United States Government Accountability Office

GAO Report to the Subcommittee on 

Readiness and Management Support, 

Committee on Armed Services, 

U.S. Senate 

DOD BUSINESS 

TRANSFORMATION 

Lack of an Integrated 

Strategy Puts the 

Army’s Asset Visibility 

System Investments at 

Risk 

July 2007 

 

GAO-07-860 
What GAO Found

United States Government Accountability Office

Why GAO Did This Study

Highlights

Accountability Integrity Reliability

July 2007

DOD BUSINESS TRANSFORMATION 

Lack of an Integrated Strategy Puts the 

Army’s Asset Visibility System 

Investments at Risk 

Highlights of GAO-07-860, a report to 

the Subcommittee on Readiness and 

Management Support, Committee on 

Armed Services, U.S. Senate 

The Department of Defense (DOD)

established a goal to achieve total

asset visibility (TAV) over 30 years 

ago, but to date it has been

unsuccessful. GAO was requested

to (1) determine whether the Army

has a systems strategy for

achieving TAV, (2) determine if the 

Army’s business system investment 

governance structure is consistent

with DOD guidance, and 

(3) evaluate the Army’s effort to

correct previously reported 

problems with the Logistics 

Modernization Program (LMP). 

GAO obtained an understanding of

the Army’s efforts to achieve TAV,

oversee and manage its business 

system investments, and address

previously reported LMP problems. 

What GAO Recommends

GAO makes five recommendations 

to DOD and the Army: (1) develop

a concept of operations for the 

Army; (2) develop policies, 

procedures, and processes to 

manage investments from a 

portfolio perspective; (3) establish 

an independent verification and 

validation function; (4) require that

any future General Fund Enterprise

Business System (GFEBS) 

economic analysis is prepared in

accordance with applicable 

policies; and (5) direct that LMP 

use an independent system test

team. Overall, DOD concurred

with the recommendations and 

stated that it will work diligently to 

close them. 

Supply chain management has been on GAO’s high-risk list since 1990. One 

area that has contributed to this long-standing problem has been DOD’s 

inability to maintain control and accountability over hundreds of billions of 

dollars of assets. DOD plans to improve its asset management through its 

business system modernization. In this regard, GFEBS, the Global Combat 

Support System-Army (GCSS-Army), and LMP are aimed at achieving TAV 

within the Army. The Army estimates that it will invest approximately $5 

billion to develop and implement these systems. However, this investment is 

being made without a clear integrated strategy. 

• GFEBS, GCSS-Army, and LMP are not being developed in the context of 

a well-defined Army-wide enterprise architecture. As a result, the Army

does not have an informed basis for determining if these systems will fit 

within the context of future Army business operations and will 

efficiently and effectively address the Army’s long-standing weaknesses 

associated with the lack of asset visibility. 

• The Army lacks a concept of operations that would describe, at a high 

level, (1) how the three business systems relate to each other in 

achieving the Army’s TAV goal, and (2) how information flows from and 

through these systems. Moreover, GAO found that the Army's lack of a 

concept of operations has contributed to its failure to take full advantage 

of business process reengineering opportunities that are available when 

using an enterprise resource planning solution. 

Without these key foundational elements, the Army is at risk of investing 

about $5 billion in business systems and still not achieving DOD’s and the 

Army’s goal of TAV. 

Furthermore, while the Army has established a governance structure that is 

consistent with DOD guidance, its processes are still maturing. The Army’s 

governance structure is designed to certify and review individual business 

systems rather than to evaluate these investments from a portfolio 

perspective. Such a perspective permits investments to be viewed in a 

comprehensive manner to help ensure that the organization’s missions and 

objectives are achieved. GAO also found that the Army did not have reliable 

processes and analyses, such as an independent validation and verification 

function or economic analyses, to support its oversight of individual 

business systems. Until the Army's investment processes mature, it runs the 

risk of investing in business systems that do not provide the desired 

functionality and efficiency. 

Additionally, LMP continues to be plagued by problems that have beset the 

system since its implementation in July 2003. LMP continues to experience 

problems with accurately recognizing revenue and billing customers, which 

can, in part, be attributed to ineffective system testing. 

www.gao.gov/cgi-bin/getrpt?GAO-07-860.

To view the full product, including the scope 

and methodology, click on the link above. 

For more information, contact McCoy 

Williams at (202) 512-9095 or Keith Rhodes 

at (202) 512-6412. 
Contents 

Letter 1

Results in Brief 4

Background 8

Army Lacks an Integrated Strategy for Achieving TAV 17 

Army’s Ability to Effectively Oversee Portfolios of Business 

Systems Investment Is Not Yet Fully Developed 22 

LMP Illustrates Continuing Problems in Implementing Business 

Systems on Time, within Budget, and with the Promised 

Capability 28

Conclusions 30

Recommendations for Executive Action 31 

Agency Comments and Our Evaluation 32 

Appendix I Scope and Methodology 35 

Appendix II Comments from the Department of Defense 38 

Appendix III Army Strategy Does Not Fully Utilize Capabilities of 

ERP Solution 46 

Appendix IV LMP Problems Continue 51 

Appendix V GAO Contacts and Staff Acknowledgments 60 

Tables 

Table 1: Unbilled and Credit Customer Orders at the Tobyhanna 

Army Depot for November 2006 through January 2007 52 

Table 2: DFAS Billings to the Tobyhanna Army Depot for 

Accounting Services 52 

Page i GAO-07-860 Army Asset Visibility
Figures 

Figure 1: LMP Time Line 10 

Figure 2: GCSS-Army Time Line 11 

Figure 3: GFEBS Time Line 12 

Figure 4: Overview of Tiered Accountability for Army Business 

System Investments 14 

Figure 5: Example of an ERP Vision for Accountability of the 

Army’s PP&E 21 

Figure 6: Planned GFEBS and GCSS-Army Fund Control Process 47 

Figure 7: GCSS-Army Funds Control Process Utilizing ERP 

Capabilities 48

Abbreviations 

BEA business enterprise architecture 

BTA Business Transformation Agency 

CIO Chief Information Officer 

COTS commercial off-the-shelf 

CSC Computer Sciences Corporation 

DBSMC Defense Business Systems Management Committee 

DFAS Defense Finance and Accounting Service 

DOD Department of Defense 

DPAS Defense Property Accountability System 

EA enterprise architecture 

EAMMF Enterprise Architecture Management Maturity Framework 

ERP enterprise resource planning 

FFMIA Federal Financial Management Improvement Act

FOC full operational capability 

GCSS-Army Global Combat Support System-Army 

GFEBS General Fund Enterprise Business System 

IRB investment review board

IT information technology 

IV&V independent verification and validation 

LMP Logistics Modernization Program 

MAIS major automated information system 

MDAP major defense acquisition program 

OMB Office of Management and Budget 

PBUSE Property Book Unit Supply Enhanced 

PCA Pre-Certification Authority 

PLM+ Product Lifecycle Management Plus 

PP&E property, plant, and equipment 

SALE Single Army Logistics Enterprise 

TAV total asset visibility 

V&V verification and validation 

Page ii GAO-07-860 Army Asset Visibility
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Page iii GAO-07-860 Army Asset Visibility
United States Government Accountability Office

Washington, DC 20548 

July 27, 2007

The Honorable Daniel K. Akaka 

Chairman 

The Honorable John Ensign 

Ranking Member 

Subcommittee on Readiness and Management Support 

Committee on Armed Services 

United States Senate 

The Department of Defense (DOD) has continually struggled to achieve 

and maintain efficient and effective management over the hundreds of 

billions of dollars it has invested in tangible assets, including inventory, 

supplies, and materials (inventory and related property) and property, 

plant, and equipment (PP&E).1

 DOD was responsible for almost 72 percent 

($697 billion) of the total $970 billion reported governmentwide value for 

these assets, as of September 30, 2006.

2

 The nature and severity of DOD’s 

financial and business management system deficiencies impede the ability 

of DOD managers to receive the full range of information needed to 

effectively manage day-to-day operations. Of the 27 areas on GAO’s high- 

 1

Federal Accounting Standards and the Joint Financial Management Improvement Program 

(JFMIP) define inventory, supplies, and materials as consisting of three subclassifications: 

(1) inventory—tangible personal property that is (a) held for sale, (b) in the process of

production for sale, or (c) to be consumed in the production of goods for sale or in the 

provision of services for a fee; (2) operating materials and supplies—tangible personal 

property to be consumed in normal operations; and (3) stockpile materials—strategic and 

critical materials held due to statutory requirements for use in national defense, 

conservation, or national emergencies. Property, plant, and equipment is defined as 

tangible assets that have an estimated useful life of 2 or more years, are not intended for 

sale in the ordinary course of business, and are intended to be used or available for use by

the entity. 

2

The reported amounts are net of allowances and depreciation, as applicable. 

Page 1 GAO-07-860 Army Asset Visibility
risk list,3

 DOD has 8 high-risk areas of its own4 and shares responsibility 

for 7 governmentwide high-risk areas.5

Visibility over its assets has been a DOD concern for decades. If the 

information contained in the asset accountability systems is not accurate, 

complete, and timely, DOD’s day-to-day operations could be adversely 

affected by investing in inventory, for example, that is not needed to meet

current needs. When this occurs, the department may obligate funds 

unnecessarily, which could lead to not having sufficient obligational 

authority to purchase needed items. In recognition of the importance of 

asset accountability to successful operations, the department established a 

goal to achieve total asset visibility (TAV) over 30 years ago. DOD defines 

TAV as the ability to provide timely and accurate information on the 

location, movement, status, and identity of units, personnel, equipment, 

and supplies and having the ability to act on that information. Over the 

years, the military services and defense components have undertaken 

numerous initiatives to achieve TAV. Within the Army, one such initiative 

has been the Logistics Modernization Program (LMP). In May 2004 and 

June 2005, we reported that LMP was not providing the Army the promised 

capability.6

 DOD’s current estimate for achieving TAV is 2010. 

This report provides information in support of your continuing oversight

of DOD’s progress towards resolving the department’s long-standing 

problems in achieving TAV. As you requested, our initial effort was 

directed at the Army. In September 2006, the Army reported inventory and 

 3

GAO, High-Risk Series: An Update, GAO-07-310 (Washington, D.C.: January 2007). 

4

The eight specific DOD high-risk areas are (1) business transformation, (2) business

systems modernization, (3) contract management, (4) financial management, (5) personnel 

security clearance program, (6) supply chain management, (7) support infrastructure 

management, and (8) weapon systems acquisition. 

5

The seven high-risk areas that DOD shares responsibility for are (1) disability programs, 

(2) information sharing for homeland security, (3) information systems and critical 

infrastructures, (4) interagency contracting, (5) human capital, (6) real property, and 

(7) technologies critical to national security interests. 

6

GAO, DOD Business Systems Modernization: Billions Continue to Be Invested with

Inadequate Management Oversight and Accountability, GAO-04-615 (Washington, D.C.: 

May 27, 2004) and Army Depot Maintenance: Ineffective Oversight of Depot Maintenance 

Operations and System Implementation Efforts, GAO-05-441 (Washington, D.C.: June 30, 

2005). 

Page 2 GAO-07-860 Army Asset Visibility
related property of about $57 billion and PP&E over $85 billion.7

 The Army 

has identified three primary system initiatives directed at achieving TAV 

within the service: (1) LMP, (2) Global Combat Support System-Army 

Field/Tactical8

 (GCSS-Army), and (3) General Fund Enterprise Business 

System (GFEBS). Our objectives were to (1) determine whether the Army 

has developed a business system strategy for achieving TAV, (2) determine 

if the Army has effectively implemented a governance structure to oversee 

and manage its business system investments in accordance with DOD 

guidance, and (3) evaluate the extent to which the Army has made 

progress in correcting the previously reported problems regarding LMP’s 

implementation. 

To address the first objective, we met with Army program office officials 

for GFEBS, GCSS-Army, and LMP and obtained briefings on the intended 

purpose of each system. In addition, we conducted walkthroughs and 

reviewed documentation related to various transactions to obtain an 

understanding of how the systems would exchange data and to assess how 

the Army intended to use these systems individually and collectively to 

achieve TAV. To address the second objective, we reviewed guidance 

issued by DOD, the Army, and the Business Transformation Agency (BTA) 

related to investment management. We also obtained an understanding of 

the Army’s business system investment governance structure and process 

for ensuring compliance with the certification and annual system review 

processes required by the fiscal year 2005 National Defense Authorization 

Act.9

 To address the third objective, we interviewed and obtained briefings 

from LMP program management office officials and others, and reviewed 

and analyzed LMP system requirement and testing documentation to 

assess the extent to which corrective actions had been taken or are 

planned to address our prior recommendations. We determined that the 

documentation Army prepared and submitted through its business system 

governance process to the investment review boards (IRBs) and the 

Defense Business Systems Management Committee (DBSMC) as a basis 

 7

As of September 30, 2006, the Army reported net inventory and related net property valued

at about $39 billion for the Army general fund and about $18 billion for the Army working

capital fund. For the same period, Army also reported net PP&E valued at over $84 billion 

for the Army general fund and over $1 billion for the Army working capital fund.

8

Field/Tactical refers to Army units that are deployable to locations around the world such 

as Iraq or Afghanistan. 

9

Ronald W. Reagan National Defense Authorization Act for Fiscal Year 2005, Pub. L. No. 

108-375, § 332, 118 Stat. 1811, 1851-56 (Oct. 28, 2004) (codified, in part, at 10 U.S.C. §§ 186, 

2222). 

Page 3 GAO-07-860 Army Asset Visibility
for approving individual Army business system investments was 

sufficiently reliable for our purposes. Our work was performed from May 

2006 through June 2007 in accordance with U. S. generally accepted 

government auditing standards. Details on our scope and methodology are 

included in appendix I. We requested comments on a draft of this report 

from the Secretary of Defense or his designee. We received written 

comments from the Deputy Under Secretary of Defense (Business 

Transformation), which are reprinted in appendix II. 

The Army’s current approach for developing GFEBS, GCSS-Army, and 

LMP lacks several elements that are critical to the successful 

implementation of integrated business systems, such as an Army-level 

enterprise architecture (EA),10 a concept of operations, and a portfoliobased rather than individual-project-based business system investment 

review process. Without these key foundational elements, the risk that the 

Army’s efforts to achieve TAV will not be successful is greatly increased. 

While the Army’s efforts to develop these systems and transform its 

logistics operations may result in incremental improvements, without 

these three essential elements, they are unlikely to achieve the efficiencies 

that can be attained through an integrated business system solution. 

Instead, if the Army continues on its current path, it runs the risk of 

investing significant resources to simply automate its existing inefficient 

business processes using more current technology. 

Results in Brief 

As it now stands, the Army plans to invest about $5 billion over the next 

several years to develop and implement GFEBS, GCSS-Army, and LMP 

without the benefit of a well-defined Army EA. We reported in August 

2006,

11 that the Army was in the initial stages of developing an EA. As of 

May 2007, this was still the case.12 A well-defined EA is an essential tool for

leveraging information technology (IT) in the transformation of business 

and mission operations. Our experience with federal departments and 

 10An enterprise architecture is a blueprint for organizational change defined in models that

describe (in both business and technology terms) how the entity operates today and how it 

intends to operate in the future; it also includes a plan for transitioning to this future state. 

11GAO, Enterprise Architecture: Leadership Remains Key to Establishing and Leveraging 

Architectures for Organizational Transformation, GAO-06-831 (Washington, D.C.: 

Aug. 14, 2006). 

12GAO, DOD Business Systems Modernization: Progress Continues to Be Made in

Establishing Corporate Management Controls, but Further Steps Are Needed, GAO-07-733 

(Washington, D.C.: May 14, 2007). 

Page 4 GAO-07-860 Army Asset Visibility
agencies has shown that attempting to modernize systems without an EA 

to guide and constrain investments often results in operations and systems 

that are duplicative, not well integrated, unnecessarily costly to maintain 

and interface, and ineffective in supporting mission goals.13 Moreover, the 

development, implementation, and maintenance of an EA are widely 

recognized as hallmarks of successful public and private organizations, 

and their use is required by the Clinger-Cohen Act of 199614 and the related 

guidance from the Office of Management and Budget (OMB).15

In addition to the Army’s lack of an EA, the Army also lacked a concept of

operations, which outlines the Army’s strategy for achieving TAV, 

including how the three systems it has identified as key in attaining TAV 

will interoperate. A concept of operations would provide the Army a 

forum for interchange among stakeholders—such as oversight entities, 

program managers, developers, and users—on major technical and 

programmatic issues related to achieving TAV. Without a concept of 

operations for achieving TAV, the Army is hindered in its ability to apply 

an enterprise view in (1) making decisions as to how GFEBS, GCSS-Army, 

and LMP will individually and collectively enhance the Army’s asset 

accountability, including providing TAV; and (2) determining what 

changes are needed in its related business processes. Additionally, the

Army’s inability to achieve TAV hinders its and DOD’s efforts to resolve 

the long-standing problems associated with supply chain management, 

which has been on our high-risk list since 1990. Asset visibility is one of 

the focus issues critical to successfully addressing this high-risk area. 

Further, the Army’s lack of a concept of operations has resulted in its 

failure to take full advantage of business process reengineering 

 13See, for example, GAO, Information Technology: FBI Is Taking Steps to Develop an

Enterprise Architecture, but Much Remains to Be Accomplished, GAO-05-363 

(Washington, D.C.: Sept. 9, 2005); Homeland Security: Efforts Under Way to Develop

Enterprise Architecture, but Much Work Remains, GAO-04-777 (Washington, D.C.: Aug. 6,

2004); DOD Business Systems Modernization: Limited Progress in Development of 

Business Enterprise Architecture and Oversight of Information Technology Investments, 

GAO-04-731R (Washington, D.C.: May 17, 2004); Information Technology: Architecture 

Needed to Guide NASA’s Financial Management Modernization, GAO-04-43 (Washington, 

D.C.: Nov. 21, 2003); and DOD Business Systems Modernization: Important Progress 

Made to Develop Business Enterprise Architecture, but Much Work Remains, 

GAO-03-1018 (Washington, D.C.: Sept. 19, 2003). 

14Pub. L. No. 104-106, div. E, tit. LI, §§ 5122, 5125, 110 Stat. 186, 683, 685 (Feb. 10, 1996) 

(codified at 40 U.S.C. §§ 11312, 11315). 

15OMB Circular No. A-130, Management of Federal Information Resources, § 8(b) (Nov. 28, 

2000). 

Page 5 GAO-07-860 Army Asset Visibility
opportunities that are available when using an enterprise resource 

planning (ERP)16 solution. Rather, the Army’s existing strategy perpetuates

some of the cumbersome and ineffective business processes that are 

currently used in its existing legacy system environment. The benefits of 

an ERP solution include streamlining of business processes and 

elimination of data redundancy. 

Furthermore, while the Army has established a business system 

investment management governance structure that is consistent with DOD 

guidance, its overall investment management approach is still maturing. 

Currently, the Army’s investment review process is designed to ensure the

completion of certifications and annual reviews of individual business 

systems rather than to evaluate business system investments from a 

portfolio management perspective. A portfolio-based perspective permits 

an organization to view its business system investments in a 

comprehensive manner to help ensure that the organization’s missions, 

strategic goals, and objectives are achieved. Moreover, we found that the 

Army did not have reliable processes or analyses, such as independent 

verification and validation functions or economic analyses, to support its 

oversight of program management office efforts to develop and implement 

business systems. Until the Army adopts a business system investment 

management approach that provides for reviewing groups of systems and 

making enterprise decisions regarding how these groups will collectively 

interoperate to provide a desired capability, it runs the risk of investing 

significant resources in business systems that do not provide the desired 

functionality and efficiency. 

LMP continues to be plagued by operational problems that have beset the 

system virtually since its initial implementation in July 2003. While from a 

“big picture” perspective, an EA ,concept of operations, and effective IT

portfolio management are essential elements in an entity’s efforts to 

transform its operations, it is equally important for the entity to have the 

disciplined processes needed to actually implement individual business 

systems on time, within budget, and with the promised capability. As we 

have previously reported, historically DOD has had difficulty in 

accomplishing this goal, and LMP has been no exception. As of September 

2006, the Army reported that it had obligated approximately $452 million 

 16An ERP solution is an automated system using commercial off-the-shelf (COTS) software 

consisting of multiple, integrated functional modules that perform a variety of businessrelated tasks such as payroll, general ledger accounting, and supply chain management. 

Page 6 GAO-07-860 Army Asset Visibility
to develop and implement LMP. In May 2004 and June 2005, we reported 

on operational issues related to LMP, for example, the inability to 

accurately recognize revenue and bill customers—a problem that 

continues today. We recommended, and the Army agreed, that the 

implementation of LMP should be delayed until the operational problems 

we identified were resolved. While the Army is working to resolve LMP 

operational issues, we continue to have concerns about the adequacy of 

LMP’s system testing given that the continuing problems with LMP can, in

part, be attributed to ineffective and nonindependent system testing. Until 

an effective LMP testing process is implemented, the Army will have little 

assurance that the corrective actions it takes (1) are properly developed, 

and (2) do not introduce additional defects into the system. 

We are making five recommendations to the Secretary of Defense to 

improve the department’s efforts to achieve TAV and further enhance its 

efforts to improve its control and accountability over business system 

investments. More specifically, we recommend that the Secretary of 

Defense (1) develop a concept of operations for the Army; (2) develop

policies, procedures, and processes to manage investments from a 

portfolio perspective; (3) establish an independent verification and 

validation function; (4) ensure the GFEBS economic analysis update is 

prepared in accordance with applicable guidance; and (5) direct that LMP

use an independent system test team. 

We received written comments on a draft of this report from the Deputy 

Under Secretary of Defense (Business Transformation), which are 

reprinted in appendix II. Overall, DOD concurred with our 

recommendations and stated that it would work diligently to implement 

them. The comments included two sets of specific responses to our 

recommendations—one set provided by BTA and another provided by the 

Army. In its comments, the Army concurred with each of the 

recommendations. BTA stated that it fully agreed with our observations. 

BTA, though, partially concurred with all the recommendations on the 

basis that they were directed jointly to the Secretary of the Army and the 

Director, BTA. BTA’s comments noted that it has neither the authority nor 

the responsibility to direct the actions of the Army. 

We appreciate the department’s willingness to address our 

recommendations. With regard to BTA’s concern, our recommendations 

do not direct BTA to oversee or direct the Army. Rather, the 

recommendations stated that the specific actions should be undertaken 

jointly at the direction of the Secretary of Defense. We continue to believe 

that a cooperative and effectively coordinated BTA and Army approach to

Page 7 GAO-07-860 Army Asset Visibility
addressing our recommendations is most likely to achieve the 

fundamental business system transformation necessary to achieve the 

department’s TAV objective. 

TAV has been elusive within DOD. Timely, reliable information on the 

location, quantity, and status of the department’s tangible assets could 

significantly improve its ability to more efficiently and effectively deliver 

needed items to DOD operating forces and thereby enhance military 

readiness. The department has recognized the importance of achieving 

TAV and included it as part of its overall business transformation initiative, 

which includes the development and implementation of a business 

enterprise architecture (BEA). The Joint Chiefs of Staff also identified TAV 

as one of four fundamental changes needed to transform the department’s 

logistics operations.17

Background 

One of the primary factors contributing to DOD’s inability to provide 

management with TAV is DOD’s outdated and ineffective management 

information system environment.18 The Federal Financial Management 

Improvement Act (FFMIA) of 199619 and other financial management 

reform legislation have emphasized the importance of improving financial

management, which necessarily encompasses proper inventory 

management, across the federal government. Built upon the foundation 

laid by the Chief Financial Officers Act of 1990,20 FFMIA emphasizes the 

need for agencies to have integrated financial management systems that 

can generate timely, accurate, and useful information to make informed 

decisions and to ensure accountability on a continuous basis.21 Lacking

such critical information, government leaders will not be positioned to 

invest resources, reduce costs, oversee programs, and hold agency 

 17DOD identified the following four fundamental changes in logistics practices that are

needed to transform its logistics operations: (1) customer wait time, (2) time-definite 

delivery, (3) TAV, and (4) Web-based, shared data environment. 

18GAO, Defense Inventory: DOD Could Improve Total Asset Visibility Initiative with 

Results Act Framework, GAO/NSIAD-99-40 (Washington, D.C.: Apr. 12, 1999). 

19Pub. L. No. 104-208, div. A, §101(f), title VIII, 110 Stat. 3009, 3009-389 (Sept. 30, 1996). 

20Pub. L. No. 101-576, 104 Stat. 2838 (Nov. 15, 1990). 

21FFMIA requires the 24 Chief Financial Officers Act departments and agencies to 

implement and maintain financial management systems that comply substantially with 

(1) federal financial management systems requirements, (2) applicable federal accounting 

standards, and (3) the U.S. Government Standard General Ledger at the transaction level. 

Page 8 GAO-07-860 Army Asset Visibility
managers accountable for the manner in which government programs are 

operated. 

Army Initiatives Aimed at 

Achieving TAV 

To improve control and accountability over its assets, the Army has 

embarked on a multisystem integration effort that is intended to leverage 

commercial ERP software and processes. This integration is the focus of 

the Single Army Logistics Enterprise (SALE) initiative. SALE is designed to

integrate information technology requirements, business processes, 

business rules, and data from the Army’s logistics, financial, and 

acquisition transactions for planning and supporting warfighting logistics 

operations. According to the Army, SALE is to provide a coordinated ERP 

solution built around two individual logistics system development efforts: 

(1) LMP and (2) GCSS-Army. Under the SALE vision, GCSS-Army and LMP 

will be integrated into a single solution to provide an Army-wide logistics 

environment spanning from “the factory to foxhole.” On the financial side,

the Army is developing GFEBS to provide financial visibility over its 

assets. Each of these efforts is described below.

LMP. In February 1998, the U.S. Army Materiel Command began an ERP 

effort—LMP—to replace its legacy materiel and maintenance management 

systems—the Commodity Command Standard System and the Standard 

Depot System—with LMP. The Army has been using the existing legacy

systems for over 30 years. LMP is intended to transform the Army’s 

Working Capital Fund logistics operations in six core processes: order 

fulfillment, demand and supply planning, procurement, asset management, 

materiel maintenance, and financial management. LMP became 

operational at the U.S. Army Communications and Electronics Command, 

Fort Monmouth, New Jersey, and Tobyhanna Army Depot, Tobyhanna,

Pennsylvania, in July 2003. The initial deployment of LMP consisted of 

inventory items such as electronics; electronic repair components; and 

communications and intelligence equipment such as night vision goggles, 

electronic components such as circuit boards, and certain munitions such 

as guidance systems included in missiles. Figure 1 shows the LMP time 

line as of March 2007. 

Page 9 GAO-07-860 Army Asset Visibility
Figure 1: LMP Time Line

The Communications-Electronics Life Cycle Management Command,22

Tobyhanna Army Depot, and the Defense Finance and Accounting Service 

(DFAS) are the primary LMP users. When LMP is fully implemented, its 

capacity is expected to include more than 17,000 users at 149 locations 

and it will be populated with 6 million Army-managed inventory items 

valued at about $40 billion. LMP is scheduled to reach full operational 

capability (FOC)23 in fiscal year 2010. As of September 30, 2006, the Army 

reported that approximately $452 million had been obligated for this 

system effort and estimates that it will invest at least another $895 million 

in LMP.24

GCSS-Army. The GCSS-Army program was initiated in 1997 to overcome 

duplicative databases, poor asset visibility, and stovepiped 

communications between numerous existing Army logistics systems. The 

goal of GCSS-Army is to integrate multiple logistic functions by replacing

numerous legacy systems and interfaces. Since the program’s inception, it 

has undergone several revisions, including a change from a custom 

 22The name of the command changed from Communications and Electronics Command to

the Communications-Electronics Life Cycle Management Command in February 2005. 

23Full operational capability means that the system has been deployed to all intended 

locations. 

24The contractor has submitted claims totaling $850 million to the Army. According to the 

LMP Program Office, these claims are being reviewed by the Army contracting officer, who 

is expected to make a decision by June 2007. 

Page 10 GAO-07-860 Army Asset Visibility
software development to a commercial ERP solution, as well as a change

in the prime contractor. According to Army officials, it invested 

approximately $95 million in the previous efforts before adopting the ERP 

approach. The existing ERP effort was started in September 2003 and is 

currently estimated to reach FOC during fiscal year 2014. Figure 2 shows 

the time line for GCSS-Army as of March 2007. 

Figure 2: GCSS-Army Time Line

GCSS-Army is intended to replace 16 stovepiped, legacy logistics systems 

that cover certain types of inventory and PP&E. The system is intended to

be operational at all deployable Army units, and provide asset visibility for 

accountable items down to the foxhole. As of September 30, 2006, the 

Army reported that it had obligated approximately $203 million for the 

ERP version of GCSS-Army. Additionally, the Army estimates that another 

$2.1 billion will be invested in GCSS-Army. 

Product Lifecycle Management Plus (PLM+). This initiative is the 

technical enabler to integrate LMP and GCSS-Army. PLM+ is the means by

which the Army intends to achieve the SALE vision of integrated logistics 

systems. PLM+ is intended to provide a single point of entry and exit for 

interfaces to external systems. Furthermore, PLM+ is intended to 

eliminate duplicative and costly system interfaces. Additionally, the PLM+

implementation schedule and related funding are aligned with that of 

GCSS-Army. PLM+ does not stand alone as an independent capability. As 

of September 2006, the Army reported that approximately $31 million had 

been obligated for PLM+. 

Page 11 GAO-07-860 Army Asset Visibility
GFEBS. While LMP is intended to provide financial control for the Army 

Working Capital Fund, GFEBS is intended to provide this important 

control over all non-working capital fund inventory, including that which 

is reported in GCSS-Army. GFEBS is an ERP solution that was initiated in 

October 2004 and is intended to serve as the Army’s general ledger system

for its general fund accounting.25 As such, GFEBS is intended to improve 

the reliability of the Army’s financial information and thereby enhance the 

Army’s management decision-making process. GFEBS is expected to 

replace 87 legacy systems, including the 30-year old Standard Army 

Finance System. Figure 3 shows the GFEBS time line as of June 2007. 

Figure 3: GFEBS Time Line

The Army estimates that GFEBS will reach FOC by 2010. As of 

September 30, 2006, the Army reported that it had obligated $123 million 

for the development of GFEBS. In addition, the Army currently estimates 

that it will invest another $1.3 billion to implement GFEBS. 

Overview of DOD’s 

Investment Management 

Practices

In 2005, DOD adopted a “tiered accountability” approach to improve 

control and accountability over the billions of dollars it invests annually in 

DOD business systems. Under this approach, executive leadership for the 

direction, oversight, and execution of DOD investments is the 

responsibility of several entities within DOD and its components. As 

shown in figure 4 and described below, the investment control process 

begins at the component level and works its way up through a hierarchy of 

 25The Army Corps of Engineers will continue to use its existing financial system—Corps of 

Engineers Financial Management System. 

Page 12 GAO-07-860 Army Asset Visibility
review and approval authorities, depending on the size and significance of 

the investment.26

 26There are four tiers of business systems. Tier 1 systems include all large, expensive 

system programs classified as a “major automated information system” (MAIS) or a “major

defense acquisition program” (MDAP) and subject to the most extensive statutory and 

regulatory reporting requirements. Tier 2 systems include those with modernization efforts

of $10 million or greater but that are not designated as MAIS or MDAP or programs that

have been designated as IRB interest programs because of their effect on DOD 

transformation objectives. Tier 3 systems include those with modernization efforts that 

have anticipated costs greater than $1 million but less than $10 million. Tier 4 systems are 

those with modernization efforts that have anticipated costs of up to $1 million.

Page 13 GAO-07-860 Army Asset Visibility
Figure 4: Overview of Tiered Accountability for Army Business System Investments 

At the DOD enterprise level, key entities involved in maintaining control 

and accountability over Army business system investments with systems 

modernizations over $1 million include the DBSMC, which serves as the 

Page 14 GAO-07-860 Army Asset Visibility
highest ranking governance body for business systems modernization 

activities; the Principal Staff Assistants, who serve as the certification 

authorities for business system modernizations in their respective core 

business missions; the investment review boards (IRBs), which form the 

review and decision-making bodies for business system investments in 

their respective areas of responsibility and review each investment for 

BEA compliance; and BTA, which provides support to the DBSMC and the 

IRBs and is responsible for leading and coordinating business 

transformation efforts across the department. The BTA is organized into 

seven directorates, one of which is the Defense Business Systems 

Acquisition Executive—the component acquisition executive for DOD 

enterprise-level (DOD-wide) business systems and initiatives. This 

directorate is responsible for developing, coordinating, and integrating 

DOD enterprise-level projects, programs, systems, and initiatives—

including managing resources such as funding, personnel, and contracts 

for assigned systems and programs. 

To implement tiered accountability within the Army, the Army designated 

its Chief Information Officer (CIO) as the Army’s Pre-Certification 

Authority (PCA) for certification and annual reviews of business system 

investments.27 The PCA is accountable for the component’s business 

system investments and acts as the component’s principal point of contact

for communication with the IRBs. As such, the PCA (1) validates that the

system information for all business systems modernizations over 

$1 million is complete and accessible to the IRBs, (2) reviews 

development/modernization investments with total cost of $1 million or 

less, (3) reviews system compliance with DOD’s BEA and enterprise 

transition plan, (4) verifies the investment’s economic viability analysis, 

(5) asserts the status and validity of the investment information by 

submitting a component precertification letter to the appropriate IRB for 

its review, and (6) provides IT portfolio management policy guidance and 

oversight of mission area/domain IT portfolios. Below the Army enterprise 

level, the Army has established six functional area domains within its 

 27Certification reviews apply to business system development/modernization programs 

with a total cost of over $1 million. This certification review focuses on program alignment 

with the business enterprise architecture and must be completed before components 

obligate funds for programs. The annual review applies to all business programs. The focus 

of the annual review is to determine whether the system development effort is in 

compliance with the business enterprise architecture, meeting its milestones, and

addressing IRB certification conditions. 

Page 15 GAO-07-860 Army Asset Visibility
business mission area.28 The domains are responsible for implementing the 

IT portfolio management process developed by DOD and the Army to 

define and justify the portfolio of planned IT expenditures consistent with 

strategic objectives and operational requirements. 

GAO Has Previously 

Reported LMP Issues 

Our May 2004 report29 pointed out that the Army had not effectively 

managed its implementation of LMP. The report noted that after LMP was 

deployed in July 2003, operational difficulties at the Tobyhanna Army 

Depot resulted in inaccurate financial management information. More 

specifically, the depot was not (1) producing accurate workload planning

information, (2) generating accurate customer bills, and (3) capturing all 

repair costs, necessary for the Army to calculate accurate future repair 

prices. The report also pointed out that LMP requirements (1) lacked the 

specific information necessary to understand the required functionality 

that was to be provided, and (2) did not describe how to determine 

quantitatively, through testing or other analysis, whether the system would 

meet the Army’s needs. Subsequently, in June 2005,30 we reported that the 

problems with LMP continued to prevent the Tobyhanna Army Depot from 

accurately reporting on its financial operations, including gains and losses, 

which adversely affected the depot’s ability to accurately set customer 

sales prices. Further, the report pointed out that problems persisted with 

recognizing revenue and billing customers. We recommended, and the 

Army agreed, that the implementation of LMP should be delayed until the 

operational problems we identified were resolved. The Army is continuing 

to resolve the outstanding issues. 

 28DOD defines a mission area as a defined area of responsibility with functions and 

processes that contribute to mission accomplishment. The Army maps its mission areas to

the four Global Information Grid Enterprise Services Mission Areas delineated by DOD,

including: Warfighting, Business, Enterprise Information Environment, and the DOD

portion of National Intelligence. The Business Mission Area includes six domains: 

(1) acquisition, (2) financial management, (3) human resources management, (4) logistics,

(5) installations and environment, and (6) civil works. 

29GAO-04-615. 

30GAO-05-441. 

Page 16 GAO-07-860 Army Asset Visibility
The Army has estimated that it will invest about $5 billion over the next 

several years to complete development and implementation of GFEBS, 

GCSS-Army, and LMP. However, the Army is making this significant 

investment without a clear integrated strategy for how these systems will 

be used to achieve TAV over hundreds of billions of dollars of assets. As 

we reported in December 2004,31 because DOD has not developed a clear 

long-range strategy, the military services will be exposed to the risk of 

spending billions of dollars on duplicative, stovepiped systems that do not 

support the department’s business transformation goals, including 

attaining TAV. More specifically, we found that the Army’s current strategy 

for achieving TAV, including the implementation of these three systems, 

does not embrace two key foundational elements that we had identified as 

essential to achieving successful transformation of business systems and

processes: an EA and a concept of operations. Without these key 

foundational elements, the Army is at risk of investing billions of dollars in 

business systems that may not achieve DOD’s and the Army’s goal of 

achieving TAV. Further, the Army’s planned strategy perpetuates some of 

the cumbersome and ineffective business processes and data

redundancies that are currently being used in the existing legacy system 

environment. 

The Army has yet to develop and implement an Army business EA to help 

guide its system efforts, including those aimed at achieving TAV. DOD’s 

acquisition policies and guidance,

32 as well as federal and best practice 

guidance,

33 recognize the importance of investing in business systems 

within the context of an EA. GFEBS, GCSS-Army, and LMP are not being 

managed and developed in the context of a well-defined Army-wide EA. In 

Army Lacks an 

Integrated Strategy 

for Achieving TAV 

Army’s Efforts to Achieve 

TAV Lack the Benefit of an 

EA 

 31GAO, Defense Inventory: Improvements Needed in DOD’s Implementation of Its LongTerm Strategy for Total Asset Visibility of Its Inventory, GAO-05-15 (Washington, D.C.:

Dec. 6, 2004). 

32DOD, Department of Defense Directive Number 5000.1 (May 12, 2003); Department of 

Defense Architecture Framework, Version 1.0, Volume 1 (February 2004).

33Pub. L. No. 104-106, div. E, tit. LI, §§ 5122, 5125; E-Government Act of 2002, Pub. L. No. 

107-347 § 101, 116 Stat. 2899, 2901-2910 (Dec. 17, 2002) codified at 44 U.S.C. §§ 3601-06); 

OMB Circular No. A-130, § 8(b); GAO, Information Technology: A Framework for

Assessing and Improving Enterprise Architecture Management (Version 1.1), 

GAO-03-584G (Washington, D.C.: April 2003); Chief Information Officer Council, A 

Practical Guide to Federal Enterprise Architecture, Version 1.0 (February 2001); and

Institute of Electrical and Electronics Engineers, Standard for Recommended Practice for

Architectural Description of Software-Intensive Systems 1471-2000 (Sept. 21, 2000). 

Page 17 GAO-07-860 Army Asset Visibility
August 2006,34 we reported that the Army was in the very early stages of 

developing an EA. We recommended that the Secretary of Defense ensure 

that the DOD architecture programs35 we reviewed develop and implement 

plans for fully satisfying each of the conditions in our Enterprise 

Architecture Management Maturity Framework (EAMMF) for assessing 

and improving EA management.36 In commenting on the report, DOD 

agreed with our recommendation. 

As detailed in our August 2006 report, we assessed the Army’s efforts to 

develop an EA against the criteria specified in EAMMF. Our EAMMF is a 

five-stage architecture framework for managing the development, 

maintenance, and implementation of an architecture and understanding 

the extent to which effective architecture management practices are being

performed and where an organization is in its progression toward having a 

well-managed architecture program. In short, the framework consists of 31 

core elements that relate to architecture governance, content, use, and 

measurement. These elements reflect research by us and others showing 

that architecture programs should be founded upon institutional 

architecture commitment and capabilities, and measured and verified 

products and results. Our analysis of information provided by the Army 

indicated that it had satisfied only 3 percent of all framework elements. In

essence, this means that the Army is at stage 1 of developing and 

implementing an EA. While stage 1 agencies may have initiated some 

enterprise architecture activity, these agencies’ efforts are ad hoc and 

unstructured, lack institutional leadership and direction, and do not 

provide the management foundation necessary for successful enterprise 

architecture development. 

In May 2007, we reported that the Army still had not developed an EA.37 As 

a result, the Army does not have a well-informed basis for determining if 

these systems will fit within the context of future Army business 

operations and will most efficiently and effectively address the Army’s 

 34GAO-06-831. 

35The five DOD architecture programs that were included in our audit were the 

Departments of the Army, Navy, and Air Force, and the DOD business enterprise

architecture and the DOD global information grid. 

36GAO, Information Technology: A Framework for Assessing and Improving Enterprise 

Architecture Management (Version 1.1), GAO-03-584G (Washington, D.C.: April 2003). 

37GAO-07-733.

Page 18 GAO-07-860 Army Asset Visibility
long-standing weaknesses associated with the lack of asset visibility. 

Improving asset visibility is critical to addressing the problems associated 

with supply chain management, which has been on our high-risk list since 

1990.

38 Asset visibility is one of the focus areas that are a critical part of 

supply chain management.39

In addition, without a clear understanding of its current systems and 

business processes—commonly referred to as the “As Is” environment—

and the business operations it envisions for the future—commonly 

referred to as the “To Be” environment—the Army will increase the risk 

that misalignments can occur that can introduce redundancies and 

incompatibilities that can produce inefficiencies and require costly and 

time-consuming rework to fix. GFEBS, GCSS-Army, and LMP have 

proceeded without a common, institutional frame of reference (for 

example, EA) that can be used to effectively manage their relationships 

and dependencies. In November 2006, DOD’s internal review of GFEBS by 

BTA noted that the Army lacked a strategy for integrating GFEBS, GCSSArmy, and LMP. 

Army Strategy to Achieve 

TAV Does Not Utilize an 

Enterprisewide 

Perspective 

The Army also lacks a concept of operations for how GFEBS, GCSS-Army, 

and LMP will collectively achieve TAV. An effective concept of operations 

would describe, at a high level, (1) how the three business systems relate 

to each other in achieving the Army’s TAV goal, and (2) how information 

flows from and through these systems. Moreover, we found that the 

Army’s lack of a concept of operations has contributed to its failure to 

take full advantage of business process reengineering opportunities that 

are available when using an ERP solution. Without a clear long-term 

strategy, the Army lacks a key management control for ensuring that time 

frames, results-oriented performance measures, and accountability 

mechanisms are established and monitored to help achieve TAV. 

Specifically, we noted that the Army’s strategy perpetuates some of the 

cumbersome and inefficient business processes that are currently being 

used in the existing legacy system environment. One of the key benefits of 

an ERP is that it can be used to streamline business processes and 

eliminate data redundancy. However, some of the basic business 

 38GAO, High-Risk Series: An Update, GAO-07-310 (Washington, D.C.: January 2007). 

39The other two focus areas related to supply chain management are requirements 

forecasting and materiel distribution. 

Page 19 GAO-07-860 Army Asset Visibility
processes being used or expected to be used by GFEBS, GCSS-Army, and 

LMP are based on the Army’s existing business processes—many of which 

are error prone, labor intensive, and redundant. Considering the billions of 

dollars the Army is investing in these systems, it is incumbent upon the 

Army to embrace and utilize the most efficient and streamlined ERP 

processes to the fullest extent possible in its effort to achieve TAV. 

For example, the Army’s planned strategy to improve control and 

accountability over its PP&E does not take advantage of the capabilities of 

an ERP solution. (See app. III for additional examples in which the Army’s 

TAV systems initiatives have not effectively streamlined legacy processes

related to funds control and disbursements.) Financial data, including 

acquisition cost and depreciation, for most of the Army’s PP&E are 

currently maintained in the Defense Property Accountability System 

(DPAS). PP&E accountability data, such as location and quantity, are 

maintained in a variety of legacy systems such as the Property Book Unit 

Supply Enhanced (PBUSE) system—which is 1 of the 16 systems that is 

expected to be replaced by GCSS-Army. In March 2007, Army Program 

Executive Office Enterprise Information Systems officials informed us that 

the financial data—such as acquisition cost and depreciation—for the 

Army’s PP&E will be transferred from DPAS to GFEBS. This maintains the 

existing accounting data in an accounting system. On the other hand, the 

accountability data—such as location, condition, and number of units—for 

PP&E assets will initially be transferred from the current legacy system to 

PBUSE or GCSS-Army, depending on whether the items belong to an 

installation or an Army unit that may be deployed. The transferring of 

items to PBUSE appears to be an interim solution since, according to 

DOD’s enterprise transition plan GCSS-Army is to replace PBUSE. 

However, GCSS-Army is not expected to assume the control and 

accountability over items that are recorded in PBUSE associated with the 

Army Working Capital Fund or other Army organizational entities that are 

not considered to be units that can be deployed (field/tactical units) in 

military operations. 

The Army’s decision to segregate its PP&E financial and accountability 

data into two separate system solutions reflects its lack of an enterprise 

concept of operations and enterprise view for achieving TAV. The Army’s 

strategy of moving PP&E data from DPAS to PBUSE, and ultimately to 

another system, means that one data conversion will take place to move 

the data from DPAS to PBUSE—a system the Army is supposed to 

eliminate with the implementation of GCSS-Army—followed by another 

data conversion from PBUSE to yet another system, not yet identified. 

Further, the Army is continuing to limit the capabilities of LMP by 

Page 20 GAO-07-860 Army Asset Visibility
transferring all information on PP&E from DPAS to PBUSE—which as 

noted before is considered a legacy business system. As a result, 

information on PP&E that could enhance Tobyhanna’s operations, 

especially in the area of workload planning, will not be available within the 

LMP environment. 

Thus, the approach being taken by the Army is simply to adapt the 

processes used by the legacy systems rather than use the streamlined 

processes inherent in the ERP solution. If the functionality of an ERP 

solution was fully utilized by the Army, it would increase the likelihood 

that TAV could be accomplished within each of the three systems for the 

specific type of PP&E items each was responsible for. For example, 

GFEBS would contain both the financial and accountability information 

related to nontactical/non-working capital fund PP&E, GCSS-Army would

have all the information associated with tactical PP&E, and LMP would 

have the data related to Working Capital Fund PP&E. Figure 5 illustrates 

one way that an ERP approach could be utilized to achieve physical and 

financial accountability control of the Army’s PP&E. 

Figure 5: Example of an ERP Vision for Accountability of the Army’s PP&E 

While the Army’s approach may result in incremental improvements in its 

asset accountability, it does not take full advantage of the (1) benefits of 

adopting enterprise processes and (2) functionality that is available in the 

ERP solution it has selected to support those processes. Fundamental to a 

successful ERP implementation is the reengineering of an organization’s 

Page 21 GAO-07-860 Army Asset Visibility
business processes in a manner that helps ensure that the right resources 

(people, material, machinery, and funds) are available in the correct 

quantities when needed.40 While Army has stated that its use of ERP 

software would help reengineer its business processes, we found that at 

least some business processes that are being used or expected to be used 

in the future do not reflect reengineered processes necessary to most 

effectively implement an ERP solution. By perpetuating the use of 

cumbersome, error-prone, and ineffective business processes in its asset 

accountability operations, the Army will diminish its capability to achieve 

TAV and improve accountability over its assets. 

While the Army has established a governance structure to oversee its 

business system investments—including its asset accountability system 

investments—that is consistent with DOD guidance, additional actions are 

needed to enhance oversight, control, and accountability. The Army’s 

business system investment oversight efforts to date have primarily 

focused on ensuring that business systems modernizations over $1 million 

are reviewed in accordance with the criteria specified in the fiscal year 

2005 National Defense Authorization Act. Both DOD and Army officials 

acknowledged that the department’s and Army’s investment review 

processes, particularly related to their ability to review business system 

investments from a portfolio perspective, are in the early stage of maturity. 

Portfolio management is a conscious, continuous, and proactive approach

to allocating limited resources among competing initiatives in light of the 

investments’ relative benefits. Taking an enterprise view enables an 

organization to consider its investment comprehensively, so that 

collectively the investments optimally address the organization’s mission, 

goals, and objectives. In addition, we found that the Army did not have 

reliable processes and analyses to support its oversight of individual 

systems modernization program efforts intended to improve asset 

visibility. Specifically, (1) the Army has not established or implemented an 

independent verification and validation (IV&V) process for the three 

systems—GFEBS, GCSS-Army, or LMP and (2) the August 2004 GFEBS 

Army’s Ability to 

Effectively Oversee 

Portfolios of Business 

Systems Investment Is 

Not Yet Fully 

Developed 

 40Thomas F. Wallace and Michael H. Kremzar, ERP: Making It Happen, (New York, N.Y.:

John Wiley & Sons, Inc. 2001).

Page 22 GAO-07-860 Army Asset Visibility
economic analysis was not prepared in accordance with DOD and OMB 

guidance.

41

Army’s Oversight of Its 

Business System 

Investments Lacks a 

Portfolio Perspective 

The Army’s oversight of its business system investments—including 

system investments intended to achieve TAV—continues to be focused on

the review and approval of individual business system investments. In May 

2007, we reported that DOD needed to improve its policies and procedures 

associated with managing its business system investments as portfolios.42

More specifically, we found that DOD had not yet progressed from projectbased processes to portfolio-based processes, a key element for effectively 

managing business system transformation efforts. DOD informed us that 

DOD components are responsible for developing and managing their own 

portfolio management processes. 

Army IT guidance for managing IT investments requires portfolios to be 

managed and monitored using established quantifiable outcome-based 

performance measures to determine whether to recommend 

continuations, modification, or termination of individual investments 

within a portfolio.43 However, the Army has not implemented processes or 

procedures that facilitate an enterprise view toward management and 

oversight of portfolios of business system investments intended to 

collectively provide a specific capability or functionality. Rather, the 

Army’s current business system investment process focuses primarily on 

reviewing and approving investment packages submitted by the 

responsible program management office for individual systems 

improvement efforts that have development/modernization funding over 

$1 million. Individual business system investments that exceed the 

 41An economic analysis of Army’s LMP initiative is not required because it is considered a 

procurement of a service as opposed to an actual system, and therefore is not subject to

the criteria established by Department of Defense Directive 5000.1 and Department of 

Defense Instruction 5000.2. Subsequent to the draft of this report being submitted to DOD

for comment, we were informed that the Office of the Deputy Assistant Secretary of the

Army for Cost and Economics had determined that GCSS-Army is economically viable. We

have not evaluated the results of that analysis. 

42GAO, Business Systems Modernization: DOD Needs to Fully Define Policies and 

Procedures for Institutionally Managing Investments, GAO-07-538 (Washington, D.C.: 

May 11, 2007). 

43U.S. Army, Army Knowledge Management (AKM) Guidance Memorandum, CapabilitiesBased Information Technology (IT) Portfolio Governance Implementing Guidance 

(Jan. 5, 2006). 

Page 23 GAO-07-860 Army Asset Visibility
$1 million systems modernization threshold are required to be reviewed by 

the appropriate IRB and approved by the DBSMC. 

Army officials acknowledged that the Army’s ability to provide portfoliobased investment review and oversight is in the early stages of

development. For example, while the Army has begun a process to share 

investment package information, including cost, schedule, and 

performance data, across its mission areas and domains, Army officials 

acknowledged that the information provided by a program management 

office, as well as the associated oversight and review, is centered largely 

on the functionality and capabilities of individual systems. For example, 

annual certifications for the three systems, LMP, GCSS-Army, and GFEBS, 

which the Army intends to utilize collectively in achieving TAV, are not 

submitted or reviewed as a portfolio, but rather as individual system 

investments. The Army has not yet implemented the processes to evaluate

and improve its progress toward achieving TAV using portfolio-based 

projects such as costs, schedule, performance, and risks. As a result, the 

Army’s ability to effectively oversee the development of the portfolio of 

systems intended to collectively provide the Army with TAV is limited. 

Until the Army’s governance process, policies, and procedures mature, 

including its ability to apply a corporate portfolio perspective in managing 

and overseeing subportfolios of business system investments intended to 

provide a desired capability or function, the Army is at risk of 

implementing systems that (1) do not provide the desired capability, 

including TAV; (2) are stovepiped in their functionality; (3) do not 

interoperate in an efficient manner; and (4) are not supported by efficient 

and effective business processes. 

Reliable Processes and 

Analyses Are Needed to 

Facilitate Management 

Oversight of Business 

System Investments 

The Army has not implemented reliable processes and analyses needed to

enhance its management oversight of program management office efforts 

to develop and implement its TAV, as well as other business systems on 

time, within budget, and with the intended capability. Both DOD’s and the 

Army’s business system investment oversight processes are highly 

dependent upon the reliability of investment information provided by 

Army program management offices. Thus, the reliability of that business 

system investment information is critical to both DOD’s and the Army’s 

ability to effectively oversee, manage, and redirect—if necessary—the 

services’ business system development and modernization efforts. 

However, we found that the Army had not yet established an independent

verification and validation function for any of the three systems we 

reviewed. In addition, the economic analysis submitted by the program 

management office for GFEBS was not prepared in accordance with DOD 

Page 24 GAO-07-860 Army Asset Visibility
or OMB guidance. As a result, the economic analysis submitted by the 

program management office to DOD and the Army oversight entities 

justifying the Army’s investment in GFEBS was based on questionable 

costs and benefits. 

The Army had not yet established an IV&V function44 for any of the three 

systems—GFEBS, GCSS-Army, and LMP. While the Army has established a 

verification and validation function for LMP, it was not an independent

review because the reviewer reports directly to the LMP program 

management office. Independence is a key component to reliable 

verification and validation function.

Independent Verification and 

Validation Would Enhance 

Program Oversight 

Best business practices have demonstrated that use of an IV&V function is 

an invaluable means to providing management reasonable assurance that a 

planned system, or the portfolio of systems, will satisfy its planned use and 

users. An effective IV&V review process should provide an independent 

assessment to DOD and Army management of the overall status of the 

project, including a discussion of any existing or potential revisions to the 

project with respect to cost, schedule, and performance. The IV&V reports 

should identify to management the issues or weaknesses that increase the 

risks associated with the project or portfolio to senior management so that 

they can be promptly addressed. These assessments involve reviewing 

project documentation, participating in meetings at all levels within the 

project, and providing periodic reports and recommendations, if deemed 

warranted, to senior management. The IV&V function should report on 

every facet of a system project such as: 

Testing program adequacy. Testing activities would be evaluated to

ensure they are properly defined and developed in accordance with 

industry standards and best practices. 

Critical-path analysis. A critical path defines the series of tasks that 

must be finished in time for the entire project (or portfolio of projects) to 

finish on schedule. Each task on the critical path is a critical task. A 

 44According to the Institute of Electrical and Electronics Engineers, verification and

validation processes for projects such as the Army ERPs can be used to determine whether 

(1) the products of a given activity conform to the requirements of that activity and (2) the 

software satisfies its intended use and user needs. This determination may include 

analyzing, evaluating, reviewing, inspecting, assessing, and testing software products and

processes. The verification and validation processes should assess the software in the

context of the system, including the operational environment, hardware, interfacing 

software, operators, and users. 

Page 25 GAO-07-860 Army Asset Visibility
critical-path analysis helps to identify the impact of various project events, 

such as delays in project deliverables, and ensures that the impact of such

delays is clearly understood by all parties involved with the project(s). 

System strategy documents. Numerous system strategy documents that 

provide the foundation for the system development and operations are 

critical aspects of an effective system project. These documents are used

for guidance in developing documents for articulating the plans and 

procedures used to implement a system. Examples of such documents 

include the Life-cycle Test Strategy, Interface Strategy, and Conversion 

Strategy. 

Our analysis of the August 2004 GFEBS economic analysis found that it 

was not prepared in accordance with OMB and DOD guidance.45 The 

purpose of an economic analysis is to give the decision maker insight into 

economic factors that have a bearing on accomplishing the stated 

objective of the system investment, for example implementation of GFEBS 

to improve the Army’s financial accountability. As such, it is important 

that the economic analysis reliably identifies factors, such as cost and 

performance risks and drivers that can be used to establish priorities and 

allocate resource allocations. While it may be appropriate to invest in a 

particular IT investment, such as GFEBS, for reasons other than estimated

economic benefits, nonetheless, the issues we identified raise questions as 

whether the funds invested in GFEBS were economically justified. Our 

specific concerns with the August 2004 GFEBS economic analysis are 

highlighted below. 

Validity of GFEBS’s Economic 

Analysis Questionable 

• Inappropriate cost savings. At least $142 million of estimated savings 

were not savings, but rather, should have been classified as transfers—

which do not equate to economic benefits. Transfers represent shifts of 

control over resource allocation from one group to another that do not 

result in a net change in the value of the resources involved in the transfer.

For example, we found that the Army claimed over $88 million of savings 

related to transferring real property management from the Army’s legacy

system to GFEBS. Since the Army’s real property management 

responsibilities were not eliminated, only transferred from the legacy 

system environment to GFEBS, this represents a transfer rather than an 

 45OMB Circular No. A-94, Guidelines and Discount Rates for Benefit-Cost Analysis of 

Federal Programs (Oct. 29, 1992); Department of Defense Instruction 7041.3, Economic 

Analysis for Decisionmaking (Nov. 7, 1995); Department of the Army, U.S. Army Cost and

Economic Analysis Center, Economic Analysis Manual (February 2001).

Page 26 GAO-07-860 Army Asset Visibility
economic benefit for the Army. Additionally, the Army claimed benefits of 

about $54 million related to GFEBS reducing the length of time funds are 

borrowed by the Treasury to meet the Army financial obligations by 

facilitating the Army’s ability to make just-in-time disbursements. OMB 

guidance provides that there are no economic gains from a pure transfer 

payment because the benefits to those government entities that receive 

such a transfer are matched by the costs borne by those government 

entities that provide the transfer.46 The Army’s inappropriate classification 

of transfers resulted in an overstatement of the economic benefits that 

would be achieved by implementing GFEBS. Additionally, in November 

2006, BTA’s enterprise risk assessment management review of GFEBS 

questioned justifying the GFEBS program on factors not fully within the 

program’s control. 

• Lack of sensitivity analysis. The analysis did not include an assessment 

of the effects of the uncertainty inherent in estimates of GFEBS benefits 

and costs, as stipulated in OMB and DOD guidance.47 Because an economic

analysis uses estimates and assumptions, it is critical that a sensitivity 

analysis be performed to understand the effects of the imprecision in both 

underlying data and modeling assumptions. This analysis is required since 

the estimates of future benefits and costs are subject to varying degrees of 

uncertainty. Sensitivity analysis refers to changing the value of a given 

variable in a model to gauge the effect of change on model results. It varies 

a single data element or assumption while holding the other data elements 

and assumptions constant to determine what amount of change in that

element is required to raise or lower the resulting benefit and cost 

elements. In this way, GFEBS data and assumptions can be risk-ranked for

decisionmaking and auditing. The Army’s failure to conduct a sensitivity 

analysis of GFEBS, as part of its economic analysis, to identify the effect 

of uncertainties associated with different assumptions increases the 

chance that decisions regarding GFEBS will be made without a clear 

understanding of the possible impact on GFEBS estimates of costs and 

benefits. Army officials informed us that they will consider including a

sensitivity analysis of the effect of uncertainties when they update 

GFEBS’s economic analysis. 

• Lack of documentation supporting benefits and cost assumptions. 

The GFEBS program management office could not provide us with 

benefits and costs data needed to replicate their analyses. As a result, we 

 46OMB Circular No. A-94, § 6(a)(4). 

47OMB Circular No. A-94, § 9; Department of Defense Instruction 7041.3, § E3.2.2. 

Page 27 GAO-07-860 Army Asset Visibility
were unable to trace the cost and benefit estimates reported in the GFEBS 

economic analysis to original source documentation to assess and validate 

the reliability and applicability of the data. OMB and DOD guidance stress

the importance of maintaining documentation supporting assumptions 

used in a cost-benefit analysis. 

LMP continues to be plagued by operational problems that have beset the 

system virtually since its initial implementation in July 2003. While, an EA, 

concept of operations, and effective IT portfolio management are essential 

elements in the Army’s efforts to transform its operations, it is equally 

important for the Army to have disciplined processes in place to 

implement its business systems on time, within budget, and with the 

promised capability. Many of DOD’s approximately 2,980 business systems 

are nonintegrated, stovepiped, and not capable of providing departmental 

management and the Congress accurate and reliable information on DOD’s 

day-to-day operations. LMP is no exception. As previously noted, LMP was 

to have reached FOC in fiscal year 2005, but currently FOC is estimated for 

fiscal year 2010—a slippage of 5 years. Further, LMP’s estimated program 

costs have also increased. Tobyhanna Army Depot—the only depot that is

operating LMP—and DFAS personnel have stated that improvements have 

been made in LMP’s operating efficiency. However, problems in the areas 

of revenue recognition and billing continue. These problems can, in part, 

be attributed to ineffective system testing. The operational issues 

confronting LMP and our concerns about the effectiveness of the system 

testing are highlighted below and discussed in more detail in appendix IV.

Tobyhanna Army Depot continues to experience problems with LMP 

accurately recognizing revenue and billing customers. These problems 

have existed virtually since the implementation of LMP in July 2003. While 

the Army and its contractor—Computer Sciences Corporation (CSC)—

have made numerous attempts to fix the problem, they have not been 

successful. Additionally, the accuracy of LMP financial reports continues 

to be questionable. For instance, the DOD Inspector General’s audit of the 

Army’s Working Capital Fund financial statements for fiscal year 2006 

noted that LMP was not properly recording transactions in accordance 

with the U.S. Government Standard General Ledger requirements. 

For the 3-month period ending January 31, 2007, we found that LMP’s 

continuing billing problems resulted in (1) customers not being billed for 

costs incurred that should have been billed and (2) customers being billed 

too much. Based upon the billing information provided by the LMP 

LMP Illustrates 

Continuing Problems 

in Implementing 

Business Systems on 

Time, within Budget, 

and with the 

Promised Capability 

Operational Issues 

Continue 

Page 28 GAO-07-860 Army Asset Visibility
program management office, there were 146 customer orders valued at 

approximately $5.4 million that were not billed (or recognized as revenue)

during the January 31, 2007, billing cycle. Customer billings and the 

associated revenue provide the means by which the depot finances its dayto-day operations. Similarly, during the January 31, 2007, billing cycle 

about 308 customer orders, amounting to about $5.8 million, were shown 

as being overbilled and a credit should have been provided to the 

customer. Moreover, the continuing billing and revenue recognition 

problem may be a factor contributing to higher depot bills from DFAS. 

According to DFAS personnel, the recurring billing problems have resulted 

in DFAS personnel processing Tobyhanna Army Depot’s bills manually. 

Based on information provided by DFAS, the number of hours spent to 

provide DFAS accounting services—including billings for the Tobyhanna 

Army Depot—has increased from approximately 17,800 hours in fiscal 

year 2004 to over 22,600 hours in fiscal year 2006.

Our prior audits48 of LMP identified significant weaknesses with the LMP 

program management office’s efforts to effectively implement the 

requirements management and testing processes needed to reduce risks to 

acceptable levels. During our current audit, we found that the 

requirements management processes have improved—a critical first 

step—but concern remains with respect to the adequacy of the testing. 

Our analysis of 10 selected LMP corrective actions identified specific 

testing weaknesses in each of the corrective actions reviewed. For 

example, none of the test scripts provided adequate information that 

linked the items tested to the specific requirement being tested. This 

linking is commonly referred to as traceability and is characteristic of a 

disciplined testing process. The test scripts reviewed contained headings 

for information on the scenario, key data requirements, expected results, 

actual results, and whether the test was considered successful. However, 

the actual test script did not contain the level of specificity that clearly 

delineated how a specific requirement identified in the requirement 

document(s) and the associated requirement(s) in that document were 

being tested. As a result, it was not possible to determine if all LMP system 

requirements were properly tested. Without linking a given requirement to

the tests designed to exercise that requirement, it was impossible to obtain 

System Testing Remains a 

Concern 

 48GAO-04-615 and GAO-05-441. 

Page 29 GAO-07-860 Army Asset Visibility
reasonable assurance that (1) all the requirements were tested and (2) the 

applied test provided adequate coverage for each requirement. 

After discussing our concerns with the LMP program management office 

and its contractor in February 2007, the LMP program office requested that

its verification and validation (V&V) contractor perform an assessment of 

the LMP testing process. According to information provided by the LMP 

program office and the V&V contractor, in March 2007, the review found 

that the LMP testing process was adequately planned but that it did not 

support a clear understanding of the (1) requirement being tested and 

(2) tests used to determine whether a requirement was adequately 

implemented. The V&V contractor’s assessment substantiates our analysis

of the LMP testing process. According to the V&V contractor, these areas 

need to be addressed before the Army Test and Evaluation Command 

conducts its review of LMP. 

According to LMP program management office officials, the CSC is 

developing and implementing a testing process that is designed to address 

the concerns raised by us and the Army V&V contractor. CSC is expected

to have a testing program that clearly links the requirements to the tests 

being conducted and to establish an independent test group to ensure that 

the testing process is following best practices. However, until the Army 

has reasonable assurance that an effective testing process has been 

properly implemented, we are reiterating our June 2005 recommendation 

that LMP not be deployed to additional locations until the Army has 

assurance that LMP is providing the intended functionality and, more 

specifically, that LMP can accurately bill its customers and recognize 

revenue. 

The Army’s efforts to develop and implement GFEBS, GCSS-Army, and 

LMP may result in incremental improvements in the Army’s accountability 

and visibility over its billions of dollars in tangible assets. However, the 

Army has not developed or utilized key management tools and concepts 

necessary to successfully transform its business processes to achieve TAV. 

The primary question that the Army has yet to effectively consider and 

address is how these systems and associated processes, individually and 

collectively, will provide the desired functionality necessary to achieve 

TAV. Until the Army develops and implements an Army EA, concept of 

operations, and portfolio-based management and oversight processes, it 

continues to risk (1) investing billions of dollars in asset accountability 

systems that may not enhance the department’s and the Army’s goal of 

Conclusions 

Page 30 GAO-07-860 Army Asset Visibility
achieving TAV, and (2) further delay DOD’s efforts to remove supply chain 

management from our high-risk list. 

It is also important that the Army take action to implement the disciplined

processes necessary to implement asset accountability systems on time, 

within budget, and with the promised capability. Continuing problems 

with LMP are illustrative of the consequences in failing to address these 

issues. Although LMP became operational 4 years ago, it continues to 

encounter operational problems. While there have been some 

improvements in LMP, key functionality, such as accurately billing 

customers and recognizing revenue, remains problematic. The Army’s 

inability to resolve these persistent LMP problems can, in part, be 

attributed to inadequate system testing. Until LMP implements an effective 

testing process, it will have little assurance that the development and 

corrective actions it takes (1) are properly developed, and (2) do not 

introduce additional defects into the system. 

To improve the department’s efforts to achieve TAV and further enhance 

its efforts to improve the control and accountability over business system 

investments, we recommend that the Secretary of Defense direct the 

Secretary of the Army and the Director, BTA, to jointly take the following

five actions: 

Recommendations for 

Executive Action 

• Develop a concept of operations that (1) clearly defines the ERP vision for 

accomplishing total asset visibility within the Army; (2) addresses how its 

business systems and processes, individually and collectively, will provide 

the desired functionality to achieve TAV; and (3) determines the desired 

functionality among the selected systems. 

• Develop policies, procedures, and processes to support the oversight and

management of selected groupings of business systems that are intended 

to provide a specific capability or functionality, such as TAV from a 

portfolio perspective, utilizing indicators such as costs, schedule, 

performance, and risks.

• Establish an IV&V function for GFEBS, GCSS-Army, and LMP. 

Additionally, direct that all IV&V reports for each system be provided to 

Army management, the appropriate IRB, and BTA. 

• Require that any future GFEBS economic analysis identify costs and 

benefits in accordance with the criteria specified by DOD and OMB 

guidance, to include a sensitivity analysis. 

Page 31 GAO-07-860 Army Asset Visibility
• Direct that LMP utilize systems testers that are independent of the LMP 

system developers to help ensure that the system is providing the users of 

the system the intended capabilities. 

We received written comments on a draft of this report from the Deputy 

Under Secretary of Defense (Business Transformation), which are 

reprinted in appendix II. Overall, DOD concurred with our 

recommendations and stated that it would work diligently to implement 

them. The comments included two sets of specific responses to our 

recommendations—one set provided by BTA and another provided by the 

Army. In regard to the response provided by the Army, it concurred with 

each of the recommendations. BTA stated that it fully agreed with our 

observations. BTA, though, partially concurred with all the 

recommendations on the basis that they were directed jointly to the 

Secretary of the Army and the Director, BTA. BTA stated that under U.S. 

Code Title 10 and in accordance with DOD’s tiered accountability, the 

Army has complete authority for execution of its programs and 

responsibility for implementing the recommendations. BTA’s comments 

noted that it has neither the authority nor the responsibility to direct the 

actions of the Army. 

We appreciate the department’s willingness to address our 

recommendations. With regard to BTA’s concern, our recommendations 

do not direct BTA to oversee or direct the Army. Rather, the 

recommendations stated that the specific actions should be undertaken 

jointly at the direction of the Secretary of Defense. We continue to believe 

that a cooperative and effectively coordinated BTA and Army approach to

addressing our recommendations is most likely to achieve the 

fundamental business system transformation necessary to achieve the 

department’s TAV objective. Further, the involvement of the Office of the

Secretary of Defense, including BTA, in the Army’s investment 

management practices is consistent with 10 U.S.C. §§ 186 and 2222, which 

provide for DOD policymaking and oversight of Army business system 

functions. 

In regard to the responses provided by the Army, it acknowledged the 

importance of a concept of operations in achieving its goal of TAV and in

optimizing its business system investments. Further, the Army 

acknowledged that there are risks involved in attempting to effectively 

integrate the various system efforts. Going forward, as we recommended, 

it will be important that the Army develop a clear, long-term strategy to 

Agency Comments 

and Our Evaluation 

Page 32 GAO-07-860 Army Asset Visibility
help ensure that time frames, results-oriented performance measures, and

accountability mechanisms are established and monitored to achieve TAV.

We are sending copies of this report to the Secretary of Defense; Acting 

Secretary of the Army; Under Secretary of Defense (Acquisition, 

Technology, and Logistics); Under Secretary of Defense (Comptroller); 

Deputy Under Secretary of Defense (Business Transformation); Deputy 

Under Secretary of Defense (Financial Management); Assistant Secretary 

of Defense (Networks and Information Integration); Assistant Secretary of 

the Army (Acquisition, Logistics, and Technology); Assistant Secretary of 

the Army (Financial Management and Comptroller); Army Chief 

Information Officer; Army Deputy Chief of Staff (Logistics); Commander, 

U.S. Army Materiel Command; and other interested congressional 

committees and members. Copies of this report will be made available to 

others upon request. In addition, this report is available at no charge on

the GAO Web site at http://www.gao.gov. 

Page 33 GAO-07-860 Army Asset Visibility
Army Asset Visibility

Please contact McCoy Williams at (202) 512-9095 or williamsm1@gao.gov, 

Keith A. Rhodes at (202) 512-6412 or rhodesk@gao.gov, or William M. Solis 

at (202) 512-8365 or solisw@gao.gov if you or your staff have questions on 

matters discussed in this report. Contact points for our Offices of 

Congressional Relations and Public Affairs may be found on the last page 

of this report. Key contributors to this report are listed in appendix V. 

McCoy Williams 

Director 

Financial Management and Assurance 

Keith A. Rhodes 

Chief Technologist 

Applied Research and Methods 

Center for Technology and Engineering 

William M. Solis 

Director 

Defense Capabilities and Management 

Page 34 GAO-07-860
Appendix I: Scope and Methodology Appendix I: Scope and Methodology 

To determine whether the Army has developed a business system strategy 

for achieving total asset visibility (TAV), we met with program office 

officials for the General Fund Enterprise Business System (GFEBS), the 

Global Combat Support System-Army (GCSS-Army), and the Logistics 

Modernization Program (LMP). We obtained briefings on the intended 

purpose of each system and walkthroughs of various scenarios that 

described how the systems would transmit data between them. We also 

met with officials from the Office of Program Analysis and Evaluation, the 

Office of the Assistant Secretary of Defense (Network and Information 

Integration)/the Department of Defense (DOD) Chief Information Officer, 

and the Business Transformation Agency (BTA) to identify and discuss 

any issues/concerns they have related to the implementation of GFEBS 

and GCSS-Army. Furthermore, we reviewed reports by the Army Audit 

Agency and the DOD Inspector General to ascertain if they had previously 

reported upon system weaknesses related to the three systems and how 

those weaknesses would affect the Army’s vision of an integrated systems 

strategy. 

In order to determine if the Army has effectively implemented a 

governance structure to oversee and manage its business system 

investment in accordance with DOD guidance, we reviewed guidance 

issued by the Office of the Secretary of Defense, the Army, and BTA 

related to investment management. We also obtained an understanding of 

the Army’s process to comply with the certification and annual system 

review processes required by the fiscal year 2005 National Defense 

Authorization Act.1

 We also obtained and analyzed documentation related

to the certification and annual system review process. Furthermore, we 

reviewed the Selected Capital Investment Review reports as of February

2006 and February 2007 to ascertain if there were any cost, schedule, and 

performance issues discussed in these reports for the GFEBS, GCSS-Army, 

and LMP. We also reviewed Defense Acquisition Executive Summary 

reports for GFEBS to ascertain if there were any cost, schedule, and 

performance issues discussed in these reports. Similar reports were not 

required for GCSS-Army and LMP. Additionally, we met with BTA officials 

to obtain an understanding of how the Enterprise Risk Assessment Model 

is to be utilized as part of the department’s investment management 

criteria. 

 1

Ronald W. Reagan National Defense Authorization Act for Fiscal Year 2005, Pub. L. No. 

108-375, § 332, 118 Stat. 1811, 1851-56 (Oct. 28, 2004) (codified, in part, at 10 U.S.C. §§ 186, 

2222). 

Page 35 GAO-07-860 Army Asset Visibility
Appendix I: Scope and Methodology 

To evaluate the extent to which the Army has made progress in correcting 

the previously reported problems regarding LMP’s implementation, we 

met with officials from the LMP program office and the Computer 

Sciences Corporation (CSC). Briefings were provided that detailed the 

specific corrective actions taken in response to the various issues 

discussed in our two previous reports.2

 To substantiate the corrective 

actions taken to address the accounting issues, we reviewed the Defense 

Finance and Accounting Service (DFAS) 1307 accounting reports3

 and 

discussed the issues detailed in the reports with DFAS personnel 

responsible for preparing the reports. We also reviewed the fiscal year 

2006 Army Working Capital Fund Financial Statements to ascertain the 

specific issues related to LMP. Further, we met with DOD Inspector 

General personnel and reviewed their workpapers to obtain an 

understanding of the deficiencies discussed in the fiscal year 2006 Army 

Working Capital Fund Financial Statements. 

To assess whether the Army had established and implemented disciplined 

processes related to requirements management and testing we: 

• obtained an understanding of the Army’s revised procedures for defining 

requirements management frameworks and compared these procedures to 

its current practices; 

• reviewed guidance published by the Institute of Electrical and Electronics

Engineers and the Software Engineering Institute and publications by 

experts to determine the attributes that should be used for developing

good requirements; and 

• selected 10 requirements and performed an in-depth review and analysis 

to determine whether they had the attributes normally associated with 

good requirements and whether these requirements traced between the 

various process documents. These requirements were to have followed the 

revised requirements management process. 

 2

GAO, DOD Business Systems Modernization: Billions Continue to Be Invested with

Inadequate Management Oversight and Accountability, GAO-04-615 (Washington, D.C.: 

May 27, 2004) and Army Depot Maintenance: Ineffective Oversight of Depot Maintenance 

Operations and System Implementation Efforts, GAO-05-441 (Washington, D.C.: June 30, 

2005). 

3

We reviewed the 1307 reports for March 2004, September 2004, March 2005, September

2005, March 2006, September 2006, December 2006, and February 2007. 

Page 36 GAO-07-860 Army Asset Visibility
Appendix I: Scope and Methodology 

To augment these document reviews and analyses, we discussed our 

analysis with LMP program office and CSC officials. We also met with 

officials from the Office of Program Analysis and Evaluation, the Office of

the Assistant Secretary of Defense (Network and Information 

Integration)/DOD Chief Information Officer (CIO), and the Business 

Transformation Agency to identify any issues/concerns they have related 

to the implementation of LMP. 

We performed our audit work from May 2006 through June 2007 in 

accordance with U. S. generally accepted government auditing standards. 

We conducted our work at the Office of the Assistant Secretary of Defense 

(Networks and Information Integration)/DOD Chief Information Officer; 

the U.S. Army Materiel Command; the Army CIO; and the Business 

Transformation Agency. We visited the Army Program Executive Office 

Enterprise Information Systems and GFEBS program office at Ft. Belvoir, 

Virginia. We also visited the Army contractor’s site for LMP, Computer 

Sciences Corporation in Marlton, New Jersey—and for GCSS-Army—

Northrop Grumman in Chester, Virginia. We also visited the Tobyhanna 

Army Depot, Tobyhanna, Pennsylvania and DFAS Indianapolis, Indiana.

We requested comments on a draft of this report from the Secretary of 

Defense or his designee. We received written comments from the Deputy 

Under Secretary of Defense (Business Transformation), which are 

reprinted in appendix II.

Page 37 GAO-07-860 Army Asset Visibility
Appendix II: Comments from the Department Appendix II: Comments from the Department of Defense 

of Defense 

Note: GAO comments 

supplementing those in 

the report text appear at 

the end of this appendix. 

See comment 1. 

Page 38 GAO-07-860 Army Asset Visibility
Appendix II: Comments from the Department 

of Defense 

Page 39 GAO-07-860 Army Asset Visibility
Appendix II: Comments from the Department 

of Defense 

Page 40 GAO-07-860 Army Asset Visibility
Appendix II: Comments from the Department 

of Defense 

Page 41 GAO-07-860 Army Asset Visibility
Appendix II: Comments from the Department 

of Defense 

Page 42 GAO-07-860 Army Asset Visibility
Appendix II: Comments from the Department 

of Defense 

Page 43 GAO-07-860 Army Asset Visibility
Appendix II: Comments from the Department 

of Defense 

See comment 2. 

See comment 3. 

Page 44 GAO-07-860 Army Asset Visibility
Appendix II: Comments from the Department 

of Defense 

The following are GAO’s comments on DOD’s letter dated July 6, 2007. 

1. See the “Agency Comments and Our Evaluation” section of this report. 

2. In regard to the GFEBS economic analysis, the program office did not 

provide the necessary support for us to replicate the estimated program 

savings. 

3. In regard to the sensitivity analysis, the Army’s approach of adding the

uncertainty surrounding the costs of interfaces into the estimate is not 

consistent with OMB, DOD, and Army guidance, as discussed in the report.

Rather, a sensitivity analysis is accomplished by changing the numerical 

value of a given variable to gauge the effect of that change on model 

results, such as the benefit-to-cost ratio. A sensitivity analysis identifies 

key assumptions and varies a single assumption while holding the others 

constant to determine what amount of change in that assumption is 

required to raise or lower the resulting dominant benefit or cost estimates 

by a set amount. 

GAO Comments 

Page 45 GAO-07-860 Army Asset Visibility
Appendix III: Army

Utilize Capab

 Strategy Does Not Fully

ilities of ERP Solution 

Page 46 GAO-07-860

Appendix III: Army Strategy Does Not Fully 

Utilize Capabilities of ERP Solution 

Fundamental to successful enterprise resource planning (ERP) 

implementation is the reengineering of an organization’s business 

processes in a manner that helps ensure that the right resources are 

available when needed. While the Army has stated that through the 

successful implementation of the General Fund Enterprise Business 

System (GFEBS), the Global Combat Support System-Army (GCSS-Army), 

and the Logistics Modernization Program (LMP) will reengineer its 

business processes, we found some business processes that have been 

adopted or are expected to be adopted have not embraced the basic 

concept of an ERP solution. Details concerning the Army’s strategy for 

handling funds control and disbursements are highlighted below. 

The funds control concept that will be utilized by GCSS-Army and GFEBS 

is that all funds control activities will be handled by GFEBS. Accordingly,

an interface must be developed to transmit the appropriate information 

between the two systems in order to ensure that all of the information is in 

agreement. Figure 6 illustrates how the process is intended to work. 

Funds Control 

Army Asset Visibility
Appendix III: Army Strategy Does Not Fully

Utilize Capabilities of ERP Solution 

Figure 6: Planned GFEBS and GCSS-Army Fund Control Process 

As shown in figure 6, information will have to be transmitted from GCSSArmy each and every time there is a transaction that is associated with 

funds control. This approach does not take full advantage of the 

capabilities within the ERP software that will be utilized by GCSS-Army. 

Figure 7 shows an example of more efficient and streamlined funds 

control process based on ERP concepts that eliminates these various 

transactions having to be processed between GFEBS and GCSS-Army. 

Page 47 GAO-07-860 Army Asset Visibility
Appendix III: Army Strategy Does Not Fully

Utilize Capabilities of ERP Solution 

Figure 7: GCSS-Army Funds Control Process Utilizing ERP Capabilities 

We were informed by GFEBS program officials that funds control for the 

activities associated with GCSS-Army needed to be maintained in GFEBS 

because (1) GCSS-Army was not considered an official accounting system, 

(2) the version of the software initially selected by GCSS-Army could not

meet the requirements of the Federal Financial Management Improvement 

Act of 1996 (FFMIA),1

 and (3) the Army wanted to centrally manage 

general fund activities. In effect, the Army’s approach mirrors the 

functionality in the stovepiped processes of the legacy systems, dedicated

processes to obtain information for specific reasons rather than ensuring a 

given process provided the information needed from an enterprise point of 

view. Furthermore, the concern that the version of software being used by

GCSS-Army had not been certified as compliant with federal requirements 

 1

Pub. L. No. 104-208, div. A, §101(F), title VIII, 110 Stat. 3009, 3009-389 (Sept. 30, 1996). 

FFMIA requires the 24 Chief Financial Officers Act departments and agencies to implement 

and maintain financial management systems that comply substantially with (1) federal 

financial management system requirements, (2) applicable federal accounting standards,

and (3) the U.S. Government Standard General Ledger at the transaction level. 

Page 48 GAO-07-860 Army Asset Visibility
Appendix III: Army Strategy Does Not Fully

Utilize Capabilities of ERP Solution 

can be easily addressed. Army officials have stated that the software 

vendor is committed to obtaining the necessary certifications and expects 

that these will be granted before GCSS-Army is deployed. From a 

corporate perspective, whether one system or two systems is the proper 

approach is not necessarily the question that the Army needs to answer. 

Rather, the Army needs to address how best to utilize the capabilities of 

the ERP to achieve an effective funds control system. 

The Department of Defense (DOD) Inspector General recently reported 

that LMP has been implemented without the functionality to match 

proposed disbursements with corresponding obligations before making 

any payments.2

 This process is referred to as prevalidation, which was 

mandated with the passage of the fiscal year 1995 Department of Defense 

Appropriations Act3

 because of DOD’s long-standing difficulty in properly 

matching disbursements with corresponding obligations. Implementing 

LMP without this functionality is an example of suboptimizing the system, 

resulting in the failure to address a long-standing weakness in matching 

obligations with proposed disbursements for the Army Working Capital 

Fund. This functionality is part of the basic software package that is being 

used by LMP. We noted that the Army expects to use the same ERP 

software package for GFEBS. 

Disbursements

The DOD Inspector General reported that, rather than reengineering its 

business processes, the Army decided to follow its existing business 

processes that were inefficient and precluded the Army from being in 

compliance with the fiscal year 1995 legislative requirement. As a result of 

this decision, the Army has not taken full advantage of the capabilities 

within the ERP software package being used to implement LMP. 

Considering that the Army has already invested approximately 

$452 million in LMP, and as previously noted is expecting to invest 

hundreds of million more, taking full advantage of its capabilities is also a 

prudent financial decision. Because the Army failed to reengineer its 

business processes, it continues to use an off-line database, managed by 

the Defense Finance and Accounting Service (DFAS), to compare 

entitlement and accounting data and provide approval for prevalidation 

requests. The DOD Inspector General report noted that the database 

 2

DOD Inspector General, Controls Over the Prevalidation of DOD Commercial Payments, 

Report Number D2007-065 (Arlington, Va.: Mar. 2, 2007). 

3

Pub. L. No. 103-335, § 8137, 108 Stat. 2599, 2654-55 (Sept. 30, 1994). 

Page 49 GAO-07-860 Army Asset Visibility
Appendix III: Army Strategy Does Not Fully

Utilize Capabilities of ERP Solution 

contained errors in the accounting data, which resulted in prevalidation 

failures and the need for additional research and rework by DFAS. 

A more efficient and streamlined process could be achieved by adopting 

ERP processes for disbursements. For example, by utilizing ERP concepts 

LMP would be the accounting system of record and responsible for 

ensuring that the applicable federal requirements governing fund control 

and disbursements were effectively implemented. Further, the 

disbursements would be made directly by the Department of the 

Treasury—much like the process used by civilian agencies—rather than 

going through DFAS. We recognize that this approach involves some 

technical issues, such as building the necessary interfaces with the 

Department of the Treasury. However, the commercial-off-the-shelf 

(COTS) package adopted by LMP is already required by its Office of 

Management and Budget certification to provide the necessary support for 

these interfaces. The elimination of the DFAS interfaces, which are not 

inherently supported by the COTS package, should help reduce the cost 

and risk associated with this change.

Page 50 GAO-07-860 Army Asset Visibility
Appendix IV: LMP Problems Continue 

Page 51 GAO-07-860

Appendix IV: LMP Problems Continue 

The Tobyhanna Army Depot continues to experience financial 

management problems because significant operational and developmental 

issues related to the Logistics Modernization Program (LMP) have not

been resolved. More specifically, LMP continues to experience problems 

with accurately recognizing revenue and billing customers. This problem 

has existed virtually since the implementation of LMP in July 2003. While 

the Army and its contractor have made numerous attempts to fix the 

problem, they have not been successful. While we found that the 

requirements management processes have improved—a critical first step 

in reducing risk to acceptable levels1

—we continue to have reservations 

about the adequacy of LMP’s testing. 

LMP’s continuing billing problems have resulted in (1) customers not 

being billed for costs incurred that should have been billed and 

(2) customers being billed too much. According to information provide by

the LMP program office, 146 customer orders valued at approximately 

$5.4 million were not billed during the January 31, 2007, billing cycle. 

Customer orders that were not recognized as revenue and billed represent 

funds that Tobyhanna Army Depot is entitled to, because the work 

requested by the customer was performed. It is essential that revenue is 

properly recognized and customers billed for work performed because it is

the means by which the depot finances its day-to-day operations. Similarly, 

during the January 31, 2007, billing cycle about 308 customer orders 

amounting to about $5.8 million were shown as being overbilled and a 

credit should have been issued to the customer. It is critical that the credit

be provided to the customer as soon as possible since the customer may 

be able to use these funds to meet other funding demands. 

Billing Problems 

Continue to Plague 

LMP 

Our analysis of the January 2007 billings for Tobyhanna disclosed that, of 

the 146 unbilled customer orders, 61 (about 42 percent) related to fiscal 

years 2006 and 2007. Similarly, for the credits, 178 of 308 customer orders 

(about 58 percent) were for fiscal years 2006 and 2007. From a dollar 

perspective, most of these billings also related to fiscal years 2006 and 

2007 transactions. The fact that these billing problems have persisted 

clearly indicates that the various efforts by the Army to resolve this critical

 1

Acceptable levels refer to the fact that any systems acquisition effort will have risks and 

will suffer the adverse consequences associated with defects in the processes. However, 

effective implementation of disciplined processes reduces the possibility of the potential 

risks actually occurring and prevents significant defects from materially affecting the cost, 

timeliness, and performance of the project.

Army Asset Visibility
Appendix IV: LMP Problems Continue 

aspect of the system have failed. Table 1 shows the dollar value and the 

number of customer orders related to unbilled work and credits for 3 

months—November and December 2006 and January 2007. 

Table 1: Unbilled and Credit Customer Orders at the Tobyhanna Army Depot for 

November 2006 through January 2007 

Month 

Unbilled

customer 

orders

Dollar value 

of unbilled

customer orders 

Customer 

orders with

credits 

Dollar value

of customer 

orders with

credits

November 2006 84 (3,161,490) 291 3,156,533

December 2006 92 (2,637,903) 301 4,772,884

January 2007 146 (5,367,798) 308 5,792,851

Source: LMP program office. 

The continuing billing problem at Tobyhanna is also a factor contributing 

to higher depot bills from the Defense Finance and Accounting Service 

(DFAS)—the Department of Defense’s (DOD) centralized finance and 

accounting organization. According to DFAS personnel, the recurring 

billing and other problems have resulted in DFAS processing Tobyhanna’s 

bills manually and performing other manual actions that are not required 

by the other depots that do not use LMP. According to the information 

provided by DFAS, the number of hours spent on DFAS accounting 

services billings for Tobyhanna has increased between fiscal years 2004 

and 2006. Table 2 shows the number of hours and related amounts DFAS 

billed Tobyhanna in each year. 

Table 2: DFAS Billings to the Tobyhanna Army Depot for Accounting Services 

Fiscal year Number of hours Amount billed (dollars)

2004 17,737 1,105,168

2005 21,197 1,360,407

2006 22,653 1,432,777

Source: GAO based upon data provided by DFAS. 

Furthermore, according to DFAS personnel, while the accounting needs of 

other depots requires the support of one full-time DFAS staff, DFAS uses 

three full-time personnel to service Tobyhanna due to the numerous 

manual workarounds associated with LMP. The manual workarounds 

required to address LMP’s billing issues results in higher DFAS bills for 

Tobyhanna, which in turn increases the prices charged by Tobyhanna to

Page 52 GAO-07-860 Army Asset Visibility
Appendix IV: LMP Problems Continue 

its customers for the work performed. Since Tobyhanna is part of the 

Army Working Capital Fund, the costs incurred for accounting services are 

passed on to the customer in the form of higher depot prices. During the 

course of our audit, LMP program officials stated that they were finalizing 

efforts to revise the billing process. At completion of our field work, the 

LMP program office stated that it anticipated having the revised process in

place in the August 2007 time frame. 

Since billing and revenue recognition have been such a long-standing 

issue, and given that the entire process is fundamental to the efficient and

effective operation of the Working Capital Fund, it is incumbent upon the 

LMP program office to closely monitor the planned corrective actions and 

obtain reasonable assurance that the revised process is meeting the 

Army’s expectations. System testing is a critical process that should help 

improve an entity’s confidence that the system will satisfy the 

requirements of the end user and will operate as intended. If the planned 

corrective actions do not resolve the existing problem, Tobyhanna’s 

operations will continue to be adversely affected. As we have previously 

recommended, LMP should not be deployed to any additional locations.2

LMP continues to experience difficulty in accurately reporting on the 

results of operations. For example, the DOD Inspector General’s fiscal 

year 2006 financial statement audit of the Army Working Capital Fund 

identified instances in which LMP was not properly recording transactions 

in accordance with the U.S. Government Standard General Ledger 

requirements. Further, our analysis of the DFAS monthly report on depot

operations—commonly referred to as the 1307 report3

—found that 

inaccurate account balances continue to persist in LMP. These issues have 

presented many challenges that are reflected throughout the Army 

Working Capital Fund financial statements as adjustments, corrections, 

and footnote disclosures. More specific details on the problems are 

highlighted below. 

Accuracy of Financial 

Information Reported 

by LMP Still a 

Concern 

• The DOD Inspector General Report on Internal Controls and Compliance 

with Laws and Regulations noted that the nonfederal accounts payable 

 2

GAO, Army Depot Maintenance: Ineffective Oversight of Depot Maintenance Operations

and System Implementation Efforts, GAO-05-441 (Washington, D.C.: June 30, 2005).

3

We reviewed the 1307 reports for March 2004, September 2004, March 2005, September

2005, March 2006, September 2006, December 2006, and February 2007. 

Page 53 GAO-07-860 Army Asset Visibility
Appendix IV: LMP Problems Continue 

account was misstated by approximately $175 million at the end of fiscal 

year 2006. This misstatement arose because Army entities using LMP had 

not resolved approximately $89 million in abnormal accounts payable 

balances reported by the Supply Management business area. An abnormal 

account balance is one in which the recorded amount has been incorrectly

classified. During fiscal year 2006, the LMP program office initiated 

systemic corrections to reduce the reported abnormal balances. Our 

analysis of the first quarter fiscal year 2007 financial statements noted that 

the reported balance had been reduced to approximately $81 million. The 

LMP program office was continuing to research the issue. 

• Our analysis of the DFAS 1307 reports found that abnormal balances in

accounts payable have been reported since fiscal year 2004. LMP program 

officials stated that abnormal balances were primarily due to the migration 

of remaining obligations on open contracts from the legacy systems. 

Substantial effort was made in fiscal year 2006 to correct the abnormal 

accounts payable balances that were reported by LMP, which resulted in a 

reduction from $334 million at the end of fiscal year 2005 to $88 million at 

the end of fiscal year 2006. The Army’s efforts to clean up abnormal 

account balances continued in fiscal year 2007. 

The Army has developed a specific plan to address the financial 

management problems recognized in these statements. For example, a 

Tobyhanna Army Depot on-site support team has been assembled to 

complete the data cleanup, validate that all system and procedural issues 

have been identified, document business processes and procedures, and 

train Tobyhanna users. However, until these problems are corrected, LMP 

will not be able to provide reliable and accurate financial information to 

the Congress or Army management.

Our prior audits4

 of LMP identified significant weaknesses with LMP’s 

efforts to effectively implement the requirements management and testing

processes needed to reduce risks to acceptable levels. During our current

audit, we found that the requirements management processes have 

improved—a critical first step—but we continue to have reservations 

about the adequacy of the testing. LMP program officials stated that these 

testing weaknesses are being addressed and expect that an improved 

Adequacy of LMP 

Testing Continues to 

Be a Concern 

 4

GAO, DOD Business Systems Modernization: Billions Continue to Be Invested with

Inadequate Management Oversight and Accountability, GAO-04-615 (Washington, D.C.: 

May 27, 2004) and GAO-05-441. 

Page 54 GAO-07-860 Army Asset Visibility
Appendix IV: LMP Problems Continue 

testing process will be effectively implemented to reduce risks to 

acceptable levels. 

During the current review, Army and contractor Computer Sciences 

Corporation (CSC) officials stated that they have acted upon our prior 

recommendations and taken steps to improve the program’s requirements 

management practices. In setting forth the revised requirements 

management process, LMP and CSC officials noted that the new process 

generally envisioned having several documents that outlined the 

requirements that needed to be addressed with each document containing

specificity needed for the intended audience. 

To ascertain if the Army’s stated corrective actions were being adhered to, 

we selected 10 requirements for detailed review. Our analysis found that 

the LMP documentation in support of the requirements management 

practices was generally in compliance with the stated process. More 

specifically, the requirements reviewed were generally consistent between 

the documents and appeared to contain the necessary specificity to reduce

requirement-related defects to acceptable levels. Our observations were 

consistent with the conclusions reached by a subsequent review

performed by the LMP verification and validation contractor, who 

examined the same documentation that we analyzed. 

Our review of the stated testing processes found that many of the 

attributes associated with a disciplined testing process were present. 

However, based upon our review and analysis of the 10 selected corrective 

actions, we still have concerns that the LMP testing process may not be 

adequate since we identified specific weaknesses in the 10 corrective 

actions reviewed. System testing is a critical process utilized by 

disciplined organizations and improves an entity’s confidence that the

system will satisfy the requirements of the end user and operate as 

intended. The stated testing process included the following: 

LMP’s Requirements 

Management Practices 

Have Improved 

Concerns regarding LMP 

Testing Processes Remain 

• Documenting scenario testing. A scenario is a business process that 

typically consists of several events. For example, a scenario could be 

developed for small purchases, which would include events such as 

(1) initiating a purchase request, (2) approving the request, (3) obligating 

the necessary funds, (4) ordering the item, (5) receiving the item, and 

(6) paying for the item. One benefit of testing scenarios is that it helps to 

ensure that information is accurately passed from one process to another. 

For instance, the denial of a requisition prevents the purchase of the item. 

Page 55 GAO-07-860 Army Asset Visibility
Appendix IV: LMP Problems Continue 

• Linking requirements to the test cases. Linking requirements and test

cases helps ensure that either (1) all requirements are adequately tested or 

(2) the risks associated with not testing a requirement can be properly 

evaluated. Because it is not economically feasible to develop a testing 

program that can find every defect, it is critical that an approach be 

developed to ensure that testing resources are focused on the areas of 

highest risk. Accordingly, linking the requirements makes it easier to 

determine which combinations of items are not tested, thereby enabling 

the Army to evaluate the risks of not conducting those tests. 

• Regression testing. Regression testing is a process that helps ensure that 

changes made to the system have not adversely affected functionality that

was working prior to a change being made to the system. In essence, it is a 

process that retests the entire system to ensure that the problem fixed did 

not have an adverse effect on other functions within the system. 

While the processes described above are an improvement over what we 

have seen in the past, we continue to identify weaknesses in the testing 

process. For example, none of the test scripts provided adequate 

information that linked the items in the test script to a specific 

requirement. This linking is commonly referred to as traceability and is 

characteristic of a disciplined testing process. The test scripts reviewed 

contained headings for information on the scenario, key data

requirements, expected results, actual results, and whether the test was 

considered successful. However, the actual test script failed to contain the 

level of specificity that clearly delineated how a specific requirement 

identified in the requirement document(s) and the associated

requirement(s) in that document were being tested. As a result, it is 

virtually impossible to ascertain if the requirement was properly tested. 

For example, several requirements defined rules that were expected to be

implemented. Without linking a given requirement to the tests designed to

exercise that requirement, it was impossible to obtain reasonable 

assurance that (1) all the requirements had been tested and (2) the test 

provided adequate coverage for each requirement. 

A review of the test script for one corrective action showed that the 

identified expected results were “output of report should show open 

accounts receivable items for customers in the range noted.” Our analysis

of the documentation disclosed that the test scripts only tested to make 

sure that a report could be printed for (1) a specific customer, (2) a 

consecutive range of customers (e.g., customers 1 through 10), (3) federal 

and nonfederal customers (the exact condition tested was not specified 

since the user was only required to pick one of the conditions), and 

Page 56 GAO-07-860 Army Asset Visibility
Appendix IV: LMP Problems Continue 

(4) receivables associated with a specified general ledger account. While 

this testing addressed the requirements that the report be printed using 

these conditions, the scripts did not provide evidence that other 

requirements were tested and the data presented were valid. For example, 

the report was expected to put receivables into 11 different age categories 

(for example 0 to 30 days, 31 to 60 days, etc.); however, no evidence was 

provided to show that the balances shown on these reports (1) were 

consistent with known results and (2) the accounts selected provided 

adequate coverage of the ranges specified. The latter is especially 

important since two of the ranges overlap. LMP and CSC officials agreed 

that the documentation did not always provide the level of detail that was 

needed to (1) document which requirements contained in applicable 

requirement documents were being tested and (2) ensure that all of the 

specific tests that were required to provide reasonable assurance that the 

application worked as expected were completed.

Furthermore, we were informed that the system testing was conducted by

the developers and subject matter experts. Using developers and subject 

matter experts, and depending on those individuals’ comprehensive body 

of knowledge as the foundation for a testing effort, carries significant risks 

since this is not a recognized best practice. A basic testing principle is that

a developer should not test his or her own work, nor should a 

development organization test its own work. These testing principles are 

based on the concept that testing is the process of executing a program 

with the intent of finding errors. Testing is normally considered a 

“destructive” process while the development activities are normally 

considered a “constructive” progress. It is very difficult for a developer to 

change the perspective required to successfully develop a program into 

the perspective necessary to adequately test a process.5

 This does not 

mean that the developers are not involved in the testing process since a 

best practice is to have them responsible for testing the code they develop

to ensure that it is ready for the next stage of testing.6

Further, as noted in our May 2004 report,7 our analysis of LMP’s December 

2003 and January 2004 project status reports identified numerous 

 5

Glenford J. Myers, The Art of Software Testing (New York, N.Y.: John Wiley & Sons, Inc.,

1979). 

6

Rex Black, Critical Testing Processes: Plan, Prepare, Perform, Perfect (Boston, Mass.: 

Addison-Wesley, 2004). 

7

GAO-04-615. 

Page 57 GAO-07-860 Army Asset Visibility
Appendix IV: LMP Problems Continue 

instances in which the Army continued to experience problems with the 

accuracy of data related to budgeting; workload planning and forecasting 

and depot maintenance operations; and accounting records such as 

customer orders, purchase orders and requisitions, obligations, and 

disbursements. DFAS and Army officials acknowledged that these 

problems were attributable to relying on subject matter experts to develop

tests for their respective functional areas, and not performing end-to-end 

testing across the various functional areas. 

After discussing our concerns with the LMP program office and CSC 

officials in February 2007, the LMP program office requested the 

verification and validation (V&V) contractor to perform an assessment of 

the LMP testing process. According to information provided by the LMP 

program office and the V&V contractor, in March 2007, the review found 

that the LMP testing process was adequately defined in the planning 

documentation and noted that the LMP testing philosophy was governed

by the concepts that (1) the change should operate as intended, (2) the 

change should not be harmful to the existing functional environment, 

(3) testing should be practical, and (4) the testing efforts should be cost 

efficient. The V&V contractor analysis of the LMP testing process also 

found that the testing documentation—which was the same 

documentation that we analyzed did not support a clear understanding of 

the (1) requirement being tested and (2) tests used to determine whether a 

requirement was adequately implemented. According to the V&V 

contractor, these key areas need to be addressed. The V&V contractor 

assessment substantiates our analysis of the LMP testing process. 

LMP program office officials and the V&V contractor agreed that the 

testing process currently being utilized could be improved. They also 

noted that the LMP program had begun implementing an initiative to 

improve the testing program that should address the weaknesses we 

identified. The following outlines two key components of LMP’s improved 

testing efforts. 

Improved Testing Process 

Planned 

• Establishment of an independent test group. This is a critical step 

and, if effectively implemented, can serve as a strong foundation for 

building an effective testing process. An independent testing group is a 

best practice. 

• Development and implementation of an automated testing 

program. CSC is developing an automated testing process which was 

expected to reduce the testing burden and eliminate user errors in the 

Page 58 GAO-07-860 Army Asset Visibility
Appendix IV: LMP Problems Continue 

testing process. For example, the user may not detect that the application 

did not provide the expected result or record an error when the 

application did operate as expected. These are commonly referred to as 

testing defects and are to be expected when manual testing activities are 

conducted. 

LMP program officials are of the opinion that these two actions will help 

address the problems of adequately linking the requirements to the testing

and documenting the testing that is actually performed. These actions, if 

effectively implemented, are a significant step forward and can help 

reduce the risks associated with testing to acceptable levels. However, the 

effective implementation will have to overcome a number of past 

problems, including ensuring that the tests provide adequate coverage. 

While developing automated tests can improve the reliability of the testing 

efforts and help facilitate an effective regression testing program, the key 

is whether the automated tests are testing the correct items. In our 

discussions with CSC, we were informed that the existing test scripts were 

the basis for developing the new automated test. Whether this approach 

will provide an effective testing process is yet to be seen. As we noted 

above, the test scripts that will be used as the basis for developing the 

automated test scripts do not provide the necessary link to the 

requirements that are being tested or provide the detailed information 

necessary to write the detailed test scripts called for in the automated 

process. 

Page 59 GAO-07-860 Army Asset Visibility
A

A

ppendix V: GAO Contacts and Staff 

cknowledgments 

Page 60 GAO-07-860

Appendix V: GAO Contacts and Staff 

Acknowledgments 

McCoy Williams, (202) 512-9095 or williamsm1@gao.gov

Keith A. Rhodes, (202) 512-6412 or rhodesk@gao.gov

William M. Solis, (202) 512-8365 or solisw@gao.gov

In addition to the above contacts, the following individuals made key 

contributions to this report: J. Christopher Martin, Senior-Level 

Technologist; Darby Smith, Assistant Director; Evelyn Logue, Assistant 

Director; F. Abe Dymond, Assistant General Counsel; Beatrice Alff; Sunny 

Chang; Harold Brumm, Jr.; Francine DelVecchio; K. Eric Essig; Jason 

Kelly; Jason Kirwan; Alyson Mahan; and Debra Rucker. 

Army Asset Visibility

GAO Contacts 

Acknowledgments 

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