s mandate 

underscores the partnership between the Under Secretary of Defense, Comptroller’s office, my office, the military department Chief 
4 

Management Officers and the Department’s other functional business owners. 

All of which will be required to achieve our audit goals. We consistently work together to ensure that we are effectively synchronizing our broader business improvement efforts with the Department’s audit readiness goal. It is a part of our broader business 

conversation. By improving our business systems environment by 

implementing ERPs, modernizing legacy systems when there is a 

business case that supports it and certainly sunsetting legacy systems not aligned with our business objectives. 

The design principles within ERP directly enable key elements of 

auditability such as, enforcing process and execution standardization among implementing organizations, managing consolidated 

business data into a single repository that allows centralized access 

control and handles transactions from an end-to-end perspective. 

As Congressman Andrews noted, it is all about the data. 

Enabling traceability of transactions, documenting repeatable 

processes and procedures and demonstrating compliance with laws, 

regulations and standards, all part of a broader business conversation end-to-end processes which systems play a role. Implementing 

ERPs requires sustained commitments from our senior leaders and 

often requires—I would say always requires change of processes 

and policies to achieve successful implementation. 

We have placed significant emphasis on orienting our business 

environment, utilizing our business enterprise architecture, defining end-to-end processes that support our audit goals like procureto-pay and budget-to-report. We are improving the usability implementation of the architecture because if an architecture isn’t usable, nobody will use it. 

Very important for us, again documenting the processes, understanding the standards and internal controls. Finally we are also 

improving our approach to acquiring and implementing our business IT [Information Technology] systems, our new acquisition 

model for defense business systems called the Business Capabilities 

Lifecycle is in use today for a growing number of programs across 

the Department. 

It aligns requirements, investment and acquisition processes 

under an integrated government framework and focuses on incremental delivery of capability within 12 to 18 months. Achieving 

auditability across the Department not only requires successful 

modernization of systems, but that we apply a consistent level of 

process controls across our organization and functional areas. 

DOD leadership understands this and is committed to achieving 

our audit goal. Thank you again for having me here today. 

[The prepared statement of Ms. McGrath can be found in the Appendix on page 29.] 

Mr. CONAWAY. Thanks, Ms. McGrath. 

Mr. Lewis. 

STATEMENT OF MARK LEWIS, DEPUTY CHIEF MANAGEMENT 

OFFICER, U.S. ARMY 

Mr. LEWIS. Chairman Conaway, Congressman Andrews, members of the panel, thank you for the opportunity to testify today regarding the Army’s efforts to implement its Enterprise Resource 
5 

Planning Systems and other actions related to audit readiness. 

This is an important topic with regard to the Department of Defense’s effort to achieve auditability by FY [fiscal year] 2017. 

And I am honored to have that opportunity to represent the 

Army before your panel. The Army believes it has set the conditions towards achieving auditability. At this point we believe that 

the Army will be able to comply with both the interim target, specified in the fiscal year 2010 National Defense Authorization Act 

which states for 2015 and to assert audit readiness by fiscal year 

2017. 

We have increased leader involvement and emphasis from the 

Secretary of Defense through the Secretary of the Army and the 

Under Secretary of the Army in his role as the Chief Management 

Officer. The Secretary of Defense most recently indicated his intent 

with his 13 October memo directing the Department to be able to 

assert audit readiness for the statement of budgetary resources by 

2014. 

We are currently in the 60-day period for review of our plans as 

he directed. The Army has implemented enterprise governance over 

business processes and systems involving all the key members of 

the Army staff and Army commands. These forums bring together 

the experts and manpower, personnel, logistics, facilities and intelligence in addition to, of course, the financial management and 

comptroller personnel and functions. 

Under the guidance and direction provided by the assistant Secretary of the Army for financial management and comptroller, we 

have created and implemented the Army’s Financial Improvement 

Plan, FIP, which is the Army’s roadmap to audit readiness and ensures alignment with the OSD [Office of the Secretary of Defense] 

Financial Improvement and Audit Readiness, FIAR, Guidance. 

The Army is developing and fielding four ERPs which will greatly support audit readiness as has been mentioned, by providing 

traceability of actions from source to statement using documented 

and disciplined processes and demonstrating compliance with laws, 

directives and standards. Using our business governance forms, we 

are conducting end-to-end process mapping and continuous process 

improvement to optimize our business processes and identify gaps 

and redundancies in our systems. 

These actions are continuous and ongoing efforts. With your support and assistance, the Army has provided adequate funding to 

our ERPs and remaining legacy systems for development and 

sustainment. Finally, we have established a culture with ongoing 

training in business case management, cost containment to help 

ensure that we use our resources efficiently and effectively. Good 

stewardship of the taxpayers’ dollars is nonnegotiable. 

Being financially auditable requires input from many financial 

feeder systems. However the ERPs are the glue that supports the 

financial auditability. 

GFEBS [General Fund Enterprise Business System] will consolidate the management and reporting of our general funds and assets across the Army enterprise. GFEBS is on track to be deployed 

to 160 locations later this year and will replace over 106 legacy systems when they are audited and certified for removal. GFEBS also 

provides for real property accountability. 
6 

Next, the global combat systems support Army. GCSS [Global 

Combat Support System]–Army is presently undergoing initial operating tests at Fort Bliss, Texas. This is the first location where 

both GFEBS and GCSS–Army are deployed jointly and offers us 

the opportunity to test the financial interfaces between the two 

ERPs in a live environment. 

GCSS–Army contains the master database for Army equipment 

and will enhance asset transparency and visibility. A key aspect of 

our 2017 auditability goals. Right now initial indications from that 

test, things are going as expected, well. 

LMP [Logistics Modernization Program] is fully deployed within 

the Army material command. In December of this year, we will 

complete the software upgrades to LMP that will update the financial functionality and bring that system into compliance with 

FISCAM [Federal Information System Controls Manual] standards. 

LMP contains the ledger for the Army working capital and 

should be for an independent audit evaluation later this year. 

Finally the Integrated Personnel Pay System–Army, IPPS–Army, 

our integrated personnel and pay system of the future is in its beginning stages. 

The first increment is to create a consolidated data base that 

brings together the military personnel information from our active 

duty, United States Army Reserve and Army National Guard soldiers. This database will be the single consolidated source for military pay and personnel and will be delivered by 2013, the database. 

While IPPS–Army will continue to be developed for several years 

when fully deployed, it will be able to calculate military pay directly. 

For my part, I bring over 40 years of continuous service to the 

United States Army both as a commissioned officer and now as a 

senior civilian for 10 years. I have had numerous staff jobs on the 

Army and Deputy G–1, Deputy G–3 and now the DCMO [Deputy 

Chief Management Officer]. 

I look forward to your questions. Thank you very much. 

[The prepared statement of Mr. Lewis can be found in the Appendix on page 38.] 

Mr. CONAWAY. Thank you, Mr. Lewis. 

Mr. Fanning. 

STATEMENT OF ERIC FANNING, DEPUTY UNDER SECRETARY 

OF THE NAVY AND DEPUTY CHIEF MANAGEMENT OFFICER, 

U.S. NAVY 

Mr. FANNING. Mr. Chairman, Congressman Andrews, members of 

the Panel, thank you for the opportunity to discuss the role of 

ERPs and supporting the Department of the Navy’s efforts to 

achieve financial auditability. I am particularly honored to be testifying before the committee where I started my professional career 

almost 20 years ago to the day. 

Financial auditability is one of the top priorities the Department 

has set out and the Department of the Navy’s strategic objectives 

signed out annually by the Secretary, the Commandant of the Marine Corps and the Chief of Naval Operations. 

Auditability is also one of the four main focus areas of the Department’s business transformation plan which is administered by 
7 

my office. And as Ms. Commons, our Assistant Secretary for Financial Management and Comptroller has already testified, 

auditability is a key part of the performance measures for any leader who has any role, large or small, in achieving this goal including 

my boss, the Under Secretary of the Navy. 

The Department of the Navy’s financial improvement plan 

timeline is also in compliance with Secretary Panetta’s directive to 

accelerate a validated statement of budgetary resources. The Department had already planned to assert its SBR by the end of fiscal 

year 2013. We are currently reviewing our strategy to see where 

we can accelerate our plan in order to mitigate any risk resulting 

from the new schedule. 

Of course we are here today to answer questions on how our investments in ERPs are supporting our efforts to achieve 

auditability. While the Department is committed to achieving 

auditability in a legacy environment, deployment of ERPs makes 

this goal easier to reach, more affordable and is critical to sustaining any audit ready environment. 

The Department has three IT efforts that contribute to audit 

readiness success. The first, Navy ERP provides improved financial 

discipline, improved accuracy with automated entry of key data 

fields and an audit trail associating users and electronic documents 

with transactions. It provides a single system for budgeting, funds 

availability, and execution across all major acquisition commands. 

In addition to financial controls, it results in single data source 

with common data structures, standardized processes and improved compliance across these commands. 

The second is our future personnel and pay solution which is on 

track to better support our financial improvement plan. After reset 

the effort in order to reprioritize the business problems it was developed to fix. Instead of a big bang solution delivering the long 

term future date we have reworked the plan to develop incremental 

capabilities so as to address our most pressing problems first. 

Financial improvements are in the highest priorities in this new 

construct and the financial management community is much more 

integrated into this effort than it was before. 

The third is the Marine Corps global combat support system. It 

is currently deployed to 7700 users and is demonstrating business 

value in several areas. For example, the time to first supply status, 

the primary measure for logistics responsiveness has been reduced 

from over 24 hours to an average of 1.5 hours. 

Additionally, order shipment times have been reduced by 29.1 

percent and maintenance repair cycle time has been reduced 48.5 

percent. 

But systems and technology alone, of course will not get us to 

clean audit statements. It is just as easy to automate bad processes 

as good ones and the work of improving our processes, standardizing our data and enforcing our controls is where we will meet 

success. And it is in these efforts that the DCMOs and the comptrollers are most closely aligned. Those goals the financial management community needs to accomplish in order to achieve financial 

improvement are in complete sync with the steps the business 

transformation community needs to take in order to make our busi-
8 

ness operations as efficient and effective as possible in support of 

the warfighter and as good stewards of taxpayer dollars. 

Thank you, and I look forward to your questions. 

[The prepared statement of Mr. Fanning can be found in the Appendix on page 47.] 

Mr. CONAWAY. Thank you, Mr. Fanning. 

Mr. Tillotson. 

STATEMENT OF DAVID TILLOTSON III, DEPUTY CHIEF 

MANAGEMENT OFFICER, U.S. AIR FORCE 

Mr. TILLOTSON. Thank you, Mr. Chairman, Mr. Andrews and 

members of the panel. It is a privilege to be here today to talk to 

you about the Army or pardon me, the Air Force’s ERP systems— 

I will talk about the Army’s systems, too—and the impact on our 

progress towards auditability and financial readiness. 

The implementation of the enterprise resource programs, which 

my colleagues have already discussed, is an essential implementation step in achieving the audit readiness goals. 

Having said that, the Air Force leadership recognizes that IT 

systems alone do not actually get us to audit readiness. We also 

have to address management challenges, process controls and the 

kind of things Mr. Chairman, you addressed in your opening question. 

For the Air Force in particular, that will become a very relevant 

question because as this panel is well aware, the Air Force schedules for achieving audit readiness tended toward the end of the objective period. 

So the goal that Secretary Panetta has recently set will cause us 

to fundamentally relook at our strategies going forward. And the 

result of that will be to not only consider what we are doing with 

the ERP deployments but we are going to have to go back and reconsider legacy remediation as well as increased process controls. 

And that work is under way as part of the 60-day planning cycle 

that the Department’s—the DOD Comptroller has laid in place. 

I have submitted to the panel my written testimony a summary 

of the three Air Force ERPs that span financial supply chain logistics and human resource management, those systems are the Defense Enterprise and Accounting Management Systems, DEAMS, 

the Expeditionary Combat Support System, ECSS, and Air Force 

Integrated Personnel and Pay System. 

DEAMS will replace nine legacy systems. It is operational, at 

Scott Air Force Base. In its first instance, it has actually achieved 

its second end-of-year closeout, much better than I will report from 

the previous years. 

More importantly from a mission execution point of view and a 

benefits point of view it has begun to point to the kinds of things 

that that GAO has suggested we should be finding all the time as 

we improve audit controls. We have reduced our interest penalty 

payments which were in fact substantially reduced previously, but 

we have maintained that record with the new deployment. More 

importantly, we have highlighted overaged, unmatched disbursements and delinquent account receivable, all of which was good financial management practice and would improve cash flow within 
9 

the Department so we are seeing the benefits at least at that base 

and certainly to expand that out to make that more significant. 

ECSS, our logistic and supply chain system, is targeted to underpin a wholesale transformation of our logistic supply chain and 

maintenance processes. This is a very ambitious project. It is 

scheduled to replace 240 legacy core systems and ranges from 

depot level activities, wholesale supply down through flight line 

maintenance kinds of activities. 

Having said that, we have recently undergone some programmatic issues with the ECSS program. We reported it to Congress at the beginning of the year, a change in this program. We 

have since had to address changes since that report because of program performance. So on a positive note, we have implemented the 

kinds of management direction that the GAO has suggested back 

in their November 2010 report for providing better oversight of the 

ERP program execution. The bad news is when you have bad execution then you have to actually go back and adjust your plans. So 

we are in the process of doing that. 

Bluntly, the re-plan for that is still underway, we report back to 

the Department by next month, by November. We would be reporting back out more publicly in the December time period about a 

way ahead for the ECSS program. 

The Integrated Personnel and Pay System will integrate 105 personnel and pay processes. We have mapped those quite extensively. 

We are actually in the early phases of that program. We are in the 

process of generating the request for proposal that is due to go out 

here in the next 30 days or so, and we are anticipating a contract 

award on that program sometime in the Spring/Summer of next 

year. And that is on schedule so that is not a revised schedule, that 

is the current schedule for that program. 

It will replace ultimately nine legacy systems. Within the Air 

Force, the Chief Management Officer, the Under Secretary and the 

CFO [Chief Financial Officer] partner closely on all auditability 

goals and business transformation goals. And in fact at my level, 

I co-chair panels with Dr. Morin, our CFO, and recently in our 

audit acceleration process, it will be me and one of his key directors 

who will co-chair the acceleration process. So we are coupled at the 

hip from our point of view on the auditability goals. 

And I thank you for the time. 

[The prepared statement of Mr. Tillotson can be found in the Appendix on page 54.] 

Mr. CONAWAY. Thank you, Mr. Tillotson. 

Mr. Khan. 

STATEMENT OF ASIF A. KHAN, DIRECTOR, FINANCIAL MANAGEMENT AND ASSURANCE, GOVERNMENT ACCOUNTABILITY OFFICE 

Mr. KHAN. Thank you Mr. Chairman, Mr. Andrews, members of 

the panel, good morning. It is a pleasure to be here today to provide a perspective on the status of DOD’s business modernization. 

Effective implementation of enterprise resource planning systems 

is a key in DOD’s efforts to reach auditability, to be audit ready 

and to be audit ready by fiscal year 2017, and now, as you have 

discussed, to meet the interim goal of preparing an auditable State-
10 

1The written testimony did not include the word ‘‘additional’’ in the sentence. GAO confirmed 

that the word ‘‘additional’’ should be deleted from the transcript. 

ment of Budgetary Resources by a new department-wide date of 

2014, as Secretary Panetta recently announced before the full 

Armed Services Committee. 

Today I will summarize three conditions holding back DOD from 

achieving its goals in ERP implementation. 

First, I will discuss the problems in scheduling and in estimating 

costs. Second, gaps in functions the systems are able to perform. 

And finally, a lack of compliance with standards. 

My statement today is based primarily on our prior work. 

First, scheduling and costs. In October 2010, we reported on 10 

ERPs that DOD identified as critical in transforming its business 

operations. Our review of DOD’s data found delays in implementation of these systems ranging from 2 to 12 years. Five systems had 

incurred cost increases totalling an estimated $6.9 billion. 

In our detailed analysis of four ERPs, we found that the development programs for these systems had omitted certain elements of 

risk analysis called for in scheduling and cost guidelines issued by 

DOD, GAO or OMB [Office of Management and Budget]. 

The DOD IG reported in 2011 that, in estimating $2.4 billion in 1

costs for implementing its general ledger ERP, GFEBS–Army had 

not identified all the project’s requirements and costs. Had they all 

been included, the costs might have been significantly higher. 

Unreliable schedules can increase costs with additional time and 

rework needed before the system is fully functional. And as costs 

for ERP rise above estimates, funding is extended for the legacy 

systems that cannot yet be replaced. 

Second, gaps in functionality. We found significant gaps between 

needed ERP functions and those delivered. In November 2010 we 

reported that Army’s Logistics Modernization Program, LMP, had 

not fully developed the capabilities that LMP needed to perform 

certain basic logistical tasks. For example, maintaining accountability for ammunition. 

Officials of the Joint Munitions and Lethality Life Cycle Management Command told us in contrast to the systems LMP was slated 

to replace, LMP did not enable staff to record the shipping, receiving or transfer of ammunition to another site. Army, to compensate, had planned to hire 172 additional personnel to perform 

manual data entry until the software could be modified to perform 

the required functions. 

In preliminary results from an ongoing review, we also found 

problems in our Army GFEBS and Air Force’s general ledger system, DEAMS. For example, financial personnel had to devise manual workarounds because of deficiencies in ERPs’ ability to accept 

data directly from other systems, including two-thirds of the data 

from an invoicing and receiving system. Such manual workarounds 

are cumbersome, error-prone, expensive and ultimately not sustainable. 

Army and Air Force officials told us that they have plans to address the issues that we raised. 

Finally, lack of compliance with U.S. Standard General Ledger. 

To be efficient and effective as a financial management tool, an 
11 

ERP must be able to process information according to accounting 

and financial reporting standards, a basic requirement for consistent reporting of financial information and the preparation of financial reports. 

But in November 2010 the DOD IG found that after more than 

10 years in development and a cost of $1.1 billion, Army’s LMP system was not compliant with the U.S. Standard General Ledger. For 

example, the Standard General Ledger contains 11 budget records 

related to contract authority for working capital funds, but LMP 

contained only three. As such, as a result it was not recording all 

the data needed for the Statement of Budgetary Resources. 

With a history of slow-moving improvement programs that fall 

short of their goals, DOD now faces the additional challenge of responding to urgent fiscal demands and serious deadlines. DOD 

leadership has taken encouraging steps toward positive change. 

But in order for DOD to achieve its goals, it is critical that leadership sustain its commitment to progress and its involvement in 

oversight to ensure that capable systems and effective processes 

are established throughout the Department. 

Mr. Chairman, Mr. Andrews, members of the panel, this concludes my prepared statement. I will be happy to answer any questions. Thank you. 

[The prepared statement of Mr. Khan can be found in the Appendix on page 62.] 

Mr. CONAWAY. Thank you, Mr. Khan. 

We will start our questioning with Mr. Todd for 5 minutes. Todd? 

Oh, Mr. Young, excuse me. Todd? 

Mr. YOUNG. Thank you, Mr. Chairman. 

Thank you to all of our panelists for being here this morning 

bright and early. I think we will, I am certainly hopeful we will 

have all the leadership at the highest levels in the Pentagon, especially with Mr. Secretary’s recent indication that we are going to 

accelerate this whole process. And I know that that will probably 

be a great point of focus for this working group in the future trying 

to figure out the implications that has on all aspects of this larger 

effort. So, I look forward to that. 

Ms. McGrath, I know that many years of effort and millions of 

dollars were invested in an effort to put together a departmentwide integrated personnel and payment system, and that that effort wasn’t successful. Ultimately there were some complications, 

some challenges. And instead the military services pursued their 

own integrated personnel and payment systems. 

First, why did that effort fail? And then secondarily, what sort 

of lessons were learned? And how might those lessons help us as 

we move forward in developing these ERP systems? 

And after you are done, if anyone else would like to add, that 

would be welcome. Thank you. 

Ms. MCGRATH. So the system that you are referring to, the Defense Integrated Military Human Resources System, commonly referred to as DIMHRS, within the Department provides an opportunity for us to learn many lessons. And I think a lot of the opening statements—you have heard some of those lessons actually 

being conveyed in the opening statements. 
12 

The challenges that were identified in DIMHRS implementation 

started with data. To Mr. Andrews’ comments earlier, all about the 

understanding the authoritative source of the data. How clean is 

it? Who defines it? So, that we had consistency not only within the 

components, but across the defense enterprise. 

We are not standard across the defense enterprise in the military 

pay. The way we define certain things like leave, and it is just not 

standard. And so what DIMHRS was also looking to do is not only 

pay but achieve standardization of data, processes. 

We don’t have consistent processes in this space. And so in order 

to successfully implement a solution, an IT solution, the fundamental aspects of both process and data had to be achieved. And 

I think that as that system, and Army was the first Service identified for implementation, and we learned through testing, that the 

Army had a lot of challenges in their data. 

And I’ll say have heeded that lesson. And so the first aspect of 

their integrated purse pay solution is establishing the authoritative 

data within the Army that will feed, I will say the rest of the business processes. And so I would say not only did we learn it, but 

it is being applied in the Army’s integrated purse pay solution. 

Now, governance too—— 

Mr. YOUNG. Could I stop you there just to clarify? I was a management consultant for a period of time, and I tend to focus on 

business process redesign because the whole ERP systems was an 

area a bit abstruse for me. But I know the two are very much related. 

And one challenge to adopting a department-wide system, it 

sounds like you are saying, was the difficulty of getting the different services, say, to recognize different pay categories by the 

same names or to change certain processes. Is that incorrect? 

Ms. MCGRATH. It is processes. Again, with good reason we execute differently across the military departments. And so to then 

bring all that into a single solution adds complexity and challenge. 

And so the getting a standard definition of an end-to-end process, 

and there are many within an integrated purse pay solution because you are dealing with how do I calculate entitlements, to how 

do I pay? 

Mr. YOUNG. Right. 

Ms. MCGRATH. And so it is processes across the Services. It is 

also then the governance required to actually enable those process 

definitions to happen. Cross-functionally, if you will, you need the 

personnel folks and the pay to then decide you know how do we 

come up with a single end-to-end process to effectively execute this 

business? 

Mr. YOUNG. Okay. So, you know maybe we will talk offline here. 

I think my time is expired. But I would be interested in some of 

the lessons learned, how you are going to apply them to future success. So, thank you. 

[The information referred to can be found in the Appendix on 

page 99.] 

Mr. CONAWAY. Mr. Andrews. 

Mr. ANDREWS. Thank you. 

Mr. Khan, the GAO looked at the 10 ERPs. And my understanding is that six of them had delays ranging from 2 to 12 years 
13 

in implementation. Does that mean the other four were on schedule? 

Mr. KHAN. Yes, sir. At least as of last year, from the information 

we were provided the other four were—— 

Mr. ANDREWS. So, this is in the 2010 report. 

Mr. KHAN. Correct. Yes. 

Mr. ANDREWS. And then on cost that 5 of the 10 were generating cost overruns, aggregating the $6.9 billion. 

Mr. KHAN. That is correct. 

Mr. ANDREWS. Does that mean the other five were within budget? 

Mr. KHAN. Well, we didn’t have information for the others. 

Mr. ANDREWS. So, we are not sure about that? 

Mr. KHAN. We are not sure about those ones. 

Mr. ANDREWS. Okay. 

I just want to look at GFEBS for a minute. Mr. Lewis, I am not 

picking on GFEBS, but there is frankly more data about it. So, I 

just want to kind of walk through this. 

The history of GFEBS is that it starts in 2004, right, Mr. Khan? 

Mr. KHAN. Correct. 

Mr. ANDREWS. When was it originally supposed to be fully 

fieldable and implemented? Mr. Lewis, do you know? I know you 

weren’t there to—believe me, I understand you walked into this 

story in the middle and not the beginning, so I get that. But when 

was it supposed to be done? 

Mr. LEWIS. I don’t know that date. I do know it was some years 

before that. 

Mr. ANDREWS. Before now. It started in 2004, right? 

Mr. LEWIS. Right. 

Mr. ANDREWS. That is when the—okay. Mr. Khan, do you know? 

Maybe if you just supplement the record for us. 

Mr. KHAN. I will do that. 

[The information referred to can be found in the Appendix on 

page 99.] 

Mr. ANDREWS. How much of the $6.9 billion in cost overruns is 

attributable to the GFEBS? 

Mr. KHAN. That was one of the systems where we didn’t have 

data, the cost overrun data for GFEBS at that point in time. 

Mr. ANDREWS. Okay. 

Mr. KHAN. That doesn’t mean that there aren’t any cost overruns—— 

Mr. ANDREWS. Well, let’s look at the projection. If I understand 

this correctly, that the GAO report says that there is an estimate 

of a $2.4 billion cost to finish the program—— 

Mr. KHAN. Correct. 

Mr. ANDREWS. But you have some doubts about whether that is 

accurate. What is the cause of those doubts? 

Mr. KHAN. Because not all the aspects what goes into building 

up a cost were considered when those estimates were developed. 

And I am reporting this information per the—what the IG had reported earlier on this year. 

Mr. ANDREWS. If you had to give a professional judgment as to 

what you think the cost will turn out to be, you think it is higher 

than 2.4? 
14 

Mr. KHAN. I would imagine so, just based on some of the problems that I have highlighted in my oral statement. 

Mr. ANDREWS. Do you have an opinion about how much higher 

it is going to be? 

Mr. KHAN. I would not guess at this point in time. 

Mr. ANDREWS. When are you next scheduled to go in and examine that program? 

Mr. KHAN. As part of our ongoing work we continue to look at 

these systems. We will be following up on our prior recommendations. 

Mr. ANDREWS. Now, Mr. Lewis, as someone who served both in 

uniform and the civilian sector, thank you. I would be interested, 

if we could wind the clock back to before GFEBS got started, knowing what you know about where we are now in terms of delay and 

potential cost overruns, how would you do it differently? If you 

were working with a blank slate of paper—sheet of paper, excuse 

me, and could take us from the beginning of this idea, this enterprise system, where we are now, what would you do differently? 

Mr. LEWIS. Mr. Andrews, thank you for that question. With these 

systems, as all systems, it has been alluded to and referred to in 

some of the statements here this morning starting with a good requirement. You have to get your requirements down and what do 

you want that system to do. 

Mr. ANDREWS. In this case did we—was the requirement overinclusive, underinclusive? What did we do wrong on the requirement in this case? 

Mr. LEWIS. Anecdotal—this conversation—on paper, but we 

didn’t have all the requirements, all the interfaces. Remember, our 

ERPs in the Army were all started at a different time, mainly for 

functional purposes. And the good news is that the three of them 

are SAP-based and so now—— 

Mr. ANDREWS. So we were underinclusive in our requirement 

process? We didn’t ask for all the stuff that we needed. 

Mr. Khan, is that part of the reason we have the present problems that you observed about this manual entry of data that I read 

about, which seems to be—must be an enormous hassle for the 

men and women who work—is that the reason why we have that 

problem do you think? 

Mr. KHAN. I mean that is part of the issue that we had highlighted, that the requirements up-front have not been correctly 

ascertained. So once the development progresses, additional requirements come to light. 

Mr. ANDREWS. Now, Mr. Lewis, this is not a rhetorical question, 

but it—why do you think we got the requirements wrong? How did 

we mess that up? 

Mr. LEWIS. Well these systems, as you know, are very complex 

and nobody has a—you know, all the knowledge on this and they 

are incrementally developed. And as we rolled them out, you know, 

we got—thank goodness we got most of it right, but there are that 

around the fringes that everybody talks here and we just have to 

pull those back in as we go along. 

And things grow over time. Technology changed over time—— 

Mr. ANDREWS. Yes. 

Mr. LEWIS [continuing]. So the more—— 
15 

Mr. ANDREWS. My time has expired. I will just mention to the 

chairman that the work that we have done together on procurement, that this is an echo what we are hearing this morning that— 

that the good work the GAO has done on cost overruns in major 

weapons systems generally that—in my view the main part of that 

story is getting the requirements wrong consistently. 

And you know, we all blame the contractors and sometimes they 

deserve it. But sometimes we need to blame ourselves because we 

keep changing the requirements on people and it tends to create 

these cost overruns so I—if I could do one—I will answer my own 

question—if I could do one thing in this area, it would be to figure 

out how we could all get the requirements consistent and right 

more often in this process. I think it would help us. Thank you. 

Mr. CONAWAY. Thank the gentleman. 

Mr. Rigell, 5 minutes. 

Mr. RIGELL. Good morning and welcome to everyone. Thank you 

Mr. Chairman for holding the hearing and good to see my colleagues this morning. It is a very, very big topic and some of my 

question is more to help me just simply understand the issue as 

much as it is to maybe provide guidance here. But Ms. McGrath, 

could you help me to understand, if we had for example a matrix 

chart and on the vertical column was the different functions. 

For example, transportation, supply, maintenance, engineering, 

payroll and then across the top of the matrix was the different 

Services, could you tell me where there would be alignment. For 

example on compensation, is there a common vendor? Have we 

tried to seek a common vendor to help with compensation almost 

specialized in that? Or is the work of these ERPs and our vendors 

more by service and—I am trying to understand the degree to 

which the DOD has sought commonality between different functions and vendors. 

Ms. MCGRATH. So, I think we are more trying to define common 

standards across the enterprise and then acquire solutions that 

will help enable implementation of the common standard vice, buying one solution that has standards embedded in it that we then 

all use. Because then that allows for competition, certainly if the 

Department is defining its business standards and processes and 

then publishing—— 

Mr. RIGELL. Okay, so we—— 

Ms. MCGRATH [continuing]. Vendors can—— 

Mr. RIGELL. And it makes sense as big as DOD is that we have 

more than—certainly more than one vendor helping us with pay 

issues for example across different Services. But then that leads to, 

to what degree are we seeking like best practices from one, if we 

are having real success. This company has really got this down, 

they are doing really well. Do you all meet together on a regular 

basis to say, ‘‘Hey this company X is doing a great job for us. They 

are on track. They have got a low cost solution.’’ 

Ms. MCGRATH. Certainly we use past performance and data in 

awarding contracts, but I think that the lessons learned in sharing, 

especially in these ERP—big ERP programs is we do have venues 

where we bring all of the ERP program managers together to identify lessons learned in terms of implementation. There are network 
16 

issues. There are standard issues. We certainly understand the 

measures we are putting in place. 

Not only with the vendor but with ourselves in terms of, you 

know, best practices and lessons learned. We are adopting those, 

embedding them into the oversight, not necessarily looking at one 

particular vendor’s performance. 

Mr. RIGELL. Well, I have been impressed by the—really the quality of the people that I have interacted with in my short time here. 

And I am sure you are doing that. I have learned in life that you 

really can’t over communicate and getting people together, sharing 

best practices is just a terrific way to improve performance, so I 

just encourage you to pursue that. 

In the 2 minutes that I have left, Mr. Khan I wanted to shift 

over to you sir and to ask you—I wanted to follow up on some comments that were made by the Ranking Member, Congressman Andrews, and—related to some of the ERPs are on track, a few aren’t. 

Let’s talk about—I wish I had time to talk about the successes. 

Let’s talk about the ones that are having trouble. 

Is there any commonality among those? Is there a company that 

is giving us a bumpier time than others? Could you explain that 

to us? Give us a—just a quick overview? 

Mr. KHAN. The commonality primarily is in requirements—requirements management, collecting requirements, up-fronts and 

how those requirements are actually developed into the system 

itself. So that is the—— 

Mr. RIGELL. So it is more our side—it is more the government 

is that—I want to make sure I understand your point here. Is it 

more that we have not been clear? It is almost like a change order 

on a house. You start remodeling your house and the builder gives 

you a certain date and you go, no I really want to do this and you 

start doing change orders and you are off-track. 

Mr. KHAN. That is correct, but it is hard to distinguish whether 

it is the government’s issue or the contractor issue because for the 

most part, teams usually are integrated to be able to collect this 

information. I was just answering your question that the—one of 

the major issues that we—when we were doing our work we found 

was the up-front requirement collection was a problem. 

Mr. RIGELL. Okay. Well in the 20 or so seconds that I have left, 

I just would encourage all of you to, you know, to reward those who 

are doing good work and to hold accountable those who are not. 

And that has to be brought into our procurement process, evaluation of vendors and I—as time goes on I would like to—for us to 

explore and see and identify those companies that are not performing as well and understand why. 

Thank you. I yield back. 

Mr. CONAWAY. Thank you gentleman. 

Mr. Ryan, 5 minutes. 

Mr. RYAN. Thank you Mr. Chairman. I just kind of want to piggy 

back a little bit on where the discussion just went as far as it 

sounds like the crux of it is incentives or can be incentives. Whether you are talking about the scheduling and the cost like Mr. Khan 

was talking about, or the lack of compliance. Can you help us identify some carrots and possibly some sticks that we need to look at 

in order to expedite this? 
17 

Especially when you are talking about the scheduling and the 

cost. You know, as we are moving into austerity I guess and cuts 

within the military, and every other program across the board, I 

think it is important for us to know early on what the exact numbers are. So, Mr. Khan can you give us some advice from your vantage point going through this with a fine tooth comb on what some 

carrots would be and what some possible sticks would be? 

And then Ms. McGrath, too, if you could comment on that? 

Mr. KHAN. Yes, sir. One of the key aspects is additional oversight, especially as far as investment management is concerned to 

make sure that a particular project, especially ERP development 

doesn’t go forward, until they are meeting the initial requirements, 

or the requirements of a particular phase. That is where government and oversight becomes critical. 

Mr. RYAN. What would the numbers look like? What investments 

would we have to make into that kind of oversight? How many people would we need for example? 

Mr. KHAN. I mean that is hard for me to say. I think we have 

got the structure in place now with the CMOs at the various components itself. There is a government structure in place under the 

leadership of the DCMO who are providing this oversight at this 

point in time. Other than that, I think as we go along it will be— 

I mean just the results will speak for themselves whether the 

projects are moving forward and what the results are. 

Mr. RYAN. So we have the manpower in place to be able to do 

this? 

Mr. KHAN. I cannot answer that question. We haven’t looked into 

that. 

Mr. RYAN. If anyone else on the panel would like to comment on 

that? 

Ms. MCGRATH. I would be happy to. So I think the shift over the 

last couple of years, in particular with all the tools that Congress 

has given us in terms of oversight and architecture development, 

investment review boards, the chief management officer, legislation 

and the business process re-engineering, have all helped in terms 

of enabling better execution of these programs. 

Another shift that has happened is that previously it was just 

the acquisition team, the acquisition oversight, the service acquisition or component acquisition executives looking at the, you know, 

is the program doing cost, schedule and performance. With the introduction of the CMOs and in particular my role with the acquisition oversight for these programs coupled with the investment reviews, you actually have everybody at the table who needs to be 

at the table to understand the impact of this particular—a particular investment. 

So you have got all the functional areas represented. You have 

the corporate business, you know, the folks at the table here represented to say, you know, how does this thing fit into my broader 

business conversations? So I actually do think if you looked over 

the last 2 years as opposed to the last 10, I would hope that you 

would see actually more implementation of systems, delivering capability closer to on time and at cost than they had been previously. 
18 

Because we better understand, you know, the implementation aspects from a much broader perspective. Another lesson learned 

frankly, to get back to a couple of questions is the requirements 

piece. I mean that is the thing that bites us every time. And part 

of what we have learned is we overrequire. We think this is the 

only time we are ever going to have a shot at putting all the requirements in so the programs are big and complex. 

And part of the business capability’s lifecycle is a different acquisition approach, if you will, to IT and business is to say, okay we 

know you want sort of this big thing, but can you chunk it such 

that we can, you know, talk about it in smaller terms and deliver 

it in smaller—understanding that it is incomplete when we first deliver it, but it is part of the broader plan. 

And I think part of the better buying power initiatives that 

AT&L [Acquisition, Technology and Logistics] and Dr. Carter have 

been promoting and part of the broader business is to figure out, 

you know, how do we structure the contracts using the right balance of incentive fees and firm fixed price versus time materials? 

I mean, we sometimes issue a firm fixed price contract when the 

requirements aren’t yet baked enough to really communicate to the 

vendor what it is we want. 

And so I think it is a balance of I am going to say all those 

things that we are really embedding into this entire conversation. 

And so you see—you will see changes in the way that some of the 

contracts—ECSS is actually a very good example from a contracting perspective. 

And so yes, I do think we have the oversight. And I would hope 

that if we did look from a shorter term that progress would be 

much, much better than it has been from a 10-year cycle. And I do 

think that it is every aspect that is required to make it better. 

Mr. RYAN. Thank you. 

Thank you, Mr. Chairman. 

Mr. CONAWAY. Thank the gentleman. Again, thank you everybody for coming this morning. I want to make sure we try to get 

as much of everybody as we can. Talk about a statement. 

Mr. Lewis, the GFEBS and the rollout, one of the things that we 

have been told is that legacy data, or much of the data from the 

legacy systems won’t necessarily be converted into the GFEBS systems for some period of time. Can you help us understand the— 

is that—obviously a planned decision. But from a manager’s standpoint, a cost standpoint is that the most effective way to manage 

that transition over time? 

Mr. LEWIS. Mr. Chairman, thank you. We would like that transition, as this was the first year that we closed out with using 

GFEBS. We would like all that to be seamless and electronic, but 

there are some interfaces that need a little extra help, that need 

some manpower to make that data move over. We have got eyes 

on target. 

That is one of those things, as Ms. McGrath said, large, complex 

systems, as we get experience using these systems we got to fix 

that. But yes, we would like to have it all be inputted into GFEBS 

and be resident in there, be manipulated in the system. And that 

also—— 
19 

Mr. CONAWAY. But are you tracking—is there enough pressure 

from the cost of maintaining legacy systems that are extra to the 

system to make sure that you do in fact move everything as expeditiously as possible into GFEBS? 

Mr. LEWIS. Oh, most affirmative. In an era here of declining resources, everybody is after legacy systems, lots of people, budgeters, programmers, those of us in the functional management 

types, and the people that run the systems. The pressure is on 

there. We have them scheduled. As soon as they are certified, the 

system certified they can handle it, we will take the legacy and 

shut it down. 

Mr. CONAWAY. All right. 

Mr. Tillotson, the stop order for the—your ECSS program, especially your comments I was going to ask a question relative to that, 

but apparently you are going to have more information on that 

next month. One of the carrots in this thing is savings associated 

with doing things better, doing things quicker and faster. And you 

have got an estimate out there for almost $3 billion of savings over 

a 10-year period once these things are implemented. 

Present value of those savings get smaller and smaller as that 

10-year window gets beyond the 2017 date. Can you visit with us 

about where you are in terms of the 2014 date? Could you get there 

by 2017? 

Mr. TILLOTSON. So, from a broad Air Force point of view, the 

2017 date, as Dr. Morin reported I think to this panel some weeks 

ago, is a moderate risk state for the Air Force as a whole for the 

total audit readiness condition. For the statement of budgetary resource we are aggressively looking now at what changes we need 

to make. 

As I indicated in my opening remarks, because of ECSS program 

performance even before the 2014 mandate from Secretary Panetta 

we were having to reconsider a mix of legacy process and ECSS deployment in order to stay on track to meet the audit goal, even at 

2017. So, we will be doing more of that as we go forward. 

So, monthly we are looking at all of the above, and we actually 

have done a very detailed deep dive on this. 

Mr. CONAWAY. Okay. Thanks, Mr. Tillotson. 

Ms. McGrath, given the things that are going on with the Air 

Force, where in that broad array of organization chart, is the Office 

of the Secretary responsibility for watching what the Air Force is 

doing and understanding what they are—watching what the Army 

is doing with respect to that. Is that your office that will be monitoring and helping us with the oversight? Where does that oversight lie within your system? 

Ms. MCGRATH. With the acquisition—milestone decision authority for all but the logistic systems resides with me. And then for 

the logistic systems like ECSS and some of the GCSSs that you 

have heard today, they are within AT&L. And then I run the subordinate body. But all of them come into the Investment Review 

Board. And so it is both the Investment Review Board and the acquisition oversight. Again, most of them are with me, the logistic 

systems are with AT&L. 

Mr. CONAWAY. Okay. 
20 

We have heard across the panels at some of these hearings that 

performance evaluations next year will be somewhat driven by success against getting this done. Is that—is a similar—we are looking 

forward to seeing how that works. I wanted to hear your comments 

about what your perspective is on that. But is the responsibility for 

watching, for the lack of a better phrase, Mr. Tillotson and Mr. 

Lewis’ efforts is that a performance requirement with whoever that 

performance review, whoever that Investment Review Board is. Because the point is, if everybody is in charge of something then nobody is in charge of it. And so comment first on the individual performance review standards particular within the system on getting 

the details, but also on the folks who are watching it to make sure 

that they are held accountable for their role as well. 

Ms. MCGRATH. I think as we testified when Mr. Hale and I were 

here last time we ensure that audit readiness is part of the strategy of the Department. It is in the strategic management plan that 

we just recently released. Also in the Department’s organizational 

guidance, which establishes the priorities for the Departments, 

which are cascaded into performance plans, which is why it is important. 

So, we have measures from a strategic perspective that cascade 

throughout the Department. And then we report on those on a 

quarterly basis. How is it going with regard to, you know, the 

Statement of Budgetary Resources or some of the milestones identified in the FIAR plan. And so institutionally we have those baked 

in, which I think is extremely important. 

Also, we are looking at cost schedule and performance of these 

ERPs, and also how they achieve the business goals. That is done 

through I think multiple governance bodies, not the least of which 

is the FIAR governance body that both Mr. Hale and I co-chair, 

and also from an acquisition perspective. Some of the things I just 

mentioned, do we have the right contract strategy and those kinds 

of things. And so it is both the investment review, acquisition oversight and the overarching total performance. 

Mr. CONAWAY. Okay. 

Ms. MCGRATH. Your face says I didn’t answer your question. 

Mr. CONAWAY. Well, yes. Part of it is just as you mentioned 

baked into the system. If you looked at the organization chart, and 

we have had this conversation before with others, there is nobody 

in charge. But the whole package, other than Mr. Panetta. 

I guess we will just have to hold Mr. Panetta in charge because 

if you look at the way it is bifurcated, you have got the audit responsibility going this direction. You have got ERPs under a different group of folks. And so I am having a hard time figuring out 

who I need to hold accountable other than Mr. Panetta to make 

this thing work. And so, there are a lot of folks who have a little 

piece of a bunch of it. 

Ms. MCGRATH. Well, I think that is both part of the challenge 

and the opportunity is that achieving a clean audit is not just one 

person or one organization or one functional area’s responsibility. 

It really does take the Department—— 

Mr. CONAWAY. I understand that part. But—anyway. 

We have got—left. Do you want to do another round, Mr. Andrews? 
21 

Mr. ANDREWS. I do. More than a question I have a suggestion. 

And that would be before the full committee begins its deliberations on next year’s authorization bill, we should get this year’s 

done first. But before we being our deliberations on next year’s authorization bill, I think it would be helpful if the GAO would revisit 

its review of these 10 systems so we would have in front of us—— 

Mr. CONAWAY. Mr. Khan, you didn’t actually—you said you 

would do it. Is there something on the books right now to update 

your November 10 analysis? 

Mr. KHAN. No, not specifically. What I meant was that as part 

of our recommendation follow up we do—— 

Mr. CONAWAY. I understand. But you don’t have a—— 

Mr. KHAN. I do not, no. 

Mr. ANDREWS. I would like us to be in a position when the full 

committee considers the fiscal year 2013 authorization bill that we 

have the current state of play with these 10 systems as to where 

they are, where they are going so that any resources we need to 

add to try to make them succeed or subtract because they are not 

succeeding, we could make an intelligent decision about that. 

I mean, I come back to the beginning of this that I think Secretary McGrath said this. This is the glue that holds this whole 

thing together. And you know we have some problems here. 

And I think in order for us to assess how to best address those 

problems I would like to think the committee would benefit from 

a current state of affairs, as stated by the GAO, before we get to 

the decisionmaking phase in next year’s bill. So, that would be my 

suggestion to the chairman if we could accomplish that. 

Mr. CONAWAY. All right—— 

Thank you for coming this morning. 

You know, part of the oversight role is to not second-guess and 

Monday morning quarterback too much. It is clear that you are 

looking at the personnel system for the entire Department of Defense. You know in hindsight that might have been clearly too big 

of a project to try to make happen and busting it up into smaller 

pieces makes more sense. And we are doing those kinds of things. 

And so you are looking at the way—to see where the system—Department got to decide let’s just do one. 

You know, it is kind of intuitive to start with. But making it a 

requirement that the Standard General Ledger be a piece of the— 

be one of the things that comes out of it, I mean in the comments 

that Mr. Khan made that the logistics management piece, the LMP 

thing didn’t meet the Standard General Ledger issues on the front 

end. I don’t know how you missed that one. 

So, we are going to try—you know, obviously that is water under 

the bridge and our focus really is from where we are today going 

forward. Unless there are some lessons to be learned about things 

that we have done. 

But I appreciate the panel being here this morning. You guys do 

great work on behalf of the taxpayers of our country. And you have 

got a tough, tough job to make this all happen. And our role is to, 

again, try to not Monday morning quarterback too much, but at 

least try to help us understand so that we can communicate back 

to the folks who pay all our salaries that you are doing the best 

job you can with the resources you have got. 
22 

And so if there are no other comments, again, thank you very 

much for being here this morning. 

This hearing is adjourned. 

[Whereupon, at 9:00 a.m., the panel was adjourned.] 
A P P E N D I X 

OCTOBER 27, 2011 

PREPARED STATEMENTS SUBMITTED FOR THE RECORD 

OCTOBER 27, 2011 

(27) 

Statement of Hon. K. Michael Conaway 

Chairman, Panel on Defense Financial Management and 

Auditability Reform 

Hearing on 

DOD’s Enterprise Resource Planning (ERP) System 

Implementation Efforts 

October 27, 2011 

I’d like to welcome everyone to today’s hearing on DOD’s Enterprise Resource Planning (ERP) System Implementation Efforts. In 

all of our previous hearings, regardless of the topic, the Enterprise 

Resource Planning systems were always an integral part of the discussion, whether the discussion centered around the skills needed 

within the financial management workforce, accountability of assets, or the controls needed to prevent potential anti-deficiency act 

violations. So, it is fitting that the Panel hold a separate hearing 

on DOD’s Enterprise Resource Planning systems. Today, we will 

examine the scope of the ERP efforts, the status of the implementation of the ERPs, and their ability to improve DOD’s financial management. 

According to DOD, the successful implementation of the ERPs is 

a key element to addressing long-standing weaknesses in financial 

management and achieving audit readiness. Yet, GAO has reported 

over the years ‘‘that the Department has not effectively employed 

acquisition management controls to help ensure the ERPs deliver 

the promised capabilities on time and within budget.’’ GAO has 

also reported that delays in the successful implementation of ERPs 

have extended the use of existing systems and continued the funding of these legacy systems longer than planned. The DOD Office 

of Inspector General noted in its testimony before the Panel on 

September 22, 2011, that ‘‘The development, implementation and 

effectiveness of these ERP systems are questionable at this point.’’ 

With billions of taxpayer dollars as stake, it is critical that DOD 

take the necessary actions to ensure that the ERPs are successfully 

implemented. 

The Secretary of Defense directed the Department to move up 

the audit readiness date of the Statement of Budgetary Resources 

(SBR) from 2017 to 2014. However, certain of the ERPs are not 

scheduled to be fully deployed until near or during 2017. In order 

to meet 2014, will the Department move up ERP deployment dates, 

make enhancements to existing legacy systems, improve manual 

controls, or some combination of the three? Also, will DOD need additional resources for this effort? We will be interested in getting 

some insight today on DOD’s approach to accomplishing this goal. 
28 

One of the key responsibilities of the DOD Deputy CMO and 

Military Department CMOs (and their respective deputies) is to 

support business system modernization efforts in a manner that 

synchronizes these efforts with the financial improvement activities 

of the reporting entities. This becomes all the more important as 

DOD works towards achieving audit readiness of the SBR by 2014, 

while also keeping on track to achieve auditability on the full set 

of financial statements by 2017. 

I would like to thank our witnesses in advance for their testimony and agreeing to be with us this morning. We have with us 

today: 

• The Honorable Elizabeth McGrath, Deputy Chief Management 

Officer, U.S. Department of Defense; 

• Mr. Mark Lewis, Deputy Chief Management Officer, United 

States Army; 

• Mr. Eric Fanning, Deputy Under Secretary of the Navy and 

Deputy Chief Management Officer, United States Navy; 

• Mr. David Tillotson III, Deputy Chief Management Officer, 

United States Air Force; and 

• Mr. Asif A. Khan, Director, Financial Management and Assurance, Government Accountability Office. 
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DOCUMENTS SUBMITTED FOR THE RECORD 

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WITNESS RESPONSES TO QUESTIONS ASKED DURING 

THE HEARING 

OCTOBER 27, 2011 

(99) 

RESPONSE TO QUESTION SUBMITTED BY MR. YOUNG 

Ms. MCGRATH. The Department is actively applying its lessons learned to the entire lifecycle of business systems. As a result of the DIMHRS experience, we have 

implemented and reinforced several key strategies to enable ERP integration. 

First, business processes must be consistently applied and data must be consistently defined so the Department can have the visibility to make effective, informed 

decisions. We continue to improve business system interoperability by sufficiently 

defining the business and solution architectures using a standard methodology and 

with tools based on open standards. Our Enterprise Information Web (EIW) capability, for example, gives decision-makers enterprise visibility and access to financial, personnel and asset data across the DOD enterprise and its domains to support 

planning and policy development. The EIW’s semantically-based technology aggregates data using established standards, regardless of code values or format, to support analysis and decisions in a near real-time environment. 

Second, the Department has instituted formal governance bodies to enforce standards compliance. Three- and Two-Star level governing councils were dedicated to resolving post-DIMHRS transition issues, establishing rules of engagement for enterprise-level system implementation, and proactively addressing emerging or potential 

concerns. Finally, the Department remains committed to a transparent and collaborative approach to communication. Both during and following DIMHRS, the Department sought to make decisions openly and in partnership with stakeholders and to 

facilitate expectation management. Cross-Service and Department-wide teams at 

tiered levels have eased collaboration by fostering an open forum for information 

sharing. The recognition of consistent standards and data as the key to business 

system interoperability, substantiated by governance and transparency, has enabled 

the Department to use the lessons of DIMHRS as a platform for successful ERP implementation. [See page 12.] 

RESPONSE TO QUESTION SUBMITTED BY MR. ANDREWS 

Mr. KHAN. As discussed in our October 2010 report the originally scheduled fiscal 

year for full deployment and the actual or latest estimated fiscal year for full deployment were 2011, in both cases. As noted in the report, the information was provided by the GFEBS program management office. Subsequently, the Army’s Deputy 

Chief Management Officer’s October 27, 2011 testimony before the Panel stated that 

GFEBS will be fully fielded to all approved users by July 1, 2012. [See page 13.] 

QUESTIONS SUBMITTED BY MEMBERS POST HEARING 

OCTOBER 27, 2011 

(103) 

QUESTIONS SUBMITTED BY MR. CONAWAY 

Mr. CONAWAY. Please provide the number of ‘‘legacy’’ systems currently in use to 

support business functions (e.g., financial management, acquisitions, logistics, personnel, etc) for each Service and the Fourth Estate. For each of the ERPs being implemented, please provide the number of legacy systems that will be retired and the 

estimated cost savings or cost avoidance once each of these ERPs are implemented. 

Furthermore, provide an explanation for the reasoning for not retiring the systems 

that will not be retired once the ERPs are implemented. 

Ms. MCGRATH. [The information was not available at the time of printing.] 

Mr. CONAWAY. At what level are decisions made to retire/maintain legacy systems 

and approve ERP customizations? 

Ms. MCGRATH. [The information was not available at the time of printing.] 

Mr. CONAWAY. Historically, the quality and integrity of the data undergoing conversion is a major contributor to schedule slippages and cost increases for ERP systems. What lessons are you applying from past problems with data conversion and 

data cleanliness to improve future outcomes for ERP deployments? 

Ms. MCGRATH. The lessons learned from the Department’s early challenges with 

data conversion have been incorporated into the document ‘‘ERP Data conversion— 

Best Practices’’ that has been made available in the Department’s Enterprise Integration Toolkit, which is posted on the defense acquisition community’s internal collaboration website. [This document can be found on page 83.] 

Mr. CONAWAY. As the ERPs are implemented, what type of training is each of the 

users receiving? Is this training incorporated into broader training explaining the 

importance of good financial management? 

Ms. MCGRATH. Each of our ERP programs is delivering a diverse set of training 

courses to educate the workforce in preparation for implementation. The types of 

training that are offered include, Computer Based Training (CBT), Web based training, Train the Trainer, Instructor Led Training (ILT), and Classroom/School-house 

Training. These classes are coupled with extensive hands-on exposure in the testing 

and training environment before the users are allowed in the production environment. Additionally, in-depth assistance is generally offered at go-live for a period 

of 30 to 60 days at each site by expert trainers and super-users and refresher training is offered on a recurring basis or as new capabilities are introduced. 

While training on specific ERP systems has generally not been incorporated into 

the Department’s overarching financial management training courses, the importance of strong technology controls and the role of the ERPs in our overall audit 

environment have been incorporated. 

Mr. CONAWAY. Please provide the number of ‘‘legacy’’ systems currently in use to 

support business functions (e.g., financial management, acquisitions, logistics, personnel, etc) for each Service and the Fourth Estate. For each of the ERPs being implemented, please provide the number of legacy systems that will be retired and the 

estimated cost savings or cost avoidance once each of these ERPs are implemented. 

Furthermore, provide an explanation for the reasoning for not retiring the systems 

that will not be retired once the ERPs are implemented. 

Mr. LEWIS. The Army uses 720 business systems currently to support business 

functions. The Army is developing/modernizing four ERPs. The development of these 

ERPs will allow the Army to retire 100 systems and partially subsume 39 others. 

Overall, cost savings/avoidance is estimated in excess of $382 million. This does 

not include any cost savings/avoidance attributable to IPPS–A fielding, because that 

cost position is still under review. The following are numbers of systems that will 

be retired or subsumed associated with each ERP and estimated cost savings based 

upon their business cases: 

• General Funds Enterprise Business System (GFEBS) fielding has resulted in 

13 legacy systems being retired and an additional six systems being partially 

subsumed. Upon completion of GFEBS fielding, an additional 55 legacy systems will be retired and 39 systems partially subsumed. The cost savings/ 

avoidance associated with GFEBS implementation is estimated to be $60 million. 
104 

• Logistics Modernization Program (LMP) fielding will result in two legacy systems being retired. The cost saving/avoidance is estimated to be $313 million. 

• Global Combat Support System–Army (GCSS–A) fielding will result in seven 

legacy systems being retired. The cost savings/avoidance is estimated to be $9 

million. 

• Integrated Personnel and Pay System–Army (IPPS–A) fielding will result in 

56 legacy systems being retired. The cost savings/avoidance has not yet been 

finalized, pending the completion/approval of the cost-benefit analysis. 

Some systems will not be retired because they are non-Army systems that support 

other DOD Organizations, while some will continue to provide some functionality 

that is not provided by the ERP solutions. Others will be partially sunset because 

the native functionality will be performed by the ERP. 

Mr. CONAWAY. At what level are decisions made to retire/maintain legacy systems 

and approve ERP customizations? 

Mr. LEWIS. Within the Army, the Secretary of the Army provides oversight, but 

has delegated responsibility for retiring/maintaining business systems management 

and approving customizations to the functional proponent, HQDA 3 Star or higher. 

This is consistent with statutory language found in 10 USC 2222 and DOD implementation guidance. Given this authority, the functional proponent decides which 

legacy systems to retire or sustain to support their business function. The functional 

proponent incorporates senior level guidance provided during the PPBE cycle, the 

capabilities required to execute their Title 10 responsibilities, cost-benefit analysis, 

and other Army initiatives into their decision-making process. 

During the systems review process, the functional requirements are reviewed at 

proponent, Army and OSD levels for Major Automated Information Systems (MAIS). 

As part of the acquisition review and approval for MAIS systems, the cost benefit 

analysis for investment in an ERP includes the benefits and savings associated with 

legacy business systems that are being partially or fully subsumed by the new system. 

The Army also established the Business System Information Technology Executive Steering Group (BSIT) in February 2011, to govern enterprise resource planning (ERP) and other business systems using a structure that fully reflects enterprise considerations and employs business process analysis and systems portfolio 

management principles. The governance structure will ensure end-to-end business 

processes support mission requirements. The BSIT forums will review existing governance forums and authorities for IT requirements, resourcing, technical standards 

and acquisition and make recommendations to the Chief Management Officer of how 

to improve and streamline IT governance. 

Mr. CONAWAY. Historically, the quality and integrity of the data undergoing conversion is a major contributor to schedule slippages and cost increases for ERP systems. What lessons are you applying from past problems with data conversion and 

data cleanliness to improve future outcomes for ERP deployments? 

Mr. LEWIS. The key lesson learned regarding the quality and integrity of the data 

undergoing conversion is to ensure that extensive planning is completed early 

enough in the program development to accurately migrate and cleanse data. 

The lessons learned from the initial release of LMP taught us a great deal about 

data conversion/data cleansing, which we have incorporated into all our ERP efforts. 

It is critical to have accurate data prior to the fielding of ERP systems to ensure 

reliability. The Army’s Enterprise Data Management Office, a component of the US 

Army Logistics Support Agency, are applying lessons learned from LMP deployments to assist with cleansing legacy logistics systems’ data in support of GCSS– 

Army fielding development. 

In addition, the Army has incorporated Army Enterprise System Integration Program (AESIP) into the GCSS–Army program to serve as a data broker between ERP 

and non-ERP logistics systems. AESIP provides a degree of quality assurance for 

data and translates the data into the common format. 

The financial audit activities supporting our 2014 and 2017 auditability goals will 

provide assurances that GFEBS is an accurate and reliable source for financial information. IPPS–Army will eventually consolidate all components into one database, 

replacing numerous legacy systems, and will consolidate personnel and pay. Ensuring data quality and integrity data is the primary goal of Increment 1. For that reason, the Army has placed the data consolidation at the beginning of the acquisition 

lifecycle for IPPS–Army. 

Mr. CONAWAY. In your testimony, there is no mention of the Army Enterprise System Integration Program (AESIP) system. What is it, and why is it important to 

the Army’s overall strategy for ERP implementation? 
105 

Mr. LEWIS. AESIP integrates business processes and systems by serving as the 

Enterprise hub for the Army’s logistics and financial ERP business systems. It enables integration by linking business processes and data across existing IT systems. 

This integration optimizes business processes and supports Enterprise-level information requirements. AESIP has successfully delivered a Web-based solution for the 

creation and management of customer and vendor master data and implemented an 

optimized messaging and hub services capability. 

AESIP has been operational since 2006 delivering customer, vendor, and material 

master data to systems across the Army and to the Defense Logistics Agency—this 

includes the data flowing to legacy systems currently being used in Iraq and Afghanistan. GCSS–Army and AESIP program costs are evaluated and managed together (AESIP is part of GCSS–Army). These costs have been validated by the Office of the Secretary of Defense, Cost Analysis and Program Evaluation (CAPE) division. Additionally, the Deputy Assistant Secretary of the Army for Cost and Economics has approved these anticipated life cycle costs and associated benefits. 

The major systems supported by AESIP are: Global Combat Support SystemArmy (GCSS–A), the tactical logistics system; Logistics Modernization Program 

(LMP), the national logistics system; and General Fund Enterprise Business System 

(GFEBS), the Army’s financial system. In addition, AESIP provides integration services for Non-Army systems and enduring non-ERP systems. 

Mr. CONAWAY. As the ERPs are implemented, what type of training is each of the 

users receiving? Is this training incorporated into broader training explaining the 

importance of good financial management? 

Mr. LEWIS. As each ERP is fielded, training is provided at all levels, from the person entering data up to senior level management. Training consists of new equipment training (both computer based (CBT) and instructor led (ILT)), business process training, audit-readiness training, post-deployment/sustainment training and refresher training. The training provided is to standards and competencies demonstrating proper internal controls. 

The Project Manager for each of the new ERPs develops and delivers ‘‘new equipment training’’ which is focused on how to perform tasks in the ERP. Functional 

training that focuses on end to end processes and job-based scenarios is also provided. A key focus of business process training has been on the development of cost 

management competencies to leverage the power of the ERP decision support tools. 

However, the training curriculum impacts more than just the tasks executed inside 

of the ERP systems. As a key partner in ERPs implementations, DFAS develops 

training on the business processes its employees perform which are impacted by the 

changing ERP environment. To supplement OUSD(C)’s audit-readiness training, the 

Army has also established Army specific audit readiness and corrective action training for Command and Installation-level staff. Fiscal responsibility and cost culture 

are also topics in General Officer and SES training courses. 

The Army, along with the DOD, has maintained an active professional development program for its Comptroller career field including civilian and military personnel. The Functional proponent for Financial Management is working closely with 

the Army’s Soldier Support Institute to ensure course material provided to the financial management workforce incorporates the new financial management systems. Course materials would include, but are not limited to, use of the new ERPs, 

principles of sound financial management, principles of cost management, managerial accounting, etc. The context of these courses reinforces efforts to satisfy audit 

standards, but go further to developing a fiscally responsible workforce. 

As an example, every course in our GFEBS curriculum (except those focused on 

specific user groups, e.g., power users, Governance, Risk, and Compliance (GRC) 

approvers, Army Learning Management System (ALMS) training coordinators) is 

provided by GFEBS to the end-user. We engage users through workshops, CBT and 

ILT delivery methods, and we do not rely on the gaining organizations to take over 

the training delivery in order to go live on GFEBS. 

In addition to the formal training, GFEBS also provides 90 days of on-site, overthe shoulder post deployment assistance to help the user gain a confidence in their 

work and in use of the new system, answering questions and resolving issues which 

the end user may encounter. 

The Army Financial Management School (AFMS) Soldier Support Institute (SSI) 

plans to provide sustainment GFEBS training starting in FY12. GFEBS is already 

working with the AFMS to transition the training materials and support their deployment of sustainment training. In addition, GFEBS is also working with United 

States Army Financial Management Command (USAFMCOM) and Defense Finance 

and Accounting Service (DFAS) to ensure a complete business process transformation for soldiers and their roles within the system. 
106 

Mr. CONAWAY. Please provide the number of ‘‘legacy’’ systems currently in use to 

support business functions (e.g., financial management, acquisitions, logistics, personnel, etc) for each Service and the Fourth Estate. For each of the ERPs being implemented, please provide the number of legacy systems that will be retired and the 

estimated cost savings or cost avoidance once each of these ERPs are implemented. 

Furthermore, provide an explanation for the reasoning for not retiring the systems 

that will not be retired once the ERPs are implemented. 

Mr. FANNING.With the roll-out of Navy ERP, there has been a retirement of 14 

legacy systems to date, with 82 more to be retired by 2016. This has garnered a 

realized cost avoidance of $116M through FY08–10 with an expected cumulative 

combined cost savings and avoidance of $682M through FY2016. 

The deployment of the Single Supply Solution enables projected inventory savings of $276M through FY2017 and expected cost avoidance of $456M for FY2018 

through FY2023. 

As the Navy ERP has been deployed to date, some receiving commands, notably 

Naval Sea Systems Command, found it more cost effective to maintain a few systems whose functions were assumed by the ERP on reduced, maintenance levels to 

keep critical contract information available for reference versus converting that data 

for Navy ERP. 

In the present fiscal environment, the Department of the Navy and Navy leadership has decided to complete the current Navy ERP program of record, but to suspend any further development. Other system functionalities may be added to the 

Navy ERP at some future dates, if a business case supports that decision. 

GCSS–MC is the Logistics Chain Management tool for the Marine Corps. It is not 

an overarching ERP since the scope is limited to the Logistics Chain. There are four 

legacy systems that will be retired through GCSS–MC Increment 1 implementation 

after attaining Full Deployment in 2nd Quarter, FY13. These systems are listed as 

follows: SASSY, MIMMS, PC MIMMS, and ATLASS. The estimated cost savings or 

cost avoidance is $2M/year. Looking forward, the Marine Corps is adjudicating within the Expeditionary Force Development System (EFDS) process the potential retirement of approximately 30+ legacy systems identified within the Draft GCSS–MC 

Increment 2 Capabilities Development Document/Business Capabilities Lifecycle 

(CDD/BCL). The impact of this new capability on these systems still needs to be assessed once a viable GCSS–MC Increment 2 material solution (Capabilities Production Document (CPD)) is designed, developed, tested, approved, and implemented. 

Mr. CONAWAY. At what level are decisions made to retire/maintain legacy systems 

and approve ERP customizations? 

Mr. FANNING. Decisions as to what systems would be retired by Navy ERP were 

made primarily by the Resource Sponsors for Navy ERP and the systems in question; with input from the relevant Functional Area Managers. 

ERP configuration changes must be approved by the Navy ERP Senior Integration 

Board, in which the Assistant Secretary of the Navy (RDA), DON CIO, Deputy 

Under Secretary of the Navy DCMO, Deputy Assistant Secretaries C4I and AP, the 

Naval Systems Commands and other receiving commands (e.g., Office of Naval Research) participate. 

The decision to retire/maintain legacy systems is made by the Functional Advocate, Deputy Commandant, Installations and Logistics. The approval of ERP 

customizations, specifically Change Requests (CRs), are made by an Enterprise Configuration Control Board (E-CCB) established by the Functional Advocate. Chaired 

by I&L, the E-CCB is comprised of members from CD&I, the OpFors (MEFs), 

LOGCOM, and the MARFORs (MARFORCOM, MARFORPAC), P&R, and C4 for 

their vetting/approval/prioritization/resourcing of CRs. Other ERP customizations 

such as Engineer Change Proposals (ECPs) are adjudicated by the E-CCB but deferred to the GCSS-MC Future Requirements Working Group (G-FRWG) for inclusion as a future increment in the draft CDD/BCL developed by CD&I (requirements 

and capabilities). 

Mr. CONAWAY. Historically, the quality and integrity of the data undergoing conversion is a major contributor to schedule slippages and cost increases for ERP systems. What lessons are you applying from past problems with data conversion and 

data cleanliness to improve future outcomes for ERP deployments? 

Mr. FANNING. To document and leverage the lessons learned from each deployment, Navy ERP developed and annually updates the Navy ERP Command Implementation Guidance (CIG). This Guide provides details of the Navy ERP implementation process and key information on structuring a command’s implementation 

teams and efforts for success. It also identifies critical success factors and provides 

timelines and checklists to help focus a command’s resources on the right things at 

the right time including data conversion and cleansing. Navy ERP establishes Data 

Conversion Agreements (DCA) with each Command owning a system from which 
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data will be converted into Navy ERP to ensure the accuracy and timeliness of data 

exchange between the respective systems. Approximately 24 months prior to deployment, Navy ERP conducts a Deployment Planning Kickoff Meeting with Command 

to discuss lessons learned including data conversion and cleansing. Navy ERP communicates the need to limit the conversion only to the data needed to execute in 

Navy ERP. Additionally, Navy ERP hosts a Data Conversion Workshop with Command to review the data conversion requirements, determine what data objects are 

required from each legacy system data and finalize plans for moving forward, to include the status of Command on-going data cleaning efforts. 

Navy ERP and the Command jointly developed a Data Conversion Strategy and 

Data Load Plan. The Data Conversion Strategy documents the data required to support the conversions and the activities to be performed by the legacy data owners 

in preparation for the cutover, including validation and reconciliation. The plan is 

a detailed, networked schedule of data conversion activities from legacy data extraction through data load into the Navy ERP solution. The strategy and plan includes 

multiple mock conversions and cutover practice to validate data. During the mock 

conversions Navy ERP provides a sandbox for the Commands to test business process scenarios using their own data allows them the opportunity to test and validate 

data quality. The Command’s extensive use of this environment to complete all data 

cleansing activities prior to deployment significantly improved the quality of converted data and enabled commands to use the converted data as part of their training which increased user readiness. Successful application of the lessons learned, 

the extensive data cleansing work by the System Commands and their partnering 

with Navy ERP resulted in 100% data accuracy for the 3,659,908 converted data objects for the Naval Sea Systems Command Working Capital Fund sites, and 100% 

data accuracy for the 22,241,247 converted data objects for the Fleet Logistic Centers and their partner sites prior to their deployments in October and November 

2011 respectively. Achieving 100% data accuracy for converted data enables commands to complete cutover activities and resume full operations in Navy ERP in approximately six weeks which minimizes impact to command business and ability to 

support fleet operations. 

The lessons learned from the contamination of ERPs by tainted data is resolved 

up front prior to a unit’s cutover into GCSS–MC. BLUF: Contaminated data is NOT 

loaded into GCSS-MC. Questionable data is ‘‘fenced off’’ and arbitrated outside of 

the system. Once cleansed, data is loaded in GCSS–MC. Procedurally, a thorough, 

12-week cutover process comprising of equipment accountability, personnel training, 

use of a data cleansing tool, and testing (mock conversions) are conducted before 

any equipment data is loaded into the system. This stringent process screens/filters 

is attributable to a high level of data cleanliness. As previously mentioned, all questionable data is identified and segregated for causative analysis by the unit to adjudicate outside of the system and, once the data is cleansed, it is loaded into GCSS– 

MC. To date, using unit data accuracy is 99% and Marine Corps Logistics Command 

data accuracy is 98% (with 1%–2% being resolved outside of the system). 

Mr. CONAWAY. As the ERPs are implemented, what type of training is each of the 

users receiving? Is this training incorporated into broader training explaining the 

importance of good financial management? 

Mr. FANNING. Navy ERP end user training strategy incorporates best practices 

learned from years of private industry experience in training end users of ERP systems. Navy ERP’s Business Process Experts, FMO and DFAS participate in all financial functional testing to ensure the system supports existing financial policy/ 

guidance (FMR and U.S. Treasury). Navy ERP training strategy is based on knowledge transfer between the functional and business process experts at Navy ERP, 

Navy Financial Management Office (FMO) and those at each of the Systems Commands. That transfer begins with extensive business process workshops 18–24 

months prior to deployment. The transfer continues through a Train-the-Trainer 

event generally scheduled four months prior to go-live. The knowledge gained by the 

deploying command’s business process experts is transferred to the command’s end 

users through just in time training events generally scheduled from two months 

prior to go-live to two months after. Finally, the knowledge transfer is continued 

through Navy ERP Program Office functional experts deployed to each command 

site providing over-the-shoulder support directly to command end users from three 

months prior to deployment through six months post-deployment to ensure effective 

business operations through the transition period. Basic users, those using primarily time and attendance functions, receive training through Web Based Training 

course. Power Users, those using more functionality and may have multiple roles, 

receive Instructor Lead Training provided by their Command’s trainers and business process experts. For example, approximately 21,000 basic users and 9,854 

power users were trained for the NAVSEA Working Capital Fund deployment and 
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approximately, 4,500 basic users and 807 power users were trained for the November deployment of the Single Supply Solution to Fleet Logistics Centers and their 

partner sites. 

The Navy ERP Program Office develops and maintains standard training materials. These incorporated both Navy standard financial management guidelines from 

Navy FMO and industry best practices. The training material consists of: 

• Presentations containing business processes and best practice business rules 

• Step-by-step work instructions 

• Hands-on exercises and supporting data 

• Simulations of Navy ERP transactions 

Deploying commands have the option of supplementing the standard training materials with additional command-specific information, generally in the form of local 

business rules and command-specific data sets for hands-on exercises thereby enhancing the importance of the command financial management practices. The Navy 

ERP Program Office maintains a live training environment for hands-on exercise 

and practice. The configuration of the training environment is updated to mirror the 

Production environment once each quarter. The data is revised regularly to reflect 

changed or new functionality. 

GIT works with our Business Process in developing the training materials. GIT 

is not the owner or lead of the functionality. We get guidance from our BP Teams. 

Our BP Leads, including Financial BP Leads, work with FMO on development, testing, review and validation of the functionality and compliance matters. The implementation of training and its development for GCSS–MC is twofold. First, training 

is incorporated into the 12-week cutover process for using units to train users on 

their Role-Based Access (RBAC) within GCSS–MC. Second, Marine Corps, Training 

Education Command recently implemented a formal training curriculum for the 

Formal MOS-producing schools at Marine Corps Combat Service Support Schools 

(MCCSSS). As with any new curriculum, revisions to the curriculum are being developed to closely align usage of the system in the OpFors and Supporting Establishment. The volume of training received is directly attributable to their specific 

role within the system (e.g., entry-level users vs supervisors/managers). The formal 

training developed by TECOM addresses the macro-level issue of good financial 

management depending on RBAC (e.g., supply or fiscal personnel) from an ethical 

perspective for requisitions as stewards of taxpayer dollars. 

Mr. CONAWAY. Please provide the number of ‘‘legacy’’ systems currently in use to 

support business functions (e.g., financial management, acquisitions, logistics, personnel, etc) for each Service and the Fourth Estate. For each of the ERPs being implemented, please provide the number of legacy systems that will be retired and the 

estimated cost savings or cost avoidance once each of these ERPs are implemented. 

Furthermore, provide an explanation for the reasoning for not retiring the systems 

that will not be retired once the ERPs are implemented. 

Mr. TILLOTSON. LOGISTICS SYSTEMS: There were approximately 400 logistics 

legacy systems identified and analyzed for ECSS processes, of which 240 will be retired following ECSS full deployment. We estimate information technology savings 

of $2B (10-yr lifecycle costs) after ECSS is fully deployed. The persistent systems 

are a mix of classified systems (ECSS is unclassified only), command- or programspecific systems which manage local processes (e.g., training records or production 

tooling), outside the scope of ECSS (e.g., military construction and environmental 

management), or are jointly owned/operated with another DOD component. 

PERSONNEL AND PAY SYSTEMS: There are 32 personnel & pay legacy systems 

within the AF, of which, 20 will be retired following AF–IPPS full operational capability. We estimate $60M annually in savings on sustainment costs after AF–IPPS 

is fully deployed. The scope of AF–IPPS is focused upon executing the Pers/Pay mission, and retiring those systems with the highest sustainment costs (including the 

Air Force Military Personnel Data System (MILPDS) and Defense Joint Military 

Pay System (DJMS)), producing the most immediate return on investment. The remaining 12 systems are tangential to the core AF–IPPS mission of enabling and 

executing Personnel to Payroll outcomes (e.g., Wounded Warrior support, promotion 

board management) and are not targeted to be subsumed into AF–IPPS. 

FINANCIAL MANAGEMENT SYSTEMS: The Air Force uses 36 Financial Management systems, 9 of which will be retired from use by the Air Force with Defense 

Enterprise Accounting and Management System (DEAMS) Full Operating Capability (FOC). At FOC the Air Force expects to save on average $18M annually by 

the replacement of legacy information technology systems. The remaining systems 

are not being subsumed because they contain core functionality outside the DEAMS 

program scope (e.g., Budget Formulation, Funds Distributions), or are being ad-
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dressed by other ERP systems (e.g., Military Pay in AF–IPPS, and Working Capital 

Fund Accounting in ECSS). 

Mr. CONAWAY. At what level are decisions made to retire/maintain legacy systems 

and approve ERP customizations? 

Mr. TILLOTSON. Decisions to retire or maintain legacy systems are made at the 

Deputy Chief of Staff (3-star level) in Headquarters Air Force. As a matter of 

course, we do not customize ERPs, but address requirements outside core ERPs 

through Reports, Interfaces, Conversions and Extensions (RICE). 

Mr. CONAWAY. Historically, the quality and integrity of the data undergoing conversion is a major contributor to schedule slippages and cost increases for ERP systems. What lessons are you applying from past problems with data conversion and 

data cleanliness to improve future outcomes for ERP deployments? 

Mr. TILLOTSON. The Air Force Integrated Personnel & Pay System (AF–IPPS), Defense Enterprise Accounting & Management System (DEAMS) and Expeditionary 

Combat Support System (ECSS) actions described below help summarize the three 

lessons that we have learned from other ERP efforts. First, initiate the data cleansing effort as early in the acquisition process as possible. Second, the government 

should take the primary role in getting data cleansed—instead of handing the work 

off to an external vendor. Third, connect the data effort back to the business rules 

to make sure every business process performance metric is achieved. 

We have made data cleansing an early and very deliberate part of our ERP initiatives. Using lessons learned from the Army and other ERP efforts, ECSS has established a Data Management Organization (DMO) which has implemented ongoing 

data quality improvements and measurements. The ECSS DMO cooperates with the 

DEAMS program office in gathering data for review. The processes of the DMO are 

focused on identifying and executing cleansing tasks in existing operational systems, 

and these repeatable processes are adapted as additional data quality concerns/targets are identified. 

The Air Force has embarked on an extensive clean-up and data cleansing effort 

to support transition to DEAMS and our other major ERPs in the area of financial 

management data, To promote consistency among the ERPs, we are also working 

to ensure data business rules are uniform. Our Financial Management data management team reviews old, unstructured legacy data elements and values, understanding what each data element was designed to represent, and provides structure 

(one value to one definition) to translate to Standard Financial Information Structure (SFIS). The Air Force Financial Management Data Quality Service (FM DQS) 

is the Air Force repository for FM data elements and data element values. The Air 

Force ERPs validate any FM Data request thru FM DQS. A dashboard tracks the 

data cleansing efforts for management oversight and action. The Air Force also created an application to track the status of open documents (data clean-up) in the accounting system. Tri-Annual Review (TAR) is an application which resides in the 

FMSuite system. The 3 times a year reviews concentrate on identifying dormant obligations. Resource Advisors (RAs) research each document for validity or closure. 

Additionally, organizational RAs continually monitor the Open Document List 

(ODL) and take follow-up action to close unsupported, duplicative, remaining balances, or erroneous documents in the accounting system. 

The Air Force has initiated a process for the AF–IPPS implementation well ahead 

of system development, to ensure that we have a controlled, mature data cleansing 

operation in place when the data is needed to support development, testing, and 

transition activities for AF–IPPS. Further, the Air Force is also constructing a Data 

Management Environment (DME) which will provide the venue and tools for cleansing Personnel and Pay data, and hosting the Services to make the data available 

to authorized consumers. The DME will be built and tested prior to AF–IPPS contract award. 

Mr. CONAWAY. As the ERPs are implemented, what type of training is each of the 

users receiving? Is this training incorporated into broader training explaining the 

importance of good financial management? 

Mr. TILLOTSON. For all the ERPs, the Air Force conducts (or plans to conduct) 

role-based training which is aligned with the implementation of the ERP and the 

new business processes. Integral to the training is instruction in the processes and 

controls that assure the completeness of transactional information critical to ensuring adherence to financial and materiel controls. These detailed, controlled processes 

are the strength of ERPs. 

The DEAMS program will continue role-based training as we move forward with 

deployments. DEAMS-specific training is currently grouped into four major categories—DEAMS/Oracle Familiarization Training, Initial Deployment Training, 

Sustainment/Recurring Training, and Post Deployment/Pipeline Training. DEAMS 

takes a blended-learning approach to training, i.e., training is delivered using a va-
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riety of methods including classroom Instructor Led Training (ILT), Web Based 

Training (WBT), and Computer Based Training (CBT). Future options will include 

delivery of instruction via Video Teleconferencing (VTC), Defense Connect Online 

(DCO), or similar capabilities. DEAMS training will be developed in accordance with 

AETC standards. In its final form, DEAMS training will be hosted on the AF Learning Management System (LMS) and accessed through the Financial Management 

Distance Learning Center (FMDLC) which can be utilized for delivering computer 

based training (CBT). Training materials will be made available via the FMDLC for 

access across the enterprise during deployment and post-deployment sustainment. 

ECSS training will be conducted through a blended learning approach to include 

a combination of role-based, instructor-led, and computer based training courses. 

Training materials will be made available in a centralized location to allow for management across the enterprise during fielding and post-fielding sustainment. In addition, end users will have access to training materials in the Online Performance 

Support System (OPSS) within the ECSS application. 

For AF–IPPS, we are addressing training as a subset of our strategic change management effort, preparing the entire workforce for the integration of Personnel and 

Pay. This will include training all 500,000+ Airmen as customers of AF–IPPS—and 

will include an extensive effort to train each Personnel & Pay technician on how 

to operate the new environment on behalf of the end-users. As noted above, the 

training will be role-based, and focus not only the software, but also upon how the 

end-to-end business process will execute. Each of the 105 Personnel and Pay business processes will be pre-defined to include the specific performance metrics, along 

with the auditing standards required to demonstrate financial control as transactions are engaged. The AF–IPPS training materials and classes will be built 

around the end-to-end processes to ensure our workforce is prepared to both run 

and use AF–IPPS immediate upon deployment. 

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