GAO-04-731R DOD Business Systems Modernization

United States General Accounting Office

Washington, DC 20548 

May 17, 2004 

Congressional Defense Committees 

Subject: DOD Business Systems Modernization: Limited Progress in Development 

of Business Enterprise Architecture and Oversight of Information Technology 

Investments

The Department of Defense’s (DOD) long-standing business systems problems 

adversely affect the economy, effectiveness, and efficiency of its business operations 

and have resulted in a lack of adequate transparency and appropriate accountability 

across all of its major business areas. To help the department transform its 

operations, we recommended1

 in 2001 that DOD develop an enterprise architecture to 

guide and constrain its almost $20 billion annual investment in business systems and 

that it establish the investment controls needed to implement this architecture. In 

July 2001, DOD initiated a program2

 to, among other things, develop a DOD business 

enterprise architecture (architecture). This effort is an essential part of the Secretary 

of Defense’s broad initiative to “transform the way the department works and what it 

works on.” 

Because DOD is one of the largest and most complex organizations in the world, 

overhauling its business operations and supporting systems represents a huge 

management challenge. In fiscal year 2003, DOD reported that its operations 

involved over $1 trillion in assets, nearly $1.6 trillion in liabilities, approximately 3.3 

million military and civilian personnel, and disbursements of over $416 billion. To 

support its business operations, DOD reported that it relies on about 2,300 business 

systems, including accounting, acquisition, logistics, and personnel systems. The 

department requested about $19 billion—about $4.8 billion for business systems3

 

1

U.S. General Accounting Office, Information Technology: Architecture Needed to Guide 

Modernization of DOD’s Financial Operations, GAO-01-525 (Washington, D.C.: May 17, 2001). 

2

The Business Management Modernization Program is the department’s business transformation 

initiative; it encompasses defense policies, processes, people, and systems that guide, perform, or 

support all aspects of business management—including development and implementation of the 

business enterprise architecture. The Under Secretary of Defense (Comptroller) established a DODwide program management office called Business Modernization and Systems Integration (BMSI), to 

oversee and manage the program. 

3

Business systems include financial and nonfinancial systems, such as civilian personnel, finance, 

health, logistics, military personnel, procurement, and transportation, with the common element being 

the generation or use of financial data to support DOD’s business operations. 
Page 2 GAO-04-731R DOD Business Systems Modernization 

modernization and about $14 billion for operation and maintenance of these 

systems—in fiscal year 2004. 

Recognizing the importance of DOD’s efforts to transform its business operations and 

systems through the use of an enterprise architecture, the Congress included 

provisions in the National Defense Authorization Act for Fiscal Year 20034

 that were 

aimed at developing and effectively implementing a well-defined architecture. 

Specifically, section 1004 of this act required that DOD (1) develop, by May 1, 2003, a 

financial management enterprise architecture5

 and a transition plan for implementing 

the architecture that meets certain requirements and (2) review financial system 

improvements with proposed obligations of funds in amounts exceeding $1 million to 

determine if those system improvements meet specific conditions that are called for 

in the act. The act also directed us to assess actions that DOD has taken to comply 

with these requirements. In July6

 and September 2003,7 we reported on DOD’s actions 

and made a number of recommendations to assist DOD in its efforts to effectively 

develop and implement an architecture and to guide and constrain its business 

systems investments. 

The act further requires that the Secretary of Defense submit an annual report not 

later than March 15 of each year from 2004 through 2007 to congressional defense 

committees on its progress in implementing the architecture, including the transition 

plan. Additionally, the act directs us to submit to congressional defense committees, 

within 60 days of DOD’s report submission, an assessment of DOD’s actions taken to 

comply with these requirements. (See enc. I for a copy of section 1004 of the act.) 

DOD submitted its first annual report on March 15, 2004. This report is our 

assessment of DOD’s March 15, 2004 report. As agreed with your offices, we 

determined (1) the actions DOD has taken to address our previous recommendations 

regarding the development and implementation of the architecture and (2) the 

actions DOD is taking to ensure its ongoing and planned investments will be 

consistent with its evolving architecture. 

 

4

Bob Stump National Defense Authorization Act for Fiscal Year 2003, Pub. L. No. 107-314, § 1004, 116 

Stat. 2458, 2629 (Dec. 2, 2002). 

5

In May 2003, the DOD Comptroller changed the architecture name from the Financial Management 

Enterprise Architecture to the Business Enterprise Architecture to reflect the transformation of 

departmentwide business operations and supporting systems, including accounting and finance, 

budget formulation, acquisition, inventory management, logistics, personnel, and property 

management systems. 

6

U.S. General Accounting Office, DOD Business Systems Modernization: Summary of GAO’s 

Assessment of the Department of Defense’s Initial Business Enterprise Architecture, GAO-03-877R 

(Washington, D.C.: July 7, 2003). 

7

U.S. General Accounting Office, 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). 
Page 3 GAO-04-731R DOD Business Systems Modernization 

We performed our work from December 2003 through April 2004 in accordance with 

U.S. generally accepted government auditing standards. Details on our scope and 

methodology are in enclosure II. 

Results in Brief 

Since our last review—and after 3 years of effort and over $203 million in 

obligations—we have not seen any significant change in the content of DOD’s 

architecture or in DOD’s approach to investing billions of dollars annually in existing 

and new systems. Few actions have been taken to address the recommendations we 

made in our September 20038

 report, which were aimed at improving DOD’s plans for 

developing the next version of the architecture and implementing the institutional 

means for selecting and controlling both planned and ongoing business systems 

investments. To DOD’s credit, it has established, for example, a group under the 

Business Management Modernization Program (program) steering committee9

 to 

facilitate communication and coordination across the domains10 for modernization 

program activities, including extending and evolving the architecture. However, DOD 

has not yet adopted key architecture management best practices11 and has not added 

the scope and detail to its architecture that we previously identified as missing. 

Further, DOD has not yet implemented an effective management structure and 

processes to provide adequate control and accountability over its $5 billion annual 

investment in business systems modernization. Additionally, the department does 

not have reasonable assurance that it is in compliance with the National Defense 

Authorization Act for Fiscal Year 2003, which requires DOD’s Comptroller to review 

all system improvements with obligations exceeding $1 million. 

Regarding architecture management best practices, DOD has not yet implemented 

key elements, such as assigning accountability and responsibility for directing, 

overseeing, and approving the architecture. In addition, it has not explicitly defined 

performance metrics to evaluate the architecture’s quality, content, and utility. With 

 

8

GAO-03-1018. 

9

The steering committee, made up of senior leaders from across the department, is advisory in nature 

and is not accountable for directing, overseeing, and approving the architecture. 

10DOD has six departmental domains, which are (1) accounting and finance, (2) acquisition, (3) human 

resources management, (4) installations and environment, (5) logistics, and (6) strategic planning and 

budgeting. It also has one enterprise information environment mission area. The domains and the 

mission area, comprised of the Under Secretaries of Defense and the Assistant Secretary of Defense 

for Networks and Information Integration/DOD Chief Information Officer, have authority, 

responsibility, and accountability within their domains for business transformation, implementation of 

the architecture, development and execution of the transition plan, portfolio management, and 

establishment of a structure to ensure representation of the DOD components and the appropriate 

federal agencies. 

11U.S. General Accounting Office, Information Technology: A Framework for Assessing and 

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

2003). 
Page 4 GAO-04-731R DOD Business Systems Modernization 

respect to the architectural content, DOD’s latest version of the architecture does not 

include many of the key elements of a well-defined “As Is,” “To Be,” and transition 

plan that we previously reported as not being satisfied.12

 For example, the “To Be” 

environment does not provide sufficient descriptive content related to future 

business operations and supporting technology to permit effective acquisition and 

implementation of system solutions and associated operational change. Similarly, 

DOD’s verification and validation contractor has concluded that this latest version of 

the architecture retains most of the limitations that the initial version had. Moreover, 

DOD has not yet defined specific plans, including milestones, detailing how it intends 

to extend and evolve the architecture to incorporate this missing content. For 

example, the program’s first objective for increment one—to enable asset 

accountability, total force visibility, and an unqualified audit opinion on DOD’s fiscal 

year 2007 consolidated financial statements—is not supported by a DOD-wide plan of 

action, and the individual component plans for accomplishing this objective may not 

be linked to the program’s activities, including the architecture. According to DOD, it 

will not have the plans on how the capabilities for increment one will be achieved 

until August 2004. 

DOD has also made limited progress in addressing our recommendations aimed at 

establishing and implementing effective investment management processes and, 

therefore, continues to lack effective management oversight and control over ongoing 

business systems modernization investments. While DOD has recently issued a policy 

that assigns investment management responsibilities to the domains, the policy has 

not yet been implemented, and DOD has not clearly defined the roles and 

responsibilities of the domains, established common investment criteria, and 

conducted a comprehensive review of its existing business systems to ensure that 

they are consistent with the architecture. Further, each of the DOD components 

continues to receive its own funding and make its own parochial investment 

decisions. Moreover, DOD has not yet established and implemented an effective 

process for ensuring that system improvements with obligations exceeding $1 million 

are submitted to DOD’s Comptroller for review and to determine whether they are 

consistent with the architecture, as required by the National Defense Authorization 

Act for Fiscal Year 2003. Based upon a comparison of limited information provided 

by the military services and defense agencies, we identified a total of $863 million in 

obligations for improvements that exceeded $1 million each but had not been 

submitted to DOD’s Comptroller for review and determination. 

The department acknowledges that it still has much more to do, including developing 

the architecture to a necessary level of detail, defining specific performance metrics, 

and clarifying the roles and responsibilities associated with managing the domains’ 

portfolios of business systems and ensuring that these systems comply with the 

architecture. The limited progress that DOD has made is due, in part, to the lack of 

clearly assigned, accountable, and sustained program leadership and to changes in 

the program direction and priorities. For example, from May 2003 to February 2004, 

there was no program manager to identify, direct, and execute program activities. 

 

12GAO-03-1018. 
Page 5 GAO-04-731R DOD Business Systems Modernization 

Our experience in reviewing other challenged architecture efforts shows that these 

efforts have suffered from limited senior management understanding of and 

commitment to an architecture and from cultural resistance to having and using one. 

Cultural resistance to change, organization component parochialism, and stovepiped 

operations are all evident at DOD. 

Because many of our prior recommendations—for managing architecture 

development, maintenance, and implementation and for controlling ongoing and 

planned investments in business systems—remain open, we are not making any new 

recommendations in this report, but we are reiterating the 22 open recommendations 

that we made in our May 2001,13 February 2003,14 and September 200315 reports. 

(Enc. III contains details on the status of all of our prior recommendations, including 

our assessment of DOD’s actions.) It is imperative that DOD act swiftly to implement 

these recommendations. If it does not, the prognosis for this program is bleak, which 

in turn puts the department’s business transformation efforts in jeopardy. 

In written comments, which are reprinted in enclosure IV, DOD agreed with our 

assessment that the department’s long-standing business systems problems have 

resulted in a lack of adequate transparency and appropriate accountability across all 

major business areas and that development and use of an architecture is necessary to 

transforming its business operations and supporting systems. In response to our 

characterization that progress has been limited, DOD stated that, over the past 3 

years, progress has been slower than either GAO or DOD would prefer but that it has 

been significant, despite appearances to the contrary. In support of its view, DOD 

provided an extensive package of information. We considered this information, most 

of which we had previously evaluated. The willingness of DOD’s leadership to tackle 

the department’s decades-old problems with its business operations and supporting 

systems represents a major step forward. However, we remain convinced that it is 

fair to characterize DOD’s progress in developing a well-defined architecture and 

implementing effective management oversight and control over its business systems 

as limited. As a result, we did not make any changes to this report. 

 

13GAO-01-525. 

14U.S. General Accounting Office, DOD Business Systems Modernization: Improvements to 

Enterprise Architecture Development and Implementation Efforts Needed, GAO-03-458 (Washington, 

D.C.: Feb. 28, 2003). 

15GAO-03-1018. 
Page 6 GAO-04-731R DOD Business Systems Modernization 

Background 

Prior Reviews of DOD’s Architecture Efforts Have Identified Challenges and 

Weaknesses

Over the last 3 years, we have reported16 that one of the key elements to successfully 

meeting DOD’s financial and related business management challenges is establishing 

and implementing an enterprise architecture, or modernization blueprint. An 

enterprise architecture provides a clear and comprehensive picture of an entity, 

whether it is an organization (e.g., federal department or agency) or a functional or 

mission area that cuts across more than one organization (e.g., financial 

management). This picture consists of snapshots of both the enterprise’s current or 

“As Is” operational and technological environment and its target or “To Be” 

environment, as well as a capital investment road map for transitioning from the 

current to the target environment. These snapshots further consist of “views,” which 

are basically one or more architecture products that provide conceptual or logical 

representations of the enterprise. We have made numerous recommendations to 

assist DOD in successfully developing the architecture and using it to gain control 

over its ongoing business systems investments. Enclosure III contains details on the 

status of all of our prior recommendations, including our assessment of DOD’s 

actions. 

In May 200117, we reported that the department did not have an architecture for its 

financial and financial-related business operations, nor the management structures, 

processes, and controls in place to effectively develop and implement one. We 

reported that if the department continued to spend billions of dollars on new and 

modified systems, independently from one another and outside the context of an 

architecture, this would result in more processes and systems that are duplicative, 

not interoperable, and unnecessarily costly to maintain and interface. We made eight 

recommendations aimed at providing the means for effectively developing and 

implementing an architecture. The Secretary of Defense established a program in 

July 2001 to develop and implement an architecture. In April 2002, DOD entered into 

an agreement with International Business Machines (IBM) pursuant to a 

governmentwide General Services Administration contract, under which DOD issued 

task orders for services to begin developing the architecture. 

During the first year of DOD’s architecture development, in 2002, we reviewed the 

department’s efforts and recognized that it was undertaking a challenging and 

 

16GAO-01-525; U.S. General Accounting Office, DOD Financial Management: Important Steps 

Underway But Reform Will Require a Long-term Commitment, GAO-02-784T (Washington, D.C.: 

June 4, 2002); and U.S. General Accounting Office, Department of Defense: Further Actions Needed to 

Establish and Implement a Framework for Successful Business Transformation, GAO-04-626T 

(Washington, D.C.: Mar. 31, 2004). 

17GAO-01-525. 
Page 7 GAO-04-731R DOD Business Systems Modernization 

ambitious task and following some architecture best practices and information 

technology (IT) investment management processes and controls. We also identified 

challenges and weaknesses in DOD’s architecture efforts. For example, in a February 

2003 report,18 we pointed out that DOD had not yet (1) established a governance 

structure and process controls needed to ensure ownership of and accountability for 

the architecture across the department, (2) clearly communicated to intended 

stakeholders its purpose, scope, and approach for developing the architecture, and 

(3) defined and implemented an independent quality assurance process. We also 

reported that DOD had yet to establish the necessary departmental investment 

governance structure and process controls needed to adequately align ongoing 

investments with its architectural goals and direction. We made six 

recommendations aimed at enhancing DOD’s ability to further develop its 

architecture and guide and constrain its business systems modernization 

investments. 

Our March 200319 report noted that the draft version of the architecture did not 

include a number of items recommended by relevant architectural guidance and that 

DOD’s plans would not fully satisfy the requirements of the National Defense 

Authorization Act for Fiscal Year 2003. For example, the draft architecture did not 

include a “To Be” security view, which defines the security requirements, including 

relevant standards to be applied in implementing security policies, procedures, and 

controls. DOD officials agreed with our preliminary assessment of the architecture 

and stated that subsequent versions of the architecture would provide these missing 

details. 

In July and September 2003,20 we reported that although DOD had expended 

tremendous effort and resources in complying with statutory requirements for 

developing and implementing a well-defined architecture, the initial version of its 

architecture, including the transition plan, did not adequately address the statutory 

requirements and other relevant architectural requirements. For example, the “As Is” 

environment did not include descriptions of the current business operations in terms 

of entities and people who perform the functions, processes, and activities and the 

locations where these are performed. The “To Be” environment did not include 

descriptions of actual systems to be developed or acquired to support future business 

operations and the physical infrastructure that would be needed to support the 

business systems. The transition plan did not include time frames for phasing out 

existing systems within DOD’s reported current inventory of about 2,300 business 

systems. Overall, the department’s initial version of the architecture did not contain 

sufficient scope and detail either to satisfy the act’s requirements or to effectively 

guide and constrain the departmentwide business transformation and systems 

 

18GAO-03-458. 

19U.S. General Accounting Office, Information Technology: Observations on Department of Defense’s 

Draft Enterprise Architecture, GAO-03-571R (Washington, D.C.: Mar. 28, 2003). 

20GAO-03-877R and GAO-03-1018. 
Page 8 GAO-04-731R DOD Business Systems Modernization 

modernization. In our September 2003 report21, we reiterated the open 

recommendations that we had made in our May 200122 and February 200323 reports, 

and we made 10 new recommendations aimed at improving DOD’s plans for 

developing the next version of the architecture and implementing the institutional 

means for selecting and controlling both planned and ongoing business systems 

investments. To date, DOD has yet to address 22 of our recommendations. 

Funding Status of Architecture Program

As of March 12, 2004, about $258 million had been appropriated to support the 

program, of which the department reported having obligated over $203 million and 

having made disbursements of $111 million since the program began in 2002. Table 1 

shows the reported status of program funding by appropriation and fiscal year. 

 

21 GAO-03-1018. 

22GAO-01-525. 

23GAO-03-458. 
Page 9 GAO-04-731R DOD Business Systems Modernization 

Table 1: Reported Funding Status of DOD’s Business Management Modernization 

Program as of March 12, 2004 

(Dollars in millions) 

Appropriation Appropriated Obligated UnobligatedaDisbursed Unliquidatedb

Fiscal year 2002/2003 

Research, 

Development, Test, 

and Evaluation 

(RDT&E) –

Defensewide (DW)c

$94.5 $94.5 $0.0 $83.0 $11.5

Fiscal year 2003/2004 

RDT&E –DWd

67.2 67.2 0.0 11.9 55.3

Fiscal year 2004/2005 

RDT&E – DWe

45.1 8.5 36.6 0.0 8.5

Fiscal year 2003 

Operations and 

Maintenance (O&M) –

DWf

 24.9 24.9 0.0 16.1 8.8

Fiscal year 2004 O&MDWg

 26.1 8.3 17.8 0.0 8.3

Total $257.8 $203.4 $54.4 $111.0 $92.4

Source: Unaudited funding information contained in DOD’s March 15, 2004 report to congressional 

defense committees. We did not validate the accuracy and reliability of the funding information 

reported. 

a

 Unobligated balances are the differences between funds appropriated and obligated; they represent 

funds that have not been obligated for expenditure. GAO’s calculations are based on DOD’s reported 

data. 

b Unliquidated balances are the differences between the funds obligated and disbursed; they represent 

funds that have been obligated but have not yet been paid. GAO’s calculations are based on DOD’s 

reported data. 

c The fiscal year 2002/2003 RDT&E funds supported the initial delivery of the architecture, transition 

plan, and change management and communications initiatives. 

d The fiscal year 2003/2004 RDT&E funds were used to refine the architecture through business process 

modeling/reengineering for the program’s first increment and to fund test and evaluation activities, 

verification and validation efforts, and engineering support. 

e The fiscal year 2004/2005 RDT&E funds will be used to complete the program’s first increment and 

begin work on the second increment and to fund the integration of the architecture, engineering 

support, and test and evaluation activities. 

f The fiscal year 2003 O&M funds were used for salaries, facilities, supplies, and program management 

support contracts. 

g The fiscal year 2004 O&M funds are being used for salaries, facilities, supplies, and program 

management support contracts. 
Page 10 GAO-04-731R DOD Business Systems Modernization 

DOD Has Taken Few Actions to Address Our Previous Recommendations 

DOD has taken some steps since our last review, but it has not yet (1) implemented 

key architecture management best practices,24 such as assigning accountability and 

responsibility for directing, overseeing, and approving the architecture to a 

committee or group comprised of representatives from across DOD’s major 

organization components, (2) revised the architecture products to include the missing 

scope and detail needed to guide and constrain the implementation of system 

solutions, and (3) clearly defined near-term and long-term plans for guiding its 

transformation activities. Until the department addresses these key elements to fully 

satisfy relevant architectural guidance, it will be challenged in its ability to produce 

an architecture that is sufficient to guide and constrain its business operations and 

systems modernization efforts. In response to our recommendations, DOD has taken 

some actions, including establishing a group to facilitate communication and 

coordination across the domains for program activities; beginning to establish a 

configuration change management process; recently issuing a policy governing the 

development, maintenance, and implementation of the architecture; and updating the 

initial version of the architecture. However, these actions are not sufficient and do 

not fully address our concerns. 

DOD Has Not Yet Implemented Key Architecture Management Best Practices

DOD’s actions have not been adequate to address architecture management best 

practices or our previous recommendations. Since our last report, the department 

has taken some actions in response to our recommendations concerning the need to 

implement an effective architecture management program. First, in September 2003, 

it formally established the Domain Owners Integration Team (DO/IT), which reports 

to the steering committee. The DO/IT is comprised of the various senior executives 

from each domain and the Business Modernization and Systems Integration office. 

The DO/IT is responsible for facilitating communication and coordination across the 

domains for program activities, including extending and evolving the architecture. 

According to program officials, the DO/IT’s role is continuing to evolve. In particular, 

the specific actions or tasks it needs to perform to carry out this responsibility have 

not been defined in detail. 

Second, DOD has taken steps to establish and implement a configuration 

management process to ensure that all changes to the architecture products are 

justified and are accounted for in a manner that maintains documentation integrity. 

Specifically, the department has established a configuration control board (CCB), 

developed a charter, and written procedures governing this process. However, the 

CCB has been tasked with reviewing changes to only some, but not all, of the 

architecture products. For example, the CCB is not responsible for tracking changes 

that are being made to the transition plan. In addition, both the charter and the 

procedures governing this process are still in draft. According to DOD officials, the 

 

24GAO-03-584G. 
Page 11 GAO-04-731R DOD Business Systems Modernization 

charter is to be approved in June 2004, but no time frame has been provided for final 

approval of the procedures. 

Third, DOD has recently issued an IT portfolio management policy governing the 

development, maintenance, and implementation of the architecture. This policy 

addresses, among other things, the roles, responsibilities, and relationships of key 

players and program participants, the value of an architecture, and the scope of the 

architecture. However, the policy does not address accountability for and approval 

of updates to the architecture, as called for by best practices, nor does it address the 

issuance of waivers in those instances when exceptions to the architecture are 

justified on the basis of documented analysis. 

Finally, DOD has developed high-level performance measures that are to be used to 

develop the more specific results-oriented performance metrics needed to enable it to 

evaluate program progress and benefits. This means that DOD has yet to establish 

measurable, results-oriented goals to evaluate and track, on an ongoing basis, specific 

program progress, outcomes, and results. For example, it has not explicitly defined 

performance measures to evaluate the quality, content, and utility of subsequent 

major updates to its initial architecture. Given that DOD has reported obligations of 

over $203 million since architecture development efforts began 3 years ago, this is a 

serious performance management weakness. It is critical that the department 

establishes meaningful, tangible, and measurable program goals and objectives—

short-term and long-term—to enable the department to determine what value it is 

receiving for its investment. 

In addition, the department has yet to address other prior recommendations related 

to architecture management best practices. Two examples are provided below. 

• DOD has not assigned accountability and responsibility for directing, overseeing, 

and approving the architecture to a committee or group comprised of 

representatives from across the department. Although it previously established 

an executive and a steering committee, these committees are advisory in nature, 

and they are currently not accountable or responsible for directing, overseeing, 

and approving the architecture. According to the department, it expects to revise 

the committees’ charters in June 2004 to include these responsibilities. 

• DOD does not have an independent verification and validation function to review 

the architecture products and management processes. The department’s current 

verification and validation contractor is not independent25 and is responsible for 

reviewing the architecture products and only selected program deliverables. 

According to program officials, the department is planning to acquire the services 

of a new contractor to perform this work, who will be tasked with reviewing all 

 

25Best practices recommend that the verification and validation function be independent of the 

architecture program and report directly to the steering committee.
Page 12 GAO-04-731R DOD Business Systems Modernization 

the architecture products and all other program deliverables. However, DOD 

officials also said that no decision has been made to change the reporting 

structure of this function to make it independent or to have this contractor review 

architecture management processes. In addition, no milestones have been set for 

any of these planned actions. 

Several factors have contributed to the department’s limited progress in 

implementing an effective architecture management program, such as changes to and 

a lack of accountability in program leadership, direction, and priorities. As we 

previously stated, DOD has not yet formalized responsibility for directing, overseeing, 

and approving the architecture. Further, from May 2003 to February 2004, there was 

no program manager to identify, direct, and execute program activities. DOD hired a 

new program manager in February 2004. Initially, DOD had planned to develop and 

implement its architecture in 1 year, but later it adopted an incremental approach to 

developing the architecture. About 1 year after adopting this approach, DOD has 

assigned labels to these increments, but it has not yet defined the purpose of these 

increments and plans of action to implement them. 

Further, our research of successful organizations and experience in reviewing other 

challenged enterprise architecture efforts show that senior management’s 

understanding of and commitment to an enterprise architecture and overcoming 

cultural resistance to having and using one are critical success factors. Cultural 

resistance to change, military service parochialism, and stovepiped operations have 

all contributed significantly to the failure of previous attempts to implement broadbased management reforms at DOD. Until such barriers are addressed, and effective 

architecture management structures and processes are established, it is unlikely that 

DOD will be able to produce and maintain a complete and enforceable architecture or 

implement modernized systems in a way that minimizes overlap and duplication and 

maximizes integration and mission support. 

DOD’s Architecture Products Remain Incomplete, with Minimal Content Change

Since our last review, DOD has not made significant changes to the content of its 

architecture. The department has an updated version of the architecture (version 

2.0), which is currently being reviewed, but it has not been approved. According to 

DOD, this version of the architecture differs from the initial architecture (version 1.0) 

in that it incorporates integrated “baseline reference business process models,” 

which, according to DOD, constitute a high-level process framework consisting of 

processes that provide a business perspective on the department’s operations (e.g., 

execute budget and performance plans) that cut across functions and organizations. 

DOD also stated that version 2.0 includes the previously excluded requirements (e.g., 

revenue requirements) for the Joint Financial Management Improvement Program 

(JFMIP)26 and partially addresses 21 of the 62 missing architecture content elements 

 

26JFMIP requirements arise from various public laws, regulations, bulletins, circulars, federal 

accounting standards, and leading practices and are applicable governmentwide. 
Page 13 GAO-04-731R DOD Business Systems Modernization 

that we recommended be added. According to DOD, the domains are currently 

validating all of the requirements—including the JFMIP requirements—that are 

contained in the architecture and, as a result, requirements may be added or deleted. 

Further, with regard to the 21 missing elements, documentation provided by DOD 

shows that it is either just beginning to initiate activities or was planning to develop 

plans to address these missing elements. This documentation also did not specify 

either how or when any of the 21 elements would be fully addressed. Instead, it 

showed that the department, to date, has made only cosmetic changes to the 

architecture, such as correcting typographical (i.e., misspelled words) and 

grammatical errors, as well as deleting unnecessary text from various architecture 

products. DOD has yet to incorporate the missing scope and detail that we 

previously identified. For example, the “To Be” environment does not provide 

sufficient descriptive content related to future business operations and supporting 

technology to permit effective acquisition and implementation of system solutions 

and the associated operational change. 

Program officials also stated that version 2.0 addresses some of the 

recommendations made by its verification and validation contractor. However, DOD 

did not provide documentation showing that it had addressed any of these 

recommendations. For example, the verification and validation contractor had 

previously reported that the “As Is” information was insufficient to support realistic 

transition planning. In April 2004, this contractor further reported that, while there 

have been some improvements in both the overall completeness of definitions and 

the structure of the architecture products, version 2.027 retains most of the critical 

problems previously cited for version 1.0. Some examples are below. 

• The utility of the architecture to stakeholders and the ability of the architecture to 

support acquisition and portfolio investment management decisions remain 

unclear. 

• Supporting documentation that describes the analysis and rationale for 

architecture choices represented within many of the architecture products 

remains incomplete in many areas and, when available, is poorly linked or 

referenced. 

• The “As Is” environment, including business processes and existing business 

application systems and supporting technology, is inadequate, making it difficult 

for DOD to perform a gap analysis to support development of a transition plan. 

• The information assurance (security) representation remains spotty and difficult 

to find even at the enterprise level, and it has some unnecessary deviations from 

the department’s accepted practices. 

 

27The focus of this review was limited to the “As Is” and “To Be” architecture products, because the 

transition plan has not been updated. 
Page 14 GAO-04-731R DOD Business Systems Modernization 

In addition, the verification and validation contractor stated that the reference 

business process models included in version 2.0, which DOD cited as the major 

difference from version 1.0, lacked the underlying data and linkage to make it useful 

in reengineering existing processes. The contractor also stated that these models 

would likely need to be reworked based on the results of efforts that the domains 

currently have under way. 

According to DOD and contractor officials responsible for updating the architecture 

products, the changes made to date have primarily affected architecture management 

processes and not the architecture’s content; and this is the result of the change in 

the program’s focus and priorities, as discussed above. However, these officials also 

stated that the Architecture Integration Teams (AIT), comprised of representatives 

from the domains, are currently focused on developing needed architectural 

content—primarily business processes, business rules, and regulations for increment 

one. 

Until the architecture is sufficiently complete and includes the missing scope and 

detail, the department remains at risk for not achieving its intended business 

transformation goals and of not having an architecture that can be used to guide and 

constrain ongoing and planned business systems investments to prevent duplicative 

and noninteroperable systems. 

DOD Has Yet To Explicitly Define Near-term and Long-term Plans for Guiding Its 

Transformation Activities

DOD has not yet developed either near-term or long-term plans for developing the 

architecture that explicitly identify and establish a baseline for the actions to be 

taken, milestones to be achieved, cost estimates to be met, and targeted outcomes to 

be achieved. As we previously stated, DOD has adopted an incremental approach to 

developing the architecture, including the transition plan, and plans to refine and 

extend the architecture in three increments. The increments, as defined by DOD, are: 

• Increment one. To enable asset accountability, total force visibility, and an 

unqualified audit opinion of DOD’s consolidated fiscal year 2007 financial 

statements. 

• Increment two. To focus on reducing acquisition cycle time and streamlining the 

Planning, Programming, Budgeting, and Execution System process between fiscal 

years 2004 and 2009. 

• Increment three. To focus on providing total asset visibility and total force 

management between fiscal years 2004 and 2010. 

However, it is unclear what the increments individually or collectively mean, and 

what they will provide or allow DOD to achieve in the near-term and long-term, 

because DOD does not have detailed plans that include performance measures for 
Page 15 GAO-04-731R DOD Business Systems Modernization 

the quality, content, and utility of the architecture. Although the three increments 

were identified in November 2003, program officials do not expect to have a plan for 

increment one until the next version of the transition plan is completed in August 

2004. According to program officials, the goals and scope for the second and third 

increments were only recently approved by the steering committee and, therefore, 

detailed plans of action and milestones for developing these plans do not yet exist. 

Currently, DOD has three initiatives under way to support increment one. First, the 

program office is developing a plan of action for increment one and intends to 

complete the plan by August 2004. Second, the accounting and finance domain is 

conducting workshops to develop needed business rules and requirements for 

extending and evolving version 2.0 of the architecture. This domain also has two 

ongoing pilot initiatives to acquire and implement production accounting systems by 

the end of 2005 at an estimated cost of $135 million, which are intended to provide 

JFMIP-compliant financial management systems to support the department’s general 

and working capital fund activities. Last, DOD components are developing individual 

plans detailing their respective efforts for supporting increment one. However, there 

is no evidence that the program office is coordinating with the components and that 

the components are coordinating amongst themselves. According to a Defense 

Logistics Agency (DLA) official, there is currently no direct link between DLA’s plan 

and modernization program activities. Because there are not yet detailed plans 

guiding the program’s activities, it is unclear whether and how these activities 

support each other and whether they support the department’s goal of achieving an 

unqualified audit opinion in 2007. 

DOD recognizes that it needs to develop detailed plans and establish performance 

metrics to measure and track program progress in order to determine (1) what it 

wants to accomplish by a certain point in time, (2) what it has actually accomplished 

by that point in time, and (3) how much it has spent. Changes in the direction of the 

program and a lack of sustained leadership have hindered DOD’s ability to do so. In 

its March 15, 2004 progress report, DOD reported that it plans to establish an initial 

approved program metrics baseline to evaluate the cost, schedule, and performance 

of the program and that, beginning with the fourth quarter of fiscal year 2004, it plans 

to begin formal tracking and reporting of specific program goals, objectives, and 

measures. 

The lack of explicitly defined program plans also has made it difficult to define 

measurable tasks that are or will be assigned to DOD employees and the 289 program 

contractor employees who are involved in architecture development, domain 

support, and program support functions. In reviewing the contractor’s work 

statements for architecture development, we found that many of the tasks lacked the 

specificity necessary to use them effectively to monitor the contractor’s progress. 

For example, tasks included such broad statements as “maintain, extend, and 

integrate” the architecture. Since DOD is acquiring services on the basis of direct 

labor hours at specified fixed hourly rates and cost of materials, it is essential that the 

department use efficient methods and effective cost controls to measure the work 
Page 16 GAO-04-731R DOD Business Systems Modernization 

being performed.28 It is also essential because the proposed work statement that 

DOD plans to approve, at an estimated cost of $43 million, explicitly states that work 

is considered complete when the hours allotted have been expended, rather than 

defining completion as the contractor’s delivery of products that meet predefined 

quality standards. According to DOD, to enable it to better monitor the contractor’s 

progress, it plans to reduce future tasks to 15 staff-day increments (from 6 week 

increments) and to require the contractor to provide more frequent, informal 

products to program officials so they can monitor and track progress more 

rigorously. 

Without an explicitly defined program baseline, detailed plans, and performance 

measures, it is difficult to validate or justify the $122 million that DOD has requested 

for fiscal year 2005 and the $494 million the department estimates it will need for 

fiscal years 2006 through 2009. In fact, DOD has been unable to show measurable 

progress and meaningful utility of the architecture products to DOD stakeholders for 

the $203.4 million that had been obligated for this program as of March 2004. 

DOD Has Taken Few Actions to Control Ongoing and Planned Investments in 

Business Systems 

DOD continues to lack effective investment management oversight and control over 

its numerous investments in business systems. While the domains have been 

designated to oversee business systems investments, the actual funding continues to 

be spread among DOD’s components, which continue to make their own parochial 

decisions regarding those investments, including obligations in excess of $1 million 

for system improvements, without having received the scrutiny of DOD’s Comptroller 

as required by the National Defense Authorization Act for Fiscal Year 2003.29 Because 

DOD lacks a departmentwide focus and effective management oversight and control 

of its business systems investments, it continues to invest billions of dollars in 

systems that potentially will fail to deliver the integrated business systems outcomes 

 

28We also found that in issuing task orders to International Business Machines (IBM) pursuant to the 

General Services Administration contract, DOD did not execute a Determination and Finding to 

support its use of Time-and-Materials task orders, as required by Federal Acquisition Regulation 

16.601, 48 C.F.R. § 16.601 (2003). This Determination and Finding requirement guides agencies in 

evaluating the cost and performance risks assumed by the government in awarding Time-and-Materials 

contracts compared to other types of contracts that may provide increased incentives for the 

contractor to control costs and efficiency. 

29 Subsection 1004(d) of the Bob Stump National Defense Authorization Act for Fiscal Year 2003, Pub. 

L. No. 107-314, 116 Stat. 2630, (Dec. 2, 2002), provides that any amount in excess of $1 million may be 

obligated for Defense financial system improvements before approval of its enterprise architecture 

and a supporting transition plan only if the DOD Comptroller makes a determination that the 

improvement is necessary for (1) critical national security capability or critical safety and security 

requirements or (2) prevention of significant adverse effect on a project that is needed to achieve an 

essential capability. The act further provides that after the architecture and transition plan are 

approved, the DOD Comptroller must determine, before making obligations that exceed $1 million for 

system improvements, that such improvements are consistent with the enterprise architecture and the 

transition plan. 
Page 17 GAO-04-731R DOD Business Systems Modernization 

that are needed to provide DOD management with timely and reliable financial 

information. 

We previously recommended30 that DOD establish investment review boards to better 

control its business systems investments (with each board comprised of 

representatives from across the department) and that the boards, consistent with 

recognized best practices, use a standard set of investment review and decisionmaking criteria to ensure compliance and consistency with the architecture. DOD 

agreed with our recommendations and, in response, it issued in March 2004 an IT 

portfolio management policy that assigns the domains responsibility for IT portfolio 

management. However, the procedures to be followed to implement the policy are 

still under development and no time frames for completion have been provided. 

According to the IT portfolio management policy, the department has 180 days (until 

mid-September 2004) to develop these procedures. In addition, the department has 

yet to formalize specific roles and responsibilities of the domains, develop standard 

criteria for performing the system reviews, and assign explicit authority for fulfilling 

roles and responsibilities. DOD recognizes the need to clarify the roles and 

responsibilities associated with managing the domains’ portfolios of business systems 

and ensure compliance with the architecture. However, it has yet to establish time 

frames for completing these activities. 

DOD has not yet implemented an effective investment management structure and 

processes for controlling ongoing and planned business systems investments, 

including one that meets the act’s requirements for ensuring that system 

improvements with obligations in excess of $1 million are consistent with the 

architecture. In an attempt to substantiate that the obligations for business systems 

modernization were in accordance with the National Defense Authorization Act for 

Fiscal Year 2003, we requested that DOD agencies provide us with a list of obligations 

greater than $1 million for fiscal year 200331 and fiscal year 2004, as of December 

2003. To ascertain whether DOD’s Comptroller had made the determination required 

by the act, we compared a list of systems approvals provided by the program office 

with the obligational data (by system) provided by the DOD activities. As we 

previously testified,32 we identified $479 million in obligations for business systems 

modernization reported by the DOD military services that were not submitted to 

DOD’s Comptroller for review. Subsequently, we requested information from the 

defense agencies and found $384 million in reported obligations for business systems 

modernization that had not been submitted to DOD’s Comptroller for review. 

Examples of DOD system improvements with obligations in excess of $1 million that 

were not submitted include the following: 

 

30GAO-01-525 and GAO-03-458. 

31We requested the obligational data for fiscal year 2003 for the period December 2, 2002, the date of 

enactment of the act, through September 2003. 

32GAO-04-626T. 
Page 18 GAO-04-731R DOD Business Systems Modernization 

• The Defense Finance and Accounting Service (DFAS) obligated about $19 million 

in fiscal year 2003 for the DFAS Corporate Database/DFAS Corporate Warehouse. 

We previously reported33 that DOD had yet to provide economic justification that 

its investment in this system would result in tangible improvements to DOD’s 

financial management operations. As of April 2004, an economic analysis has yet 

to be approved but, according to DOD officials, about $129 million had been spent 

on the program through January 2004. 

• The Defense Information Systems Agency obligated about $7 million in fiscal year 

2003 and about $2 million in fiscal year 2004 for the Wide Area Workflow.34

• DFAS obligated about $7 million in fiscal year 2003 for the Defense Standard 

Disbursing System before it was terminated in December 2003 after 

approximately 7 years of effort and a reported investment of about $53 million. 

We previously reported35 that continued investment in this system had not been 

justified, because an economic analysis had not been updated to reflect significant 

schedule delays. DFAS noted that this system was terminated because a valid 

business case for continuing the effort could not be made. 

• DLA obligated about $5 million in fiscal year 2003 and about $2 million in fiscal 

year 2004 for the Defense Medical Logistics Standard Support Program. 

These and other examples demonstrate that DOD does not have reasonable 

assurance that it is in compliance with the National Defense Authorization Act for 

Fiscal Year 2003, which provides that obligations in excess of $1 million for system 

improvements may not be made unless DOD Comptroller makes a determination that 

the improvement is in accordance with the criteria specified in the act. The act 

places limitations on the legal authority of individual program and government 

contracting officials to obligate funds in support of the systems for which they are 

responsible, but DOD has yet to proactively manage its investments to avoid 

violations of the limitations and to review and approve investments in any meaningful 

way in order to comply with these statutory limitations. 

DOD acknowledges that the department does not have a systematic means to identify 

and determine which system improvements should be submitted to DOD’s 

Comptroller for review and, in essence, is dependent upon system owners coming 

forward to the domains and requesting approval. Also, as we have testified,36 DOD 

components continue to receive direct funding for their business systems and 

continue to make their own parochial decisions regarding investments without the 

 

33U.S. General Accounting Office, DOD Business Systems Modernization: Continued Investment in 

Key Accounting Systems Needs to be Justified, GAO-03-465 (Washington, D.C.: Mar. 28, 2003). 

34Wide Area Workflow is a secure web-based system for electronic invoicing, receipt, and acceptance. 

35GAO-03-465. 

36GAO-04-626T. 
Page 19 GAO-04-731R DOD Business Systems Modernization 

scrutiny of DOD’s Comptroller that is required by the act. The current funding 

process has contributed to the proliferation of duplicative, nonintegrated, and 

stovepiped business systems that are highly prone to error and are unable to provide 

DOD management with timely, reliable financial information. In March 2004,37

 we 

offered a suggestion for legislative action to address this issue, consistent with our 

open recommendations to DOD that funds for its business systems be appropriated 

directly to the domains in order to provide for accountability, transparency, and the 

ability to prevent the continued parochial approach to systems investments that 

exists today. The legislation we envisioned—for which we will make a legislative 

proposal in a related report to be issued soon—would define the scope of the 

domains and establish functional responsibility for managing the portfolio of 

business systems to the domains. The domains would establish business systems 

investment review boards with DOD-wide representation, including the military 

services and defense agencies. 

Until DOD strengthens its process for selecting and controlling business systems 

investments and sufficiently develops a well-defined architecture that can be used to 

guide and constrain investment decisions, it will likely continue to spend billions of 

dollars on duplicative, nonintegrated, stovepiped systems that do not optimize 

mission performance and accountability and, therefore, do not support the 

department’s transformation goals. 

Conclusions 

Having and effectively using a well-defined architecture is essential for guiding and 

constraining DOD’s business transformation efforts and moving the department away 

from nonintegrated business systems development efforts. DOD’s efforts to date to 

address our prior recommendations aimed at accomplishing this have not been 

sufficient. Specifically, despite 3 years of effort and over $203 million in reported 

obligations, DOD’s architecture remains insufficiently defined, and the way in which 

the department makes business systems investments decisions remains largely 

unchanged. As a result, billions of dollars continue to be at risk of being spent on 

more systems that are duplicative, are not interoperable, cost more to maintain than 

necessary, and do not optimize mission performance and accountability. 

The future of DOD’s architecture development and implementation activities is at 

risk; this in turn places the department’s business transformation effort in jeopardy of 

failing as other efforts by the department have in the past. Therefore, it is imperative 

that DOD move swiftly to implement our 22 open recommendations, which are aimed 

at strengthening architecture management activities, adding missing content to 

architecture products, and implementing investment oversight and control measures. 

 

37U.S. General Accounting Office, Department of Defense: Further Actions Needed to Establish and 

Implement a Framework for Successful Financial and Business Management Transformation, 

GAO-04-551T (Washington, D.C.: Mar. 23, 2004) and GAO-04-626T. 
Page 20 GAO-04-731R DOD Business Systems Modernization 

Agency Comments and Our Evaluation 

In commenting on a draft of this report (reprinted in enc. IV), DOD agreed with our 

assessment that its long-standing business systems problems have resulted in a lack 

of adequate transparency and appropriate accountability across all major business 

areas. It confirmed that development and use of an architecture is necessary to 

transforming its business operations and supporting systems. However, in response 

to our characterization that progress has been limited, DOD stated that, over the past 

3 years, progress has been slower than either GAO or DOD would prefer but that it 

has been significant, despite appearances to the contrary. The willingness of DOD’s 

leadership to tackle the department’s decades-old problems with its business 

operations and supporting systems represents a major step forward. However, we 

continue to believe that our characterization of DOD’s progress in developing a welldefined architecture and implementing effective management oversight and control 

over its business systems as limited is fair. Therefore, we are not making any 

changes to our report. 

DOD stated that we did not adequately consider or incorporate in our report 

important completed and ongoing activities, plans, and documentation, and provided 

an extensive package of information. We disagree that we did not adequately 

consider or incorporate in our report important completed and ongoing activities, 

plans, and documentation. While our assessment focused primarily on the 

department’s completed, ongoing, and planned activities that it reported to Congress 

on March 15, 2004, we also considered and incorporated various activities, plans, and 

documentation through April 27, 2004, which included the vast majority of the 

information in the package. 

In addition, we acknowledged in this report most, if not all, of the actions DOD 

represents in their comments as having been completed such as issuing the IT 

portfolio management policy and establishing the DO/IT. We also recognized many of 

DOD’s ongoing activities, such as the workshops being held by the accounting and 

finance domain and the department’s establishment of the AIT, which are currently 

focused on developing needed architectural content for increment one. To gain an 

understanding of the specific AIT activities, which began in January 2004, we met 

with the domains during our review and discussed various collaborative efforts, such 

as their participation in validating business rules and requirements to support the 

development of end-to-end business processes. Regarding planned activities, we 

recognized DOD’s intent to revise the executive and steering committees’ charters to 

include responsibilities for directing, overseeing, and approving the architecture, and 

to develop the procedures for implementing the IT portfolio management policy. In 

its response, DOD stated that it plans to complete these actions in June and 

December 2004, respectively. 

Because we received information about certain activities after we completed our 

fieldwork—or not at all—these activities are not included in our evaluation. For 

example, DOD stated that the department plans to release a management initiative 

during May 2004; establish an architecture and program management maturity plan 
Page 21 GAO-04-731R DOD Business Systems Modernization 

and supporting metrics to address the quality, content, and utility of the architecture; 

and establish a balanced scorecard and supporting metrics focused on the 

organization’s internal management processes. While we inquired about the 

management initiative during our review, program officials stated that they were 

unable to provide us a copy because DOD does not allow the release of such draft 

documents outside the department. In addition, program officials did not provide a 

characterization of the focus or scope of the management initiative; therefore we 

were unable to include it in our report. We made inquiries about other initiatives 

during the course of our review, but were not advised of the maturity plan and 

balanced scorecard. However, it is important to note that carrying out activities does 

not necessarily guarantee results, and thus progress, unless these activities are based 

on an approved program plan that can be used to measure progress. 

In addition, we disagree with DOD’s other comments. Specifically, DOD stated that 

the Comptroller is accountable for approval of updates to the architecture as called 

for by best practices. As we previously reported38 and reiterated in this report, best 

practices recommend that the accountability and responsibility for directing, 

overseeing, and approving the architecture be assigned to a committee or group 

comprised of representatives responsible for the core business areas across the 

department—not a single individual. The purpose of assigning the accountability and 

responsibility to such a committee is to obtain and ensure continued enterprisewide 

support of the architecture effort, thereby, increasing the department’s chances for 

success. 

In addition, DOD stated that its verification and validation function is independent 

because the contractor responsible for these activities currently reports to the 

Deputy Director, Program Support, who is not directly involved with developing the 

architecture. DOD also stated that to ensure this independence, reports prepared by 

this contractor are provided directly to GAO and the steering committee. We 

disagree that this function is sufficiently independent. According to best practices, 

the contractor performing this role should report the results of its work directly to 

the steering committee, as well as the program office. Since the Deputy Director, 

Program Support reports directly to the program management office and not the 

steering committee, the function is not independent. In addition, the verification and 

validation contractor agreed with us that its reports are not provided directly to GAO 

or the steering committee. The contractor also concurred with our statement that, in 

the one instance in which it briefed the steering committee, the program office 

modified the content of the presentation. 

DOD disagreed with our prior position that funds for DOD business systems be 

appropriated directly to the domains. We are reaffirming that position as stated by 

the Comptroller General in his March 2004 testimony39 before the Subcommittee on 

Readiness and Management Support, Senate Armed Services Committee. This matter 

 

38 GAO-03-458. 

39 GAO-04-551T. 
Page 22 GAO-04-731R DOD Business Systems Modernization 

for congressional consideration and related changes in responsibility will be 

discussed in additional detail in a report to be issued shortly.

- - - - - 

We are sending copies of this report to interested congressional committees; the 

Director, Office of Management and Budget; the Secretary of Defense; the Under 

Secretary of Defense (Comptroller); the Assistant Secretary of Defense (Networks 

and Information Integration)/DOD Chief Information Officer; the Under Secretary of 

Defense (Acquisition, Technology, and Logistics); the Under Secretary of Defense 

(Personnel and Readiness); and the Director, Defense Finance and Accounting 

Service. This report will also be available at no charge on our Web site at 

http://www.gao.gov. 

If you have any questions concerning this information, please contact Gregory Kutz at 

(202) 512-9095 or kutzg@gao.gov or Randolph Hite at (202) 512-3439 or 

hiter@gao.gov. GAO contacts and key contributors to this report are listed in 

enclosure V. 

Gregory D. Kutz 

Director, Financial Management and Assurance 

Randolph C. Hite 

Director, Information Technology Architecture 

 and Systems Issues 

Enclosures 
Page 23 GAO-04-731R DOD Business Systems Modernization 

List of Committees 

The Honorable John W. Warner 

Chairman 

The Honorable Carl Levin 

Ranking Minority Member 

Committee on Armed Services 

United States Senate 

The Honorable Ted Stevens 

Chairman 

The Honorable Daniel K. Inouye 

Ranking Minority Member 

Subcommittee on Defense 

Committee on Appropriations 

United States Senate 

The Honorable Duncan Hunter 

Chairman 

The Honorable Ike Skelton 

Ranking Minority Member 

Committee on Armed Services 

House of Representatives 

The Honorable Jerry Lewis 

Chairman 

The Honorable John P. Murtha 

Ranking Minority Member 

Subcommittee on Defense 

Committee on Appropriations 

House of Representatives 
Page 24 GAO-04-731R DOD Business Systems Modernization 

Enclosure I 

SEC. 1004. [of Public Law 107-314] DEVELOPMENT AND 

IMPLEMENTATION OF FINANCIAL MANAGEMENT ENTERPRISE 

ARCHITECTURE 

(a) REQUIREMENT FOR ENTERPRISE ARCHITECTURE AND FOR TRANSITION 

PLAN— 

Not later than May 1, 2003, the Secretary of Defense shall develop— 

(1) a financial management enterprise architecture for all budgetary, accounting, 

finance, enterprise resource planning, and mixed information systems of the 

Department of Defense; and 

(2) a transition plan for implementing that financial management enterprise 

architecture. 

(b) COMPOSITION OF ENTERPRISE ARCHITECTURE— 

(1) The financial management enterprise architecture developed under 

subsection (a)(1) shall describe an information infrastructure that, at a minimum, 

would enable the Department of Defense to— 

(A) comply with all Federal accounting, financial management, and reporting 

requirements; 

(B) routinely produce timely, accurate, and reliable financial information for 

management purposes; 

(C) integrate budget, accounting, and program information and systems; and 

(D) provide for the systematic measurement of performance, including the ability 

to produce timely, relevant, and reliable cost information. 

(2) That enterprise architecture shall also include policies, procedures, data 

standards, and system interface requirements that are to apply uniformly throughout 

the Department of Defense. 

(c) COMPOSITION OF TRANSITION PLAN—The transition plan developed under 

subsection (a)(2) shall include the following: 

(1) The acquisition strategy for the enterprise architecture, including specific timephased milestones, performance metrics, and financial and nonfinancial resource 

needs. 

(2) A listing of the mission critical or mission essential operational and 

developmental financial and nonfinancial management systems of the Department of 

Defense, as defined by the Under Secretary of Defense (Comptroller), consistent with 

budget justification documentation, together with— 

(A) the costs to operate and maintain each of those systems during fiscal year 

2002; and 

(B) the estimated cost to operate and maintain each of those systems during 

fiscal year 2003. 

(3) A listing of the operational and developmental financial management systems of 

the Department of Defense as of the date of the enactment of this Act (known as 

‘legacy systems’) that will not be part of the objective financial and nonfinancial 

management system, together with the schedule for terminating those legacy systems 

that provides for reducing the use of those legacy systems in phases. 
Page 25 GAO-04-731R DOD Business Systems Modernization 

(d) CONDITIONS FOR OBLIGATION OF SIGNIFICANT AMOUNTS FOR FINANCIAL 

SYSTEM IMPROVEMENTS—An amount in excess of $1,000,000 may be obligated for 

a defense financial system improvement only if the Under Secretary of Defense 

(Comptroller) makes a determination regarding that improvement as follows: 

(1) Before the date of an approval specified in paragraph (2), a determination that 

the defense financial system improvement is necessary for either of the following 

reasons: 

(A) To achieve a critical national security capability or address a critical 

requirement in an area such as safety or security. 

(B) To prevent a significant adverse effect (in terms of a technical matter, cost, or 

schedule) on a project that is needed to achieve an essential capability, taking into 

consideration in the determination the alternative solutions for preventing the 

adverse effect. 

(2) On and after the date of any approval by the Secretary of Defense of a financial 

management enterprise architecture and a transition plan that satisfy the 

requirements of this section, a determination that the defense financial system 

improvement is consistent with both the enterprise architecture and the transition 

plan. 

(e) CONGRESSIONAL REPORTS—Not later than March 15 of each year from 2004 

through 2007, the Secretary of Defense shall submit to the congressional defense 

committees a report on the progress of the Department of Defense in implementing 

the enterprise architecture and transition plan required by this section. Each report 

shall include, at a minimum— 

(1) a description of the actions taken during the preceding fiscal year to implement 

the enterprise architecture and transition plan (together with the estimated costs of 

such actions); 

(2) an explanation of any action planned in the enterprise architecture and transition 

plan to be taken during the preceding fiscal year that was not taken during that fiscal 

year; 

(3) a description of the actions taken and planned to be taken during the current 

fiscal year to implement the enterprise architecture and transition plan (together with 

the estimated costs of such actions); and 

(4) a description of the actions taken and planned to be taken during the next fiscal 

year to implement the enterprise architecture and transition plan (together with the 

estimated costs of such actions). 

(f) COMPTROLLER GENERAL REVIEW—Not later than 60 days after the approval of 

an enterprise architecture and transition plan in accordance with the requirements of 

subsection (a), and not later than 60 days after the submission of an annual report 

required by subsection (e), the Comptroller General shall submit to the congressional 

defense committees an assessment of the extent to which the actions taken by the 

Department comply with the requirements of this section. 

(g) DEFINITIONS—In this section: 

(1) The term ‘defense financial system improvement’ means the acquisition of a new 

budgetary, accounting, finance, enterprise resource planning, or mixed information 

system for the Department of Defense or a modification of an existing budgetary, 

accounting, finance, enterprise resource planning, or mixed information system of 
Page 26 GAO-04-731R DOD Business Systems Modernization 

the Department of Defense. Such term does not include routine maintenance and 

operation of any such system. 

(2) The term ‘mixed information system’ means an information system that supports 

financial and non-financial functions of the Federal Government as defined in Office 

of Management and Budget Circular A-127 (Financial Management Systems). 

(h) REPEAL—(1) Section 2222 of title 10, United States Code, is repealed. The table 

of sections at the beginning of chapter 131 of such title is amended by striking the 

item relating to such section. 

(2) Section 185(d) of such title is amended by striking ‘has the meaning given that 

term in section 2222(c)(2) of this title’ and inserting ‘means an automated or manual 

system from which information is derived for a financial management system or an 

accounting system’. 
Page 27 GAO-04-731R DOD Business Systems Modernization 

Enclosure II 

Scope and Methodology 

Consistent with the act and as agreed with congressional defense committees’ staffs, 

our review focused on (1) the actions the Department of Defense (DOD) has taken to 

address our previous recommendations regarding the development and 

implementation of the architecture and (2) the actions DOD is taking to ensure its 

ongoing and planned investments will be consistent with its evolving architecture. 

To determine what actions DOD has taken to address our previous recommendations 

that relate to the development and implementation of the architecture, we met with 

DOD and contractor officials to obtain an update on the status of our prior 

recommendations. We used our Enterprise Architecture Management Maturity 

Framework,40 which describes the stages of management maturity, to update the 

status of key elements of architecture management best practices that DOD had not 

adopted. To make this determination, we reviewed program documentation, such as 

program policies and procedures, communications plan, and charters for the 

governance bodies; and we compared them to the elements in the framework. We 

reviewed program documentation, such as requests documenting proposed and 

actual changes to the architecture and external41 requirements extracted from the 

updated architecture. We also reviewed contractor task orders to determine the 

work performed and planned by the prime contractor associated with extending and 

evolving the architecture. 

To determine what actions DOD is taking to ensure its ongoing and planned business 

systems investments are consistent with its evolving architecture, we met with DOD 

officials to obtain an update on the status of our prior recommendations. We met 

with appropriate officials from the offices of the Under Secretary of Defense 

(Comptroller) and the Assistant Secretary of Defense (Networks and Information 

Integration)/DOD Chief Information Officer, and with representatives from the 

domains to discuss the status of various draft policies and guidance that are aimed at 

improving the department’s control of and accountability for business systems 

investments. We also reviewed and analyzed DOD’s budget request for fiscal year 

2004 to identify the business systems investments that could be subject to the 

requirements of the National Defense Authorization Act for Fiscal Year 2003, which 

requires that all financial system improvements with obligations in excess of $1 

million be reviewed by DOD’s Comptroller, who must make a determination on 

whether the system improvements are in accordance with criteria specified in the act. 

To assess DOD’s compliance with the act, we also obtained and reviewed 

departmental guidance, memorandums, DOD Comptroller review decisions, and 

 

40U.S. General Accounting Office, Information Technology: A Framework for Assessing and 

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

April 2003). 

41External requirements are those that are obtained from authoritative sources, such as the Joint 

Financial Management Improvement Program, and constrain various aspects of the architecture. 
Page 28 GAO-04-731R DOD Business Systems Modernization 

other documentation provided by the program office. Additionally, we requested that 

DOD provide us with data on obligations in excess of $1 million for business systems 

modernization for fiscal years 2003 and 2004, as of December 2003. We also received 

obligational data from some of the defense agencies. We then compared the 

obligational data with the information we had received from the program office to 

ascertain if the systems modernization had been reviewed. 

To augment our document reviews and analyses, we interviewed officials from 

various DOD organizations and contractors, including the Office of the Under 

Secretary of Defense (Comptroller); Office of the Under Secretary of Defense 

(Acquisition, Technology, and Logistics); Office of the Under Secretary of Defense 

(Personnel and Readiness); International Business Machines; and MITRE 

Corporation. 

We did not validate the accuracy and reliability of the funding information contained 

in DOD’s March 15, 2004, report. Also, the unliquidated and unobligated calculations 

that we made were based on DOD reported data. Further, we did not validate the 

accuracy and reliability of the obligational data provided by the military services and 

the defense agencies for systems modernization. 

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

designee. We received written comments from the Acting Under Secretary of 

Defense (Comptroller), which we printed in enclosure IV. We considered, but did not 

reprint the voluminous attachments that DOD provided with its written comments. 

We conducted our work primarily at DOD headquarters offices in Washington, D.C., 

and Arlington, Virginia, from December 2003 through April 2004, in accordance with 

U.S. generally accepted government auditing standards. 
Page 29 GAO-04-731R DOD Business Systems Modernization 

Enclosure III 

Status of Prior Recommendations on DOD’s Business Enterprise 

Architecture (BEA) 

 

Status of recommendation 

Recommendation 

Implemented Partially 

implemented

Not 

implemented

DOD’s comments and our 

assessment 

GAO-01-525: Information Technology: Architecture Needed to Guide Modernization of DOD’s Financial 

Operations. May 17, 2001. 

(1) The Secretary of 

Defense immediately 

designate DOD financial 

management 

modernization a 

departmental priority 

and accordingly direct 

the Deputy Secretary of 

Defense to lead an 

integrated program 

across the department 

for modernizing and 

optimizing financial 

management operations 

and systems. 

X 

(2) The Secretary 

immediately issue a 

DOD policy that directs 

the development, 

implementation, and 

maintenance of a 

financial management 

enterprise architecture. 

 X DOD recently issued its 

Information Technology (IT) 

Portfolio Management policy. 

This policy, in conjunction 

with the overarching Global 

Information Grida

 policy, 

assigns responsibilities for the 

development, implementation, 

and maintenance of the BEA.b

However, it does not provide 

for having accountability for 

and approval of updates to the 

BEA, processes for BEA 

oversight and control, and 

review and validation of the 

BEA. 

(3) The Secretary 

immediately modify the 

Senior Financial 

Management Oversight 

Council’s charter to 

• designate the 

Deputy Secretary of 

Defense as the 

Council Chair and 

the Under Secretary 

of Defense 

(Comptroller) as 

 X The department had previously 

established the executive and 

steering committees, which we 

reported were advisory in 

nature. The department 

recently established the 

Domain Owners Integration 

Teamc

 and stated that these 

three bodies are responsible 

for governing the program. 

However, these three groups 

have not been assigned the 
Page 30 GAO-04-731R DOD Business Systems Modernization 

Status of recommendation 

Recommendation 

Implemented Partially 

implemented

Not 

implemented

DOD’s comments and our 

assessment 

the Council viceChair; 

• empower the 

Council to serve as 

DOD’s financial 

management 

enterprise 

architecture 

steering committee, 

giving it the 

responsibility and 

authority to ensure 

that a DOD 

financial 

management 

enterprise 

architecture is 

developed and 

maintained in 

accordance with the 

DOD C4ISR 

Architecture 

Framework; 

• empower the 

Council to serve as 

DOD’s financial 

management 

investment review 

board, giving it the 

responsibility and 

authority to (1) 

select and control 

all DOD financial 

management 

investments and (2) 

ensure that its 

investment 

decisions treat 

compliance with the 

financial 

management 

enterprise 

architecture as an 

explicit condition 

for investment 

approval that can 

be waived only if 

justified by a 

compelling written 

analysis; and 

• expand the role of 

the Council’s 

System Compliance 

accountability and 

responsibility for directing, 

overseeing, and approving the 

BEA. According to DOD, it 

expects to revise and finalize 

the executive and steering 

committees’ charters to 

include these responsibilities 

in June 2004. 

DOD issued an IT portfolio 

management policy (March 

2004) that assigns the domainsd

responsibility for IT portfolio 

management. However, the 

procedures to be followed to 

implement the policy are still 

under development and no 

time frames for completion 

have been provided. According 

to the IT portfolio management 

policy, the department has 180 

days (until mid-September 

2004) to develop these 

procedures. In addition, the 

department has yet to 

formalize specific roles and 

responsibilities of the domains, 

develop standard criteria for 

performing the system reviews, 

and assign explicit authority 

for fulfilling roles and 

responsibilities. DOD has yet 

to establish time frames for 

completing these activities. 
Page 31 GAO-04-731R DOD Business Systems Modernization 

Status of recommendation 

Recommendation 

Implemented Partially 

implemented

Not 

implemented

DOD’s comments and our 

assessment 

Working Group to 

include supporting 

the Council in 

determining the 

compliance of each 

system investment 

with the enterprise 

architecture at key 

decision points in 

the system’s 

development or 

acquisition life 

cycle.

(4) The Secretary 

immediately make the 

Assistant Secretary of 

Defense (Command, 

Control, 

Communications & 

Intelligence), in 

collaboration with the 

Under Secretary of 

Defense (Comptroller), 

accountable to the 

Senior Financial 

Management Oversight 

Council for developing 

and maintaining a DOD 

financial management 

enterprise architecture. 

In fulfilling this 

responsibility, the 

Assistant Secretary 

appoint a Chief 

Architect for DOD 

financial management 

modernization and 

establish and 

adequately staff and 

fund an enterprise 

architecture program 

office that is 

responsible for 

developing and 

maintaining a DODwide financial 

management enterprise 

architecture in a 

manner that is 

consistent with the 

framework defined in 

the CIO Council’s 

 X The Assistant Secretary of 

Defense (Networks and 

Information Integration)/DOD 

Chief Information Officer is a 

member of the executive and 

steering committees; however, 

as discussed previously, 

members’ roles and 

responsibilities are advisory in 

nature. 

DOD established a Financial 

Management Modernization 

Program Office in July 2001. 

DOD has also appointed a chief 

architect and, according to the 

department, it has adequate 

program funding and staff for 

developing and maintaining its 

BEA. However, DOD has not 

yet defined the roles and 

responsibilities for the Chief 

Architect. 
Page 32 GAO-04-731R DOD Business Systems Modernization 

Status of recommendation 

Recommendation 

Implemented Partially 

implemented

Not 

implemented

DOD’s comments and our 

assessment 

published guide for 

managing enterprise 

architectures. In 

particular, the Assistant 

Secretary should take 

appropriate steps to 

ensure that the Chief 

Architect 

• obtains executive 

buy-in and support; 

• establishes 

architecture 

management 

structure and 

controls; 

• defines the 

architecture 

process and 

approach; 

• develops the 

baseline 

architecture, the 

target architecture, 

and the sequencing 

plan; 

• facilitates the use of 

the architecture to 

guide financial 

management 

modernization 

projects and 

investments; and 

• maintains the 

architecture. 

(5) The Assistant 

Secretary of Defense 

(Command, Control, 

Communications & 

Intelligence) reports at 

least quarterly to the 

Senior Financial 

Management Oversight 

Council on the Chief 

Architect’s progress in 

developing a financial 

management enterprise 

architecture, including 

the Chief Architect’s 

adherence to enterprise 

architecture policy and 

guidance from OMB, the 

CIO Council, and DOD. 

 X The Assistant Secretary of 

Defense (Networks and 

Information Integration)/DOD 

Chief Information Officer is a 

member of the steering 

committee, which is briefed 

monthly by the program office 

on various program activities; 

but not necessarily on the 

development and maintenance 

of the BEA’s content. The 

Chief Architect is a member of 

the program office. 

(6) The Senior Financial X The Deputy Chief Financial 
Page 33 GAO-04-731R DOD Business Systems Modernization 

Status of recommendation 

Recommendation 

Implemented Partially 

implemented

Not 

implemented

DOD’s comments and our 

assessment 

Management Oversight 

Council report to the 

Secretary of Defense 

every 6 months on 

progress in developing 

and implementing a 

financial management 

enterprise architecture. 

Officer briefed the Secretary of 

Defense in November 2003 on 

behalf of DOD’s Comptroller, 

who chairs the executive 

committee. 

(7) The Secretary 

reports every 6 months 

to the congressional 

defense authorizing and 

appropriating 

committees on progress 

in developing and 

implementing a 

financial management 

enterprise architecture. 

 X Senate Report 107-213 directs 

that the department report 

every 6 months on the status of 

the BEA effort. DOD submitted 

status reports on January 31 

and July 31, 2003 and on 

January 31, 2004. However, 

these reports were submitted 

by DOD’s Comptroller and 

were not signed by the 

members of the executive or 

steering committees. 

(8) Until a financial 

management enterprise 

architecture is 

developed and the 

Council is positioned to 

serve as DOD’s financial 

management investment 

review board as 

recommended above, 

the Secretary of 

Defense limit DOD 

components’ financial 

management 

investments to 

• deployment of 

systems that have 

already been fully 

tested and involve 

no additional 

development or 

acquisition cost; 

• stay-in-business 

maintenance 

needed to keep 

existing systems 

operational; 

• management 

controls needed to 

effectively invest in 

modernized 

systems; and 

• new systems or 

existing system 

 X DOD has not yet defined and 

implemented an approach for 

selecting and controlling 

business systems investments. 

In March 2004, the Deputy 

Secretary of Defense signed 

the IT portfolio management 

policy and assigned 

responsibility to the domains 

for IT portfolio management. 

However, the procedures to be 

followed to implement the 

policy are still under 

development and no time 

frames for completion have 

been provided. According to 

the IT portfolio management 

policy, the department has 180 

days (until mid-September 

2004) to develop these 

procedures. In addition, the 

department has yet to 

formalize specific roles and 

responsibilities of the domains, 

develop standard criteria for 

performing the system reviews, 

and assign explicit authority 

for fulfilling roles and 

responsibilities. DOD has yet 

to establish time frames for 

completing these activities. 
Page 34 GAO-04-731R DOD Business Systems Modernization 

Status of recommendation 

Recommendation 

Implemented Partially 

implemented

Not 

implemented

DOD’s comments and our 

assessment 

changes that are 

congressionally 

directed or are 

relatively small, 

cost effective, and 

low risk and can be 

delivered in a 

relatively short time 

frame. 

GAO-03-458: DOD Business Systems Modernization: Improvements to Enterprise Architecture Development 

and Implementation Efforts Needed. February 28, 2003. 

(1) The Secretary of 

Defense ensure that the 

enterprise architecture 

executive committee 

members are singularly 

and collectively made 

explicitly accountable 

to the Secretary for the 

delivery of the 

enterprise architecture, 

including approval of 

each version of the 

architecture. 

 X The department had previously 

established the executive and 

steering committees, which we 

reported were advisory in 

nature. The department 

recently established the 

Domain Owners Integration 

Team and stated that these 

three bodies are responsible 

for governing the program. 

However, these groups have 

not been assigned the 

accountability and 

responsibility for directing, 

overseeing, and approving the 

BEA. According to DOD, it 

expects to revise and finalize 

the executive and steering 

committees’ charters to 

include these responsibilities 

in June 2004. 

(2) The Secretary of 

Defense ensure that the 

enterprise architecture 

program is supported by 

a proactive marketing 

and communication 

program. 

 X DOD has a strategic 

communications plan; 

however, the plan has not yet 

been executed. According to 

DOD, the plan is scheduled to 

be executed between June and 

December 2004. 

(3) The Secretary of 

Defense ensure that the 

quality assurance 

function 

• includes the review 

of adherence to 

process standards 

and reliability of 

reported program 

performance, 

• is made 

independent of the 

program 

management 

 X According to DOD, the quality 

assurance function does not 

yet address process standards 

and program performance, nor 

is it yet an independent 

function. Further, DOD subject 

matter experts continue to be 

involved in the quality 

assurance function. 
Page 35 GAO-04-731R DOD Business Systems Modernization 

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Implemented Partially 

implemented

Not 

implemented

DOD’s comments and our 

assessment 

function, and 

• is not performed by 

subject matter 

experts involved in 

the development of 

key architecture 

products. 

(4) The Secretary gain 

control over ongoing IT 

investments by 

establishing a hierarchy 

of investment review 

boards, each 

responsible and 

accountable for 

selecting and 

controlling investments 

that meet defined 

threshold criteria, and 

each composed of the 

appropriate level of 

executive 

representatives, 

depending on the 

threshold criteria, from 

across the department. 

 X DOD has not yet defined and 

implemented an approach for 

selecting and controlling 

business systems investments. 

In March 2004, the Deputy 

Secretary of Defense signed 

the IT portfolio management 

policy and assigned 

responsibility to the domains 

for IT portfolio management. 

However, the procedures to be 

followed to implement the 

policy are still under 

development and no time 

frames for completion have 

been provided. According to 

the IT portfolio management 

policy, the department has 180 

days (until mid-September 

2004) to develop these 

procedures. In addition, the 

department has yet to 

formalize specific roles and 

responsibilities of the domains, 

develop standard criteria for 

performing the system reviews, 

and assign explicit authority 

for fulfilling roles and 

responsibilities. DOD has yet 

to establish time frames for 

completing these activities. 

(5) The Secretary gain 

control over ongoing IT 

investments by 

establishing a standard 

set of criteria to include 

(a) alignment and 

consistency with the 

DOD enterprise 

architecture and 

(b) our open 

recommendations 

governing limitations in 

business systems 

investments pending 

development of the 

 X DOD has not developed 

standard criteria for evaluating 

business systems investments 

and has not established time 

frames for completing this 

activity. 
Page 36 GAO-04-731R DOD Business Systems Modernization 

Status of recommendation 

Recommendation 

Implemented Partially 

implemented

Not 

implemented

DOD’s comments and our 

assessment 

architecture. 

(6) The Secretary gain 

control over ongoing IT 

investments by 

directing these boards 

to immediately apply 

these criteria in 

completing reviews of 

all ongoing IT 

investments, and to not 

fund investments that 

do not meet these 

criteria unless they are 

otherwise justified by 

explicit criteria waivers. 

 X In March 2004, the Deputy 

Secretary of Defense signed 

the IT portfolio management 

policy and assigned 

responsibility to the domains 

for IT portfolio management. 

However, the procedures to be 

followed to implement the 

policy are still under 

development and no time 

frames for completion have 

been provided. According to 

the IT portfolio management 

policy, the department has 180 

days (until mid-September 

2004) to develop these 

procedures. In addition, the 

department has yet to 

formalize specific roles and 

responsibilities of the domains, 

develop standard criteria for 

performing the system reviews, 

and assign explicit authority 

for fulfilling roles and 

responsibilities. DOD has yet 

to establish time frames for 

completing these activities. 

Further, the policy also does 

not address the issuance of 

waivers in those instances 

when exceptions to the BEA 

are justified on the basis of 

documented analysis. 

GAO-03-1018: DOD Business Systems Modernization: Important Progress Made to Develop Business 

Enterprise Architecture, but Much Work Remains. September 19, 2003. 

(1) The Secretary of 

Defense or his 

appropriate designee 

define and implement 

an effective investment 

management process to 

proactively identify, 

control, and obtain 

DOD Comptroller 

review and approval of 

expenditures for new 

and ongoing business 

systems investments 

exceeding 

$1 million while the 

architecture is being 

developed and after it is 

 X As discussed in this report, 

DOD has not yet defined and 

implemented an effective 

investment management 

process to proactively identify 

and control system 

improvements exceeding $1 

million in obligations. DOD 

officials have acknowledged 

that the department does not 

have a systematic means to 

identify and determine which 

system improvements should 

be submitted to the 

Comptroller for review and, 

are dependent upon system 

owners coming forward to the 
Page 37 GAO-04-731R DOD Business Systems Modernization 

Status of recommendation 

Recommendation 

Implemented Partially 

implemented

Not 

implemented

DOD’s comments and our 

assessment 

completed, and which 

includes clearly defined 

domain owners’ roles 

and responsibilities for 

selecting and 

controlling ongoing and 

planned system 

investments. 

domains and requesting 

approval. 

(2) The Secretary of 

Defense or his 

appropriate designee 

implement the core 

elements in our 

Enterprise Architecture 

Framework for 

Assessing and 

Improving Enterprise 

Architecture 

Management that we 

identify in this report as 

not satisfied, including 

ensuring that minutes of 

the meetings of the 

executive body charged 

with directing, 

overseeing, and 

approving the 

architecture are 

prepared and 

maintained. 

 X DOD has taken some actions, 

but these actions are not 

sufficient to fully address our 

previous concerns. For 

example, DOD has 

• established the Domain 

Owners Integration Team; 

• begun to establish a 

configuration management 

process; 

• recently issued an IT 

portfolio management 

policy governing the 

development, maintenance, 

and implementation of the 

BEA; and 

• developed high-level 

performance measures that 

are to be used to develop 

the more specific resultsoriented performance 

metrics that are needed to 

enable it to evaluate 

program progress and 

benefits. 

However, as discussed 

previously, accountability and 

responsibility have not been 

assigned to a committee or 

group comprised of 

representatives from across 

the DOD component 

organizations—which would 

be responsible for directing, 

overseeing, and approving the 

BEA. DOD plans to update the 

executive and steering 

committees’ charters to 

include these responsibilities 

in June 2004. Also, the 

configuration control board 

has been tasked with reviewing 

changes to only some, not all 

BEA products (e.g., the board 

is not responsible for tracking 
Page 38 GAO-04-731R DOD Business Systems Modernization 

Status of recommendation 

Recommendation 

Implemented Partially 

implemented

Not 

implemented

DOD’s comments and our 

assessment 

changes that are being made to 

the transition plan as part of 

the BEA effort). In addition, 

both the charter and the 

procedures governing the 

configuration management 

process are still in draft. 

According to DOD, the charter 

is to be approved in June 2004, 

but no time frame has been 

provided for final approval of 

the procedures. The portfolio 

management policy does not 

address accountability for and 

approval of updates to the 

BEA—as called for by best 

practices. In addition, the 

policy does not address the 

issuance of waivers in those 

instances when exceptions to 

the BEA are justified on the 

basis of documented analysis. 

The department’s current 

verification and validation 

contractor is not independent 

and is responsible for 

reviewing the BEA products 

and only selected program 

deliverables. 

(3) The Secretary of 

Defense or his 

appropriate designee 

update version 1.0 of 

the architecture to 

include the 340 Joint 

Financial Management 

Improvement Program 

requirements that our 

report identified as 

omitted or not fully 

addressed. 

X 

(4) The Secretary of 

Defense or his 

appropriate designee 

update version 1.0 of 

the architecture to 

include the 29 key 

elements governing the 

“As Is” architectural 

content that our report 

identified as not being 

fully satisfied. 

 X Of the 29 elements, DOD stated 

that it plans to address 26, but 

it did not have detailed plans 

on how and when they would 

be fully addressed. According 

to DOD, it is currently 

addressing 2 of the 26—system 

and process inventories—

which will be part of the 

transition plan. With respect to 

the system inventory, DOD’s 

Comptroller recently testified 
Page 39 GAO-04-731R DOD Business Systems Modernization 

Status of recommendation 

Recommendation 

Implemented Partially 

implemented

Not 

implemented

DOD’s comments and our 

assessment 

that the actual number of DOD 

systems could be twice as 

many as is currently reported; 

2,274. For the 3 elements that 

DOD did not consider to be 

relevant to the program, it did 

not provide any explicit 

analysis as to why the 3 would 

be irrelevant. Until DOD 

provides such an analysis, we 

consider all 29 elements to be 

critical for the “As Is” 

architectural content. 

(5) The Secretary of 

Defense or his 

appropriate designee 

update version 1.0 of 

the business enterprise 

architecture to include 

the 30 key elements 

governing the “To Be” 

architectural content 

that our report 

identified as not being 

fully satisfied. 

 X According to DOD, it has 

partially addressed 21 

elements, but it plans to 

address all 30. However, DOD 

did not provide any detailed 

plans showing how and when it 

would fully address these 

elements. In addition, the 

information provided for the 21 

elements shows that it had not 

addressed them but was 

planning to address them or 

had just begun to take needed 

actions. 

(6) The Secretary of 

Defense or his 

appropriate designee 

update version 1.0 to 

ensure that “To Be” 

architecture artifacts 

are internally 

consistent, to include 

addressing the 

inconsistencies 

described in this report, 

as well as including user 

instructions or guidance 

for easier architecture 

navigation and use. 

 X DOD did not have information 

readily available to show that it 

had addressed inconsistencies 

identified in our report. 

(7) The Secretary of 

Defense or his 

appropriate designee 

update version 1.0 of 

the architecture to 

include (a) the 3 key 

elements governing the 

transition plan content 

that our report 

identified as not being 

fully satisfied and (b) 

 X According to DOD, the next 

transition plan will be available 

in August 2004. However, DOD 

did not have information 

readily available to show how 

or when it would fully address 

our recommendations. 
Page 40 GAO-04-731R DOD Business Systems Modernization 

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implemented

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implemented

DOD’s comments and our 

assessment 

those system 

investments that will 

not become part of the 

“To Be” architecture, 

including time frames 

for phasing out those 

systems. 

(8) The Secretary of 

Defense or his 

appropriate designee 

update version 1.0 of 

the architecture to 

address comments 

made by the verification 

and validation 

contractor. 

 X According to DOD, it has 

addressed some of its 

verification and validation 

contractor’s comments and 

plans to address the majority 

of the others. However, DOD 

did not have documentation 

readily available to show that it 

had addressed some of the 

contractor’s comments, and 

was unable to provide plans 

detailing how and when it 

would fully address the 

remaining comments. 

According to DOD, the 

verification and validation 

contractor’s comments would 

be addressed in BEA updates 

after version 2.0. 

(9) The Secretary of 

Defense or his 

appropriate designee 

develop a well-defined 

near-term plan for 

extending and evolving 

the architecture and 

ensure that this plan 

includes addressing our 

recommendations, 

defining roles and 

responsibilities of all 

stakeholders involved in 

extending and evolving 

the architecture, 

explaining 

dependencies among 

planned activities, and 

defining measures of 

activity progress. 

 X As discussed in this report, 

DOD has not developed welldefined near-term or long-term 

plans to be used to guide dayto-day program activities to 

enable it to evaluate its 

progress. 

(10) The Secretary of 

Defense or his 

appropriate designee 

limit the pilot projects 

to small, low-cost, lowrisk prototype 

investments that are 

 X The accounting and finance 

domain has two ongoing pilot 

initiatives to acquire and 

implement production 

accounting systems by the end 

of 2005—at an estimated cost 

of $135 million. This domain is 
Page 41 GAO-04-731R DOD Business Systems Modernization 

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Implemented Partially 

implemented

Not 

implemented

DOD’s comments and our 

assessment 

intended to provide 

knowledge needed to 

extend and evolve the 

architecture, and are 

not to acquire and 

implement production 

version system 

solutions or to deploy 

an operational system 

capability. 

also currently conducting 

workshops to develop needed 

business rules and 

requirements for extending and 

evolving the BEA in support of 

DOD’s achieving objective of 

increment one, which includes 

achieving an unqualified audit 

opinion on DOD’s fiscal year 

2007 consolidated financial 

statements. However, the 

department did not provide 

detailed plans that showed 

how or if the workshop results 

would serve as the basis for 

acquiring these production 

systems. 

Source: GAO analysis of DOD data. 

a

DOD defines the Global Information Grid as the globally interconnected, end-to-end set of 

information, capabilities, associated processes, and personnel for collecting, processing, storing, 

disseminating, and managing information on demand to warfighters, policymakers, and support 

personnel. 

b

In May 2003, the DOD Comptroller changed the architecture name from the Financial Management 

Enterprise Architecture to the Business Enterprise Architecture to reflect the transformation of 

departmentwide business operations and supporting systems, including accounting and finance, 

budget formulation, acquisition, inventory management, logistics, personnel, and property 

management systems. 

c

In September 2003, DOD established the Domain Owners Integration Team, comprised of domain 

representatives, to facilitate communication and coordination across the domains. 

d

DOD has six departmental domains, which are (1) accounting and finance, (2) acquisition, (3) human 

resources management, (4) installations and environment, (5) logistics, and (6) strategic planning and 

budgeting. It also has one enterprise information environment mission area. The domains and the 

mission area, comprised of the Under Secretaries of Defense and the Assistant Secretary of Defense 

for Networks and Information Integration/DOD Chief Information Officer, have authority, 

responsibility, and accountability within their domains for business transformation, implementation of 

the BEA, development and execution of the transition plan, portfolio management, and establishment 

of a structure to ensure representation of the DOD components and the appropriate federal agencies.
Page 42 GAO-04-731R DOD Business Systems Modernization 

Enclosure IV 

Comments from the Department of Defense 
Page 43 GAO-04-731R DOD Business Systems Modernization 

See comment 2. 

See comment 1. 

See comment 1. 
Page 44 GAO-04-731R DOD Business Systems Modernization 

See comment 1. 

See comment 1. 
Page 45 GAO-04-731R DOD Business Systems Modernization 

See comment 3. 
Page 46 GAO-04-731R DOD Business Systems Modernization 

See comment 5. 

See comment 4. 

See comment 1. 
Page 47 GAO-04-731R DOD Business Systems Modernization 

See comment 3. 

See comment 1. 

See comment 6. 

See comment 7. 
Page 48 GAO-04-731R DOD Business Systems Modernization 

See comment 8. 
Page 49 GAO-04-731R DOD Business Systems Modernization 

See comment 1. 

See comment 9. 

See comment 1. 

See comment 1. 

See comment 1. 
Page 50 GAO-04-731R DOD Business Systems Modernization 

See comment 10. 

See comment 11. 

See comment 12. 
Page 51 GAO-04-731R DOD Business Systems Modernization 

See comment 13. 

See comment 13. 
Page 52 GAO-04-731R DOD Business Systems Modernization 

See comment 14. 
Page 53 GAO-04-731R DOD Business Systems Modernization 

The following are GAO’s comments on the Department of Defense’s (DOD) letter 

dated May 10, 2004. 

GAO Comments 

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

2. We have reviewed multiple versions of the architecture development 

methodology, including the latest version, which is currently draft. Based on 

our review of the latest draft, we concluded that this methodology does not 

provide a documented approach for performing activities in a coherent, 

consistent, accountable, and repeatable manner. Key DOD stakeholders also 

expressed concerns about the methodology. For example, these stakeholders 

stated that it is an “after-the-fact” description of work products rather than a 

prescriptive document that details the approach to be followed to develop the 

architecture. 

3. The descriptions of increments 2 and 3 in DOD’s comment letter are different 

than the descriptions the program manager provided to us on April 27, 2004, as 

reflected in this report. Because of the inconsistencies in the responses, it 

remains unclear what the department’s focus is for increments 2 and 3. DOD’s 

response also stated that the executive committee approved all three 

increments; however, DOD did not provide evidence of this approval. 

4. As stated in our report, DOD’s objective for achieving an unqualified audit 

opinion is not supported by a DOD-wide plan of action nor are the individual 

component plans linked to program activities. 

5. As stated in our report, DOD does not expect to complete the next version of 

its transition plan until August 2004. In addition, as we previously reported,42

its initial transition plan was basically a plan to develop a transition plan and 

did not possess the attributes needed to guide its transformation efforts. 

6. Attachment 11 does not list the deliverables the verification and validation 

contractor has reviewed since April 2003. 

7. The matrix does not show the anticipated disposition (e.g., date and 

architecture version) of the verification and validation contractor’s comments. 

8. This information was provided after fieldwork was completed. 

9. These briefings were presentations given by each domain describing its 

approach for conducting portfolio management reviews. The steering 

 

42 GAO-03-1018. 
Page 54 GAO-04-731R DOD Business Systems Modernization 

committee did not review actual systems investments nor was there detailed 

discussion about the domains’ approaches. 

10. The scope of our review did not include an evaluation of the realignment of 

funds made by the logistics domain to determine an effective demonstration of 

portfolio management. 

11. DOD’s characterization of its current process for oversight and control of 

modernization investments is inaccurate. We along with the DOD Inspector 

General continue to report on significant weaknesses in the department’s 

requirements, acquisition, and budgeting processes for business systems 

modernization projects. For example, we reported43 that estimated costs for 

the Defense Procurement Payment System had increased by $274 million and 

the schedule had slipped by almost 4 years after having already invested 7 

years and over $126 million. DOD Comptroller’s noted that the project was 

being terminated due to poor program performance and increased costs. 

12. We look forward to receiving DOD's forthcoming guidance to contracting and 

program officials that describes the process by which these officials obtain 

DOD Comptroller’s statutorily required determination before making 

obligations exceeding $1 million for a financial system improvement. 

However, given the obligation data provided to us by DOD and included in our 

report, we are concerned that DOD plans no action to review previous 

obligations for system improvements to ensure that there have been no such 

violations since the enactment of the limitation. 

13. We continue to believe that contractor tasks have not been clearly defined and 

that, because DOD is acquiring services on the basis of time and materials, it is 

essential that the department use efficient methods and effective cost controls 

to measure the work being performed. While we did not take issue with DOD 

on its use of a time and materials contract, we did state that DOD’s failure to 

execute the required Determination and Finding to evaluate the cost and 

performance risks assumed by the government illustrates an overall lack of 

clear architecture development plans. 

14. According to a program official, DOD did not begin requiring acceptance 

criteria prior to the contractor beginning work until August 2003. Further, 

DOD has paid the contractor under the time and materials contract even when 

the contractor did not meet all of the criteria for the deliverable. For example, 

based on reports provided by DOD, the department paid the contractor for 

delivery of version 2.0 of the architecture even though this version did not 

meet 50 percent of the acceptance criteria. 

 

43 GAO-03-465. 
Page 55 GAO-04-731R DOD Business Systems Modernization 

Enclosure V 

GAO Contacts and Staff Acknowledgments 

GAO Contacts Jenniffer Wilson, (202) 512-9192 

 Cynthia Jackson, (202) 512-5086 

Acknowledgments In addition to the individuals named above, key contributors to 

this report included Beatrice Alff, Francine DelVecchio, Abe 

Dymond, Joanne Fiorino, Neelaxi Lakhmani, J. Christopher 

Martin, Mai Nguyen, Michael Peacock, David Plocher, Katherine 

Schirano, Darby Smith, and Bernard Trescavage. 

(192114) 
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