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THE STANDARD PROCUREMENT SYSTEM [SPS]:

CAN THE DOD PROCUREMENT PROCESS BE

STANDARDIZED?

HEARING

BEFORE THE

SUBCOMMITTEE ON NATIONAL SECURITY,

VETERANS AFFAIRS AND INTERNATIONAL

RELATIONS

OF THE

COMMITTEE ON

GOVERNMENT REFORM

HOUSE OF REPRESENTATIVES

ONE HUNDRED SEVENTH CONGRESS

SECOND SESSION

FEBRUARY 7, 2002

Serial No. 107–144

Printed for the use of the Committee on Government Reform

(

Available via the World Wide Web: http://www.gpo.gov/congress/house

http://www.house.gov/reform

(II)

COMMITTEE ON GOVERNMENT REFORM

DAN BURTON, Indiana, Chairman

BENJAMIN A. GILMAN, New York

CONSTANCE A. MORELLA, Maryland

CHRISTOPHER SHAYS, Connecticut

ILEANA ROS-LEHTINEN, Florida

JOHN M. MCHUGH, New York

STEPHEN HORN, California

JOHN L. MICA, Florida

THOMAS M. DAVIS, Virginia

MARK E. SOUDER, Indiana

STEVEN C. LATOURETTE, Ohio

BOB BARR, Georgia

DAN MILLER, Florida

DOUG OSE, California

RON LEWIS, Kentucky

JO ANN DAVIS, Virginia

TODD RUSSELL PLATTS, Pennsylvania

DAVE WELDON, Florida

CHRIS CANNON, Utah

ADAM H. PUTNAM, Florida

C.L. ‘‘BUTCH’’ OTTER, Idaho

EDWARD L. SCHROCK, Virginia

JOHN J. DUNCAN, JR., Tennessee

——— ———

HENRY A. WAXMAN, California

TOM LANTOS, California

MAJOR R. OWENS, New York

EDOLPHUS TOWNS, New York

PAUL E. KANJORSKI, Pennsylvania

PATSY T. MINK, Hawaii

CAROLYN B. MALONEY, New York

ELEANOR HOLMES NORTON, Washington,

DC

ELIJAH E. CUMMINGS, Maryland

DENNIS J. KUCINICH, Ohio

ROD R. BLAGOJEVICH, Illinois

DANNY K. DAVIS, Illinois

JOHN F. TIERNEY, Massachusetts

JIM TURNER, Texas

THOMAS H. ALLEN, Maine

JANICE D. SCHAKOWSKY, Illinois

WM. LACY CLAY, Missouri

DIANE E. WATSON, California

STEPHEN F. LYNCH, Massachusetts

———

BERNARD SANDERS, Vermont

(Independent)

KEVIN BINGER, Staff Director

DANIEL R. MOLL, Deputy Staff Director

JAMES C. WILSON, Chief Counsel

ROBERT A. BRIGGS, Chief Clerk

PHIL SCHILIRO, Minority Staff Director

SUBCOMMITTEE ON NATIONAL SECURITY, VETERANS AFFAIRS AND INTERNATIONAL

RELATIONS

CHRISTOPHER SHAYS, Connecticut, Chairman

ADAM H. PUTNAM, Florida

BENJAMIN A. GILMAN, New York

ILEANA ROS-LEHTINEN, Florida

JOHN M. MCHUGH, New York

STEVEN C. LATOURETTE, Ohio

RON LEWIS, Kentucky

TODD RUSSELL PLATTS, Pennsylvania

DAVE WELDON, Florida

C.L. ‘‘BUTCH’’ OTTER, Idaho

EDWARD L. SCHROCK, Virginia

DENNIS J. KUCINICH, Ohio

BERNARD SANDERS, Vermont

THOMAS H. ALLEN, Maine

TOM LANTOS, California

JOHN F. TIERNEY, Massachusetts

JANICE D. SCHAKOWSKY, Illinois

WM. LACY CLAY, Missouri

DIANE E. WATSON, California

STEPHEN F. LYNCH, Massachusetts

EX OFFICIO

DAN BURTON, Indiana HENRY A. WAXMAN, California

LAWRENCE J. HALLORAN, Staff Director and Counsel

J. VINCENT CHASE, Chief Investigator

JASON CHUNG, Clerk

DAVID RAPALLO, Minority Counsel

(III)

C O N T E N T S

Page

Hearing held on February 7, 2002 ......................................................................... 1

Statement of:

Myers, Margaret, Deputy Assistant Secretary of Defense, Command, Control, Communications, and Intelligence [C3I], Department of Defense;

Gary Thurston, Defense Contract Management Agency, Department

of Defense; and Colonel Jake Haynes, Program Director, SPS Program

Office, Defense Contract Management Agency, Department of Defense . 52

Willemssen, Joel, managing director, Information Technology Systems

Issues, U.S. General Accounting Office, accompanied by Cynthia Jackson, Assistant Director, Information Technology Systems Issues, U.S.

General Accounting Office; and Robert J. Lieberman, Deputy Inspector

General, Office of Inspector General, Department of Defense .................. 14

Letters, statements, etc., submitted for the record by:

Haynes, Colonel Jake, Program Director, SPS Program Office, Defense

Contract Management Agency, Department of Defense, prepared statement of ........................................................................................................... 77

Lee, Deidre, Director, Defense Procurement Office of the Under Secretary

of Defense for Acquisition, Technology, and Logistics ............................... 5

Lieberman, Robert J., Deputy Inspector General, Office of Inspector General, Department of Defense, prepared statement of ................................. 32

Myers, Margaret, Deputy Assistant Secretary of Defense, Command, Control, Communications, and Intelligence [C3I], Department of Defense,

prepared statement of ................................................................................... 54

Shays, Hon. Christopher, a Representative in Congress from the State

of Connecticut, prepared statement of ........................................................ 12

Thurston, Gary, Defense Contract Management Agency, Department of

Defense, prepared statement of ................................................................... 66

Willemssen, Joel, managing director, Information Technology Systems

Issues, U.S. General Accounting Office, prepared statement of ............... 16

(1)

THE STANDARD PROCUREMENT SYSTEM

[SPS]: CAN THE DOD PROCUREMENT PROCESS BE STANDARDIZED?

THURSDAY, FEBRUARY 7, 2002

HOUSE OF REPRESENTATIVES,

SUBCOMMITTEE ON NATIONAL SECURITY, VETERANS

AFFAIRS AND INTERNATIONAL RELATIONS,

COMMITTEE ON GOVERNMENT REFORM,

Washington, DC.

The subcommittee met, pursuant to notice, at 9:36 a.m., in room

2247, Rayburn House Office Building, Hon. Adam Putnam (acting

chairman of the subcommittee) presiding.

Present: Representatives Putnam, Shays, Gilman, Kucinich,

Tierney, and Lynch.

Staff present: Lawrence J. Halloran, staff director and counsel;

J. Vincent Chase, chief investigator; and Thomas Costa, professional staff member.

Mr. PUTNAM. The subcommittee will come to order.

The Subcommittee on National Security, Veterans Affairs and

International Relations is convened here today to talk about the

standard procurement system. Can the DOD procurement process

be standardized? We welcome our panel and guests this morning.

This year the Department of Defense will rely on a host of incompatible, largely paper-based systems and processes to manage an

account for procurement contracts worth more than $130 billion.

The President’s fiscal year 2003 budget released this Tuesday pronounces those systems outdated and in need of an overhaul. Both

the Comptroller General and the DOD Inspector General agree, citing longstanding financial weaknesses at the Pentagon. They also

note DOD often suffers the Government-wide malady of purchasing

large information technology systems that fail to meet user needs,

fail to replace older, incompatible systems, and fail to meet schedule and cost projections.

The standard procurement system was meant to address both

problems. Standardization of contract and purchasing processes

should bring greater transparency and data commonality to DOD’s

tangled web of financial systems. Selection of a commercial, off-theshelf product should have brought efficiency and discipline to the

data system development.

Today we ask whether SPS, the 7-year-old, $359 million Department of Defense effort to modernize, streamline, and unify Pentagon contracting, has become an expensive part of the problem or

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a partial solution to the Pentagon’s chronic financial management

woes.

The supposedly standard procurement system has required extensive, unanticipated modifications to meet user demands, causing

the Inspector General to question the COTS-based acquisition

strategy.

The schedule has slipped by more than 3 years. Deployment of

system modules has been clumsy. The military services continue to

pursue non-standard approaches. A survey by the Inspector General found SPS under-utilized or used only in tandem with paperbased legacy systems.

Based on the IG’s concerns and the size and significance of the

SPS effort, we ask the GAO to assess DOD management of the program. Their findings describe how the potential of a solution like

SPS can be sabotaged by untested assumptions of value and the resulting failure to weigh the costs and benefits of each step in a

complex development process.

The Clinger-Cohen Act of 1996 provides a framework for largescale IT acquisitions by Federal agencies. It requires explicit economic justification over the expected life of a program and specific

analysis of the costs and benefits of each program increment.

But the Department of Defense appears to dispute the need for

incremental justification, relying instead on an outdated, all-ornothing economic analysis of the $3.7 billion SPS. According to the

General Accounting Office, the Department also lacks other noneconomic measures to determine if SPS is meeting performance

goals.

SPS is an example of good intentions corrupted by lax oversight

and entrenched bad habits. The fate of SPS should offer a cautionary tale to those in the Administration entrusted with the resources needed to wage the war on terrorism, enhance homeland

security, modernize U.S. forces, and maintain military readiness.

We look to our witnesses this morning to help us understand

how the standard procurement system went astray and how the

Department plans to make sure continued investment in SPS leads

to improved financial accountability.

Again, we thank our panel for being here. At this time the Chair

recognizes the ranking member from Ohio, Mr. Kucinich.

Mr. KUCINICH. Thank you very much, Mr. Putnam, Mr. Shays,

and committee staff, and to the people who are testifying today,

good morning.

There’s two things I want to say at the beginning. First of all,

I have three other committee meetings, Mr. Chair, at 10. We’ve

had that happen before. So I’m not going to be able to stay.

Before I begin, I also want to take my privilege to recognize the

leader of the Democrats in the Ohio Senate who is visiting with us

today, Senator Lee Harrington. Thank you very much for your

presence.

Mr. Chairman, today’s Washington Post contains an OpEd piece.

I’ll just quote from one paragraph, because in a sense it helps to

frame the challenge which is before this subcommittee and the IG’s

office. It says, ‘‘The Pentagon remains the largest source of waste,

fraud, and abuse in the Federal Government. Its bookkeeping

makes Enron look transparent. It still cannot track what it has

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spent money on, what it has purchased, and what it has stored.’’

That’s from an article in today’s Washington Post OpEd piece by

Robert Borsage.

As this subcommittee has repeatedly heard, the financial disarray within the Department of Defense has reached epic proportions. Last year we heard testimony from David Walker, the Comptroller General of the United States, regarding the high-risk nature

of DOD operations, including logistics, acquisitions, planning, contracts, and management, just to name a few. The problems were

highlighted when the Inspector General issued a report with some

astonishing language. In fiscal year 2000, alone, ‘‘1.2T—’’ for trillion. And just to make sure the people are transcribing this,

‘‘1.2T—’’ for trillion—‘‘in Department-level accounting entries were

unsupported because of documentation problems or improper because the entries were illogical or did not follow generally accepted

accounting principles.’’ That was $1.2 trillion worth of improper or

illogical expenditures. This is a figure that is beyond disgraceful.

It is beyond unbelievable.

Contributing to these problems is the Department’s failure to

manage its contracts properly. The Department of Defense spends

over $130 billion for goods and services each year, but in 1992 and

every year since the General Accounting Office designated Department of Defense’s contract management as one of the largest highrisk areas within the Federal Government.

Although the Department of Defense has tried to remedy this by

initiating a new standard procurement system, GAO reports that

this effort is nearly $1 billion over budget, 31⁄2 years behind schedule, and is not meeting its objectives. Yesterday, the President requested a $45.3 billion increase in military spending, for a total Pentagon budget of $379 billion—I

might add, more than the combined military budgets of the next

24 largest-spending countries. In fact, the increase alone is larger

than any defense budget in the world but Japan’s. It is also the

largest 1-year increase in military budget authority since 1966, for

a total budget 15 percent above the cold war average.

Now, given the Pentagon’s legendary accounting problems, I’m

asking how can the taxpayers be sure that the Department will

spend this extra money on measures that will, in fact, increase security? No major part of the Defense Department has ever passed

the test of an independent audit. As ‘‘Business Week’’ has put it,

‘‘The Pentagon makes Enron and Arthur Andersen look like paragons of number crunching.’’ That’s the ‘‘Business Week.’’

No sane investor would sink $45 billion extra into a firm with

this kind of performance. You have to wonder why the American

taxpayer should be asked that.

We’re told that the extra money is needed to pay for war, but in

reality the proposed Defense funds are largely devoted to the same

weapons acquisition programs that GAO has decided are at risk of

waste and abuse, programs that are of little utility in defending the

Nation against the sort of attack we confronted in September.

These include the F–22, the most expensive fighter ever, which, as

this subcommittee has heard, has racked up more than $9 billion

in cost overruns, and includes the crusader mobile howitzer artillery weapon, which at 90 tons is so immobile that the military’s

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largest transport plane can’t lift it without violating flight rules.

The Administration plans to spend $11 billion to purchase 480 of

these, and include the B–1 bomber, which even the Secretary of

Defense admits is headed toward expensive obsolescence.

This budget rewards our Defense establishment for its fiscal mismanagement, and the allocation of this money follows the same

wasteful high-risk patterns of spending that lavish politically influential military contractors with large sums to produce weapons

geared toward obsolete cold war era threats. Protecting our country, our Service members, and our people is a very pragmatic endeavor and it takes practical effort. It sometimes requires some

very mundane but essential tasks, such as demanding that DOD

pass an audit, demanding that DOD efficiently manage its contracts, and demanding that DOD dutifully seek the best value for

every dollar Congress appropriates.

I hope that after concluding this hearing on standard procurement system that this subcommittee will endeavor to take up oversight of programs such as the $200-plus billion national missile defense system, the $250 billion joint strike fighter, the $70 billion

F–22, the $56 billion DD destroyer, the $45 billion C–17, the $37

billion V–22, and the $11 billion howitzers.

The reason is simple. Is America getting the best defense money

can buy, or are defense contractors feasting at taxpayers’ expense?

The question is the essence of procurement and financial management oversight.

I hope this subcommittee will schedule hearings and devote its

attention to this question where these large and significant procurement programs are concerned.

I thank the chair.

Mr. PUTNAM. I thank the gentleman for his opening statement.

Before you leave, Mr. Kucinich, I’d ask unanimous consent to put

into the record the written statement of Deidre Lee, Director, Defense Procurement Office of the Under Secretary of Defense for Acquisition, Technology, and Logistics, without objection.

[The prepared statement of Ms. Lee follows:]

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Mr. PUTNAM. I ask unanimous consent that all members of the

subcommittee be permitted to place any opening statement in the

record and the record remain open for 3 days for that purpose.

Without objection, so ordered.

I ask further unanimous consent that all witnesses be permitted

to include their written statements in the record. Without objection, so ordered.

I welcome to the committee the real chairman of the subcommittee, Mr. Shays from Connecticut.

Would you like to make a statement?

Mr. SHAYS. Yes, thank you. Just a very brief one.

I’d like to thank our witnesses and guests for being here. I think

this is a very, very important hearing. Mr. Kucinich had some basic

points right on target. It is astounding that you would have $1.2

trillion worth of transactions that you couldn’t verify as an auditor.

It has come down from a few other trillion. You could look at it

positively. But there is really no part of the Defense budget the is

auditable, and I think we all know why. We all know why, because

we don’t have a choice when it comes to Defense to appropriate the

money, and I think, therefore, the Defense Department has gotten

used to the fact that, ‘‘You can’t do without us, so we’ll focus our

attention on other concerns.’’

This borders on the line of being criminal because we are wasting billions of dollars. There has to be tremendous amount of theft,

and so on, and misuse, and it has to be corrected, and it has to be

corrected now—I mean now in the next few years. Over time it has

to definitely change.

One of the points that I would have made to Mr. Kucinich is that

this committee is dedicated to helping the GAO and others to see

that happens.

I’m not chairing this hearing because I had requested the Subcommittee on Energy Policy, Natural Resources and Regulatory Affairs of the Government Reform Committee to hold a hearing on Indian gaming and Indian recognition, and since I’m the one that requested it I feel that I need to be there, so I will be in and out of

this hearing. I thank the gentleman from Florida for chairing this

hearing, but I hope to be back and I hope, obviously, to listen to

the first part of the panel discussion.

So I thank you very much and I thank our witnesses.

[The prepared statement of Hon. Christopher Shays follows:]

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Mr. PUTNAM. Thank you, Mr. Chairman. And thank you for the

opportunity that you’ve given me to participate in this committee.

At this time we will swear in our first panel. Please rise and

raise your right hand.

Do you solemnly swear or affirm that your testimony you will

give before this subcommittee will be the truth, the whole truth,

and nothing but the truth?

Mr. WILLEMSSEN. I do.

Ms. JACKSON. I do.

Mr. LIEBERMAN. I do.

Mr. PUTNAM. Not for the record that the witnesses have responded in the affirmative.

At this time I’d like to ask Mr. Joel Willemssen, managing director of information technology systems issues from the U.S. General

Accounting Office to begin with your opening testimony.

You are recognized, sir. Welcome.

STATEMENTS OF JOEL WILLEMSSEN, MANAGING DIRECTOR,

INFORMATION TECHNOLOGY SYSTEMS ISSUES, U.S. GENERAL ACCOUNTING OFFICE, ACCOMPANIED BY CYNTHIA

JACKSON, ASSISTANT DIRECTOR, INFORMATION TECHNOLOGY SYSTEMS ISSUES, U.S. GENERAL ACCOUNTING OFFICE; AND ROBERT J. LIEBERMAN, DEPUTY INSPECTOR

GENERAL, OFFICE OF INSPECTOR GENERAL, DEPARTMENT

OF DEFENSE

Mr. WILLEMSSEN. Thank you, Mr. Vice Chair, Mr. Chairman. As

requested, I’ll briefly summarize our statement.

Accompanying me is Cynthia Jackson, Assistant Director.

DOD launched SPS a little over 7 years ago, with the goal of replacing 76 existing procurement systems with a single Departmentwide system that would more effectively support contracting processes. At that time estimated costs were about $3 billion over a 10-

year period.

For information technology projects such as SPS, the ClingerCohen Act and Office of Management and Budget guidance emphasized the need for investment management practices to help ensure

that projects are being implemented at acceptable cost and within

reasonable and expected timeframes, and that they are contributing to tangible improvements in mission performance. For SPS, we

reported to you last year that the Department had not met these

investment and management criteria.

First, the Department had not economically justified its investment in the program. In fact, its recent analysis showed that the

system, as defined, had estimated costs that exceeded anticipated

benefits.

Second, it had not effectively addressed the inherent risks associated with a program as large and lengthy as SPS because it had

not divided the program into incremental investment decisions that

coincided with incremental releases of system capabilities.

Third, the Department had not met key program commitments

that were used to justify the program. For example, the Department committed to implementing a commercially available contract

management system. However, because it had modified so much of

the foundational commercial product, SPS evolved into a cusVerDate 11-MAY-2000 11:09 Mar 17, 2003 Jkt 000000 PO 00000 Frm 00018 Fmt 6633 Sfmt 6633 D:\DOCS\84232.TXT HGOVREF1 PsN: HGOVREF1
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tomized DOD system. Also, although the Department committed to

fully implementing the system by March 2000, this target date has

now slipped to September 2003, and program officials have recently

stated that this date will also not be met.

Fourth, the Department did not know if it was meeting other key

program commitments. For example, the Department had not

measured whether expected system benefits were being realized.

Further, DOD was not tracking actual program costs, so it does not

know how much has been spent on this program.

Because of these many problems with SPS, we made several recommendations, including that investment in further enhancements

to the system be made conditional on the Department first demonstrating that the system was producing benefits that exceed

costs, and that future decisions be based on complete and reliable

economic justifications.

In commenting on a draft of our report, DOD generally disagreed

with our recommendations, noting that they would delay development and implementation of SPS. Since that time, however, the

Department has either initiated or stated its intention to initiate

steps that are consistent with our recommendations.

For example, officials have stated that the Department will prepare an economic analysis before investing beyond already executed contractual commitments and that it will assess the extent

to which the Department is deriving benefits from SPS. These are

positive steps. Nevertheless, much remains to be done before the

Department will be in a position to make informed, data-driven decisions about the system. To increase the chances of program success, we believe the Department must follow through on stated

commitments and implement our recommendations. Doing so

means that the Department should commit to specific tasks and

milestones for completing those tasks. If it does not, the Department runs the risk of continuing to spend an unknown amount of

money on a system with unknown results.

That concludes a summary of my statement, and I would be

pleased to address any questions you may have.

Mr. PUTNAM. Thank you very much.

[The prepared statement of Mr. Willemssen follows:]

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Mr. PUTNAM. Thank you very much. At this time I’d ask Mr.

Robert Lieberman, Deputy Inspector General, Office of Inspector

General, Department of Defense, to give your opening statement.

You are recognized, sir.

Mr. LIEBERMAN. Thank you, Mr. Chairman.

As requested in your invitation letter, my written statement focuses primarily on results of my office’s three audits on the standard procurement system. To put our findings in a broader

context——

Mr. PUTNAM. Could you move the microphone a little bit closer?

Mr. LIEBERMAN. To put our findings on the SPS in the proper

context, I believe it is important to recognize the fact that information systems are the primary tools that we put into the hands of

DOD employees to carry out the internal business processes of the

Department—things such as contracting, contract administration,

paying contractors, and accounting.

As I reported to you in a hearing last March, the DOD has had

chronic difficulties in fielding information systems that are up to

par in terms of meeting cost, schedule, and performance expectations.

The SPS is no different from many other system acquisition initiatives in the Department that have had problems. It is not uncommon for information system acquisition projects to have the

kinds of problems that SPS has encountered. In fact, most studies

indicate that fewer than one in three large information system

projects in both the public and private sector meet expectations in

terms of cost, schedule, and performance. This is not an excuse, but

I do think we need to recognize how inherently difficult a large information system development project is.

We support the basic concept of SPS. The idea of modernizing

the information system tools in the hands of contracting personnel

and rationalizing the jumble of legacy systems that we have in the

Department, none of which are really adequate to meet user needs,

and few of which talk to each other in any rational way, is a compelling need.

Our criticisms of the SPS project have to do with its planning

and management, not with the basic concept of achieving as much

standardization as possible. Even a total standardization is probably too ambitious a goal.

Turning now to the results of our findings, in 1996 we reported

poor planning from the standpoint of identifying user needs, providing for rigorous testing, and otherwise managing what we felt

were obvious developmental risks in this project. I want to make

it clear that we certainly were never against the idea of acquiring

a commercially available system and modifying it to Defense Department needs. We certainly support the idea that the private sector has leading IT technology and the Department needs to get access to those products.

What we criticized, though, was the idea that you can merely

transplant a commercially available system to DOD processes without massive changes to either the system or the processes or both.

Any time you attempt to do something like that, you are automatically incurring a lot of risk and you are very much in a developmental mode, as opposed to just buying something off the shelf that

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has very little risk. We never felt that the SPS project adequately

recognized the risks that were being taken, and therefore we criticized what we would characterize as the risk management in the

program.

In response to the 1996 auditors—audit, managers generally

agreed that the program carried risk and took various measures to

formalize the testing requirements, limit the Government’s financial exposure, and provide ongoing monitoring. Most importantly,

we were assured that each future acquisition milestone decision

would be accompanied by a rigorous review of system functionality,

contracting method, testing, and risks. In retrospect, it seems to me

the managers remain preoccupied with maintaining system deployment schedules instead of focusing on the functionality of the system.

It is clear that not enough was done to keep the commitment expressed by the Defense Logistics Agency in response to our report,

which was that, ‘‘SPS will not be deployed to any DOD procurement site wherein we cannot provide equal to or better than existing functionality.’’

Because we lacked confidence that the program was on track, we

performed a followup audit during 1998. We raised or reiterated a

number of concerns, which are listed in my statement on pages six

and seven. The management responses were mixed. By and large,

program managers appeared to believe that the latest version of

the system would correct the performance problems that we had

found.

In late 1999, the House Budget Committee received a number of

complaints from SPS users in the Department of Defense about the

cost and usefulness of the system, so we did a user survey. We reported on the results of that survey in March 2001. Its results are

summarized in pages eight and nine of my written statement. Basically, user dissatisfaction levels were still very high—abnormally

high in such a late stage of the program. We also reported that the

licensing arrangement for the software was inefficient, and we concluded that the program needed better performance measures to

control risk and enable management to make informed decisions in

how to proceed in the road ahead.

To sum up, we believe that SPS was a good idea, remains a good

idea, will result in more efficient contracting and related processes

such as financial management, but the program needs restructuring at this point. We understand that is being done. I would defer

to the second panel to provide you the particulars. I remain cautiously optimistic that SPS will end up being at least a partial solution to the Department’s information system problems in this area,

but we shouldn’t be naive and think that the road ahead will be

smooth. Several important decisions need to be made about the

exact scope of the project, and it needs to be adequately resourced

to get from here to there.

Thank you for considering our views.

That concludes my statement.

Mr. PUTNAM. Thank you very much, Mr. Lieberman.

[The prepared statement of Mr. Lieberman follows:]

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Mr. PUTNAM. Let me just apologize to everyone for the temperature in this room, although it is getting better. This is Florida day

in Congress, and so we are trying to make it as hot and muggy as

possible in here.

Mr. Willemssen, Mr. Lieberman just concluded that, the its core,

SPS is a good idea and is a functional program that is in need of

additional resources and restructuring. Do you agree with that

basic premise?

Mr. WILLEMSSEN. I think much of what Mr. Lieberman mentioned in terms of standardization at its core could be beneficial,

but, in and of itself, we still need to identify exactly what the benefits are and what the contributions are to improve mission performance.

Does it mean that we are going to be able to get rid of some of

the 76 systems, for example, that SPS was intended to replace? If

so, then there are tremendous benefits associated with that. Does

it mean that on the battlefield that our troops will be able to procure systems immediately and get the article delivered to them?

Could be tremendous benefits. We haven’t seen that analysis,

though, demonstrating that SPS is going to necessarily deliver

those kind of—has delivered those benefits, so what we are asking

for right now is, before there are further investments beyond existing contractual commitments, let’s make sure of what we are getting for our money. How much have we spent? And what are the

associated benefits? Let’s make some assessment of that, and then

let’s go forward and see what additional benefits we can get for our

money.

Mr. PUTNAM. Have any of the 76 systems been replaced or partially replaced thus far?

Mr. WILLEMSSEN. Let me defer to my assistant director. I believe

there are a couple that have been replaced at this point.

Cynthia.

Ms. JACKSON. Yes. At this point two have been fully retired as

a result of SPS and two partially retired, meaning they will still

be used—they are still being used by some of the other Defense

agencies at this time.

Mr. PUTNAM. Can you assign a percentage of implementation

that SPS is at this stage? Is it 50 percent in place, 80 percent in

place?

Mr. WILLEMSSEN. I think it would be difficult to assess a percentage until you define exactly what the program is going to be. And

I—our view would also be that now is a good time to take a pause

and understand where the Department is at with SPS before it decides to move forward. There are releases out there that are being

used that, of course, don’t provide the full functionality that was

envisioned for SPS, but I think it would be prudent to make that

kind of an assessment at this point.

Anything you want to add, Cynthia?

Ms. JACKSON. No. Not at this time.

Mr. PUTNAM. Mr. Lieberman, did you want to add anything to

that last question?

Mr. LIEBERMAN. No, sir. I think the second panel is most qualified to tell you where this reassessment stands, but I think they

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do have a responsive story to tell in terms of what has been done

in response to our reports and GAO’s.

Mr. PUTNAM. How will the—when totally implemented, how will

it help assure total asset visibility, that we’d have a handle on everything that is in the DOD inventory?

Mr. LIEBERMAN. I don’t think that total asset visibility is one of

SPS’s features. It is not an inventory management system. There

are separate logistics systems that do that. This is a system that

connects with those inventory management systems, rather than

one that is intended to do inventory management, itself. This is a

system for identifying what needs to be procured for helping people

select the right contracting mode, write the contracts, put all the

right clauses in, administer the contracts, get them placed, pay the

contractor, or at least provide the information to the finance people

to pay the contractor, and that sort of thing, but it is not a supply

management system.

Mr. PUTNAM. How will it interface with that payment process,

that payment portion of the equation?

Mr. LIEBERMAN. The finance centers will have—they get information from the contracting community on what to pay contractors

and how to deal with the invoices that they receive, so there are

elaborate interfaces. In fact, that’s one of the primary challenges of

a system like this—being able to connect efficiently to the finance

systems so that the contractors can be paid correctly and we won’t

have the kind of overpayments or payments from the wrong accounts that we’ve had in the past because of poor information coming into the finance centers, among other things. And also the accounting systems, keeping track of what funds have been spent out

of each account, need to interface into these systems, also.

Therein lies the challenge. In the commercial sector you don’t

have nearly as many different systems. It is a much more integrated picture. That’s why it has been very hard to just transplant

an off-the-shelf commercial system to the Government process.

Mr. PUTNAM. Are the payment systems and inventory management systems among the 76 that this was to phaseout, or are we

talking about even more systems than that? To whomever can answer that.

Mr. WILLEMSSEN. We’re speaking of more systems than that.

Mr. PUTNAM. OK. It’s just me and you all now. Work with me

here. Nobody else wanted to come.

How—you know, I guess all this begs the core question. How and

when will we know whether SPS has met the hype, the expectations, the objectives? I mean, we’re 5 years into an 8-year program,

I assume, and we’re not doing so hot so far, so when can we have

some expectation or some basis for understanding whether or not

we’re still headed in the right direction after all this investment?

Mr. WILLEMSSEN. Well, I would answer the question in this fashion, Congressman—and, again, somewhat similar to what Bob said

in terms of the second panel, but it is incumbent upon the Department to commit to milestones and the tasks associated with those

milestones to implement, we think, our recommendations focused

at exactly the question you are asking—when are we going to know

how much this system costs and what we are getting for that

money?

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Right now I would submit we don’t know for sure what we’re getting, and that’s why we think it important for the Department to

commit to taking those actions and commit to you to when those

steps are going to be completed. Without milestones to get it done,

this can continue on for several more years.

Mr. PUTNAM. Mr. Lieberman, do you want to——

Mr. LIEBERMAN. I certainly agree that more explicit documentation of where we are going and where we are is extremely important. When we talk about the lack of performance measures, it may

be sort of an esoteric term, but basically we’re saying the same

thing. In order to measure whether we have achieved success or

not, we need some very specific parameters laid out as to what success constitutes, and we really don’t have that right now in this

program.

There are some positive signs. It was used recently during a military exercise in Thailand where people plugged into the system

from over there and were able to place purchase orders all over the

world to buy supplies that they needed, and the feedback from that

was very positive. The system seems to work well for small, locallevel purchases.

The big question with it is: is it simply too much to ask for the

same system to handle all those millions of small purchases and

then those gigantic weapons systems contracts also? That’s probably a bridge too far, and I would predict that the Department will

probably decide to let SPS concentrate on the small-and mediumsized purchases and deal with its problems in the weapon systems

and the inventory control points with a different system some time

in the future.

Mr. PUTNAM. Just out of curiosity, in a $350 billion budget what

is a medium-sized purchase?

Mr. LIEBERMAN. Well, there’s a definition of micro purchases,

which is $2,500 or less, so those are the little, bitty ones. I don’t

know where large starts. In Defense terms, everything is relative.

But the weapons systems contracts normally are tens of millions of

dollars, and in some cases even much greater than that, so they

are clearly the high end of the spectrum in terms of individual dollar value. In terms of numbers, those small procurements are 95

percent of the contracting activity.

So if SPS can support those smaller type of purchases well, it

will be dealing with 90 percent of the number of contracting actions

that we place, which will be a considerable achievement.

Mr. PUTNAM. Mr. Willemssen, would that type of bifurcated process achieve some efficiencies?

Mr. WILLEMSSEN. It very well could, and on the surface that

sounds reasonable. All I would add is to have the decisions be data

driven. It may, indeed, prove that through the next release, which

will focus more on the small and medium contracts, that’s where

you get a lot of the benefits. That’s where you get a lot of your efficiencies. And if we looked forward on the later phases of the original planned SPS with the larger and more complex efforts, that

may not be worth the effort, worth the cost to do because you’re

not going to get the same return on investment that you could with

these first increments, so I think that’s—it very well could be the

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outcome. My only caveat would be—is have the decision be data

driven, not what we think it looks like.

Mr. PUTNAM. But the 10 percent that would be remaining is

what percent of the money?

Mr. WILLEMSSEN. Well, it’s a large percent of the contract money,

but it is not necessarily as large a percent of the activity associated

with managing contracts, the steps you have to go through from

cradle to grave in contract management, which there’s a lot of resources associated with just doing that.

What you may find—and I think what program managers have

already found—is when you get into the larger, more complex contracts there tends to be a lot more unique features that a standardized system may not map well to, and it could be a little bit more

difficult to standardize in that regard. A lot more complexity.

Mr. PUTNAM. Who is ultimately responsible for achieving the

SPS mission objectives?

Mr. WILLEMSSEN. Responsibility for the program—there is a program office that has responsibility, and then also, because this is

considered a major system acquisition, C3I office, the Chief Information Officer has a major role at key decision points along the

way of the life cycle of the system to make sure that it is being

kept on track.

Mr. PUTNAM. Did your report evaluate the level or quality of

oversight that office has provided in this program?

Mr. WILLEMSSEN. We looked at it from the perspective, not so

much individualizing the organizations, but what kind of key tenets of effective investment management should be done, and in

the case of SPS they were not done as they should have been.

Mr. PUTNAM. Thank you.

At this time the Chair recognizes the gentleman from Massachusetts, Mr. Tierney.

Mr. TIERNEY. Thank you, Mr. Chair.

Just two brief questions. One is: if you were to project forward

on this thing, just how many years behind schedule do we anticipate this will run? And how much over budget?

Mr. LIEBERMAN. Sir, that depends on the outcome of the Department’s current deliberation on where to go from here. They have

not made an irrevocable commitment that SPS will be used for

every kind of contract. So if you cutoff large segments of the problem here, SPS could end up having a much smaller scope than was

originally envisioned, and I think that there will be various options

in terms of how much more to try to do with SPS and how much

that is going to cost.

Mr. TIERNEY. Do we have a range?

Mr. LIEBERMAN. I don’t.

Mr. TIERNEY. You don’t?

Mr. LIEBERMAN. No, sir.

Mr. WILLEMSSEN. The end date on the full program was late

2003, but then program officials told us they were not going to be

able to meet that either, so what the end date is for the full-blown

program I think is up in the air right now, and it goes back to what

Mr. Lieberman said. They’re going to have to make a decision

about whether we are going to do the full system or just significant

pieces of it.

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Mr. TIERNEY. OK. Mr. Lieberman, a somewhat unrelated issue

but similar on that. About a year or so ago you shared with us the

fact that you thought there was over $1 trillion unaccounted for in

the Department of Defense budget. Have we made any progress in

locating any of that money?

Mr. LIEBERMAN. Well, you’re referring to the $1.3 trillion worth

of unsupported adjustments to the year-end financial statements.

Mr. TIERNEY. Right.

Mr. LIEBERMAN. It is impossible to retroactively figure out those

accounting adjustments. The way the financial statement auditing

works is that each year the Department creates new end-year

statements, and each year we audit those. The reports on the endyear statements for fiscal year 2001 are due later this month. I

don’t candidly expect that you are going to see much difference in

terms of the audit opinions. We will still find all of the major financial statements, with the exception of the military retirement fund,

which is in good shape. We’ll find the rest to be unauditable. And

the unsupported adjustment figure will still be very high, probably

less than it was last year because the Department has been trying

to fix the reasons why those kinds of adjustments have to be made

and improving the audit trail so that the auditors don’t deem them

to be unsupported.

I should explain that what we’re talking about is the ability to

portray financial statements in the year-end statements. Saying

that there are unsupported adjustments in those statements does

not necessarily mean that the Department doesn’t know where the

money is, but it can’t—the information on where the money is is

down in the roots of the Department, and we have no efficient way

to summarize that information and portray it at the end of the year

in the financial statements.

Mr. PUTNAM. Is there a plan to do just that? Is there a guide

which Department people or personnel could follow to get to that

point some time soon?

Mr. LIEBERMAN. Yes, there is. The Department is currently

spending $100 million that the Congress just appropriated to it to

lay out a road map on what has to be done to overcome that problem, plus a lot of money is being spent—we’re not quite sure how

much, but we are in the multi-billion-dollar range—on financial

management system improvements, all of which are designed to,

among other things, create auditable financial statements.

Mr. TIERNEY. Thank you.

Thank you, Mr. Chairman. I have no further questions.

Mr. PUTNAM. Thank you, Mr. Tierney.

Mr. Willemssen, in the GAO report and in your testimony you

state that, ‘‘In commenting on a draft of our report, DOD generally

disagreed with our recommendations, noting that they would delay

development and implementation of SPS. Since that time, however,

the Department has either initiated or stated its intention to initiate steps that are consistent with our recommendations.’’ To what

do you attribute the change of heart?

Mr. WILLEMSSEN. A couple factors come into play, not the least

of which is congressional oversight. To the extent—and I’ve seen—

witnessed this beyond Department of Defense, but when congressional committees and subcommittees exert oversight over the acVerDate 11-MAY-2000 11:09 Mar 17, 2003 Jkt 000000 PO 00000 Frm 00053 Fmt 6633 Sfmt 6633 D:\DOCS\84232.TXT HGOVREF1 PsN: HGOVREF1
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tivities, or major information systems, in this case, of a particular

department, they get a lot more attention at the department level

when they know that congressional subcommittees such as yours

are actively engaged in oversight, so that is a key factor.

Second, I think when you look at the facts of the Department

can’t tell us how much in total it has spent on SPS and they can’t

tell us what they’ve got for their money, I think that’s a hard position to defend indefinitely.

Mr. PUTNAM. Mr. Lieberman.

Mr. LIEBERMAN. I totally agree. I think that, as I mentioned in

my opening statement, unfortunately, the kinds of problems we see

in the SPS project are the kinds of problems that we find in most

of the audits that we do of DOD information acquisition projects.

We need a more-disciplined process, and the Department has been

working on that for several years, but progress has been slow and

I think any objective assessment would still have to say that we’re

a long way away from achieving the goals of the Clinger-Cohen Act.

Mr. PUTNAM. We began this questioning with your statement

about the fundamental—your fundamental support of SPS, but certainly stating that it was in need of restructuring. Would you like

to elaborate on some of the restructuring recommendations that

you have?

Mr. LIEBERMAN. Well, I should preface anything I say by making

it clear that we have not been into this program for over a year

now. But I think, in general terms, the question of whether to try

to push SPS into the inventory control points, where we buy a centrally managed item like aircraft repair parts and things like that,

and to push it into the weapons systems contracting world, which

is so radically different from what the current version of SPS can

support, that’s really, I think, where serious consideration has to

be given to drawing the line and saying this is too much for one

system to handle and we’re going to explore another option.

Mr. PUTNAM. Mr. Willemssen, what recommendations for restructuring have you all made? And, of those, which have been implemented?

Mr. WILLEMSSEN. Among the recommendations that we would

have for restructuring within that realm is, before the Department

invests in future releases of SPS, that it be made conditional on the

fact that they can demonstrate that what’s out there to date is providing results that exceed the amount of money that has been

spent, and DOD has told us that they plan to do that.

Second, that those future investment decisions be based on reliable and complete economic analysis. Again, the Department has

said they are going to do that. And also to determine—we think it

is important to determine the current status of program commitments, and the Department has said that they would do that, in

terms of where each of the releases of the system are and what

they are getting for that.

We also think it is important that the Department look at this

system in retrospect and identify lessons learned and report on

those lessons learned so it can use them for subsequent systems.

This is not the way to go about managing a multi-billion-dollar IT

project.

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And Mr. Lieberman is correct. There are many other examples

of where this has occurred. In fact, the reason Clinger-Cohen was

passed in 1996 is, frankly, the Congress became fed up with repeated stories of major information technology projects that failed.

You can look at FA advanced automation system—couple billion

dollars; Internal Revenue Service tax system modernization, $3 billion—and the list goes on. That’s why Clinger-Cohen was put in.

It was to say, ‘‘We want cost benefits and risks managed, not just

at the beginning of a project, but throughout its life cycle, so that

if this project starts going off-track, we want management in there

to say, ‘Hold it. We’ve got to take action.’ ’’ That’s what needs to

occur with SPS.

Mr. LIEBERMAN. Sir, could I add something to that?

Mr. PUTNAM. Mr. Lieberman.

Mr. LIEBERMAN. One of the recommendations we made in one of

our reports was that DOD issue guidance on how to buy commercial software. The Congress strongly encouraged doing so with acquisition reform legislation in 1994, and as late as the year 2000

DOD still had not put out guidance to its contracting and program

management people on how to do that and what pitfalls might

exist and how to avoid them, so we recommended that be done, and

it was done with a white paper issued in July 2000. That is really

an excellent document, in terms of what to do and what not to do

when buying COTS products. Now the challenge is to get people to

read it and apply it to their own program.

Mr. PUTNAM. And, finally, for the entire panel, what is the likely

outcome of the Department continuing with current plans for this

acquisition of SPS without implementing the recommendations?

What’s the—what types of consequences can we expect if this continues?

Mr. WILLEMSSEN. Namely, the Department, if they didn’t implement the recommendations—but I believe they will, but if they

didn’t I think they’d continue to limp along year after year, spending money on a program, an unknown amount of money with an

unknown set out outcomes about what we’re getting for that investment. But I don’t think that’s going to be the outcome. I think the

Department is going to move in the right direction and make an

assessment of where they’re at and either decide to, as Mr.

Lieberman said earlier, either essentially cutoff after the next release or go forward with future releases.

Mr. PUTNAM. Do you agree, Mr. Lieberman?

Mr. LIEBERMAN. Yes, I do. I think the Congress has already expressed dissatisfaction with the current plan through a major cut

to the appropriate for SPS for 2002. The Department can’t expect

the Congress to support the old program plan in future budgets, so

it is going to have to be restructured, and that restructuring is underway. So, as I said, I remain cautiously optimistic that SPS can

fulfill a large part of the requirement.

Mr. PUTNAM. Very good. Mr. Lieberman, Mr. Willemssen, Ms.

Jackson, I am very appreciative for your time and your talents this

morning in sharing this with us.

We are going to recess for me to run and go vote before we seat

the second panel, so at this time everybody can just enjoy this summer weather and I’ll be back in just a few moments.

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This subcommittee is in recess.

[Recess.]

Mr. PUTNAM. The subcommittee will reconvene.

I’d like to welcome our second panel. I look forward to your testimony and to helping us fill in some of the gaps from the first panel.

There were several references to the second panel may be able to

answer that a little better, and so we look forward to that.

We will begin our second panel testimony by swearing you all in,

so if you will please stand and raise your right hand, do you solemnly swear or affirm that the testimony you give before this subcommittee will be the truth, the whole truth, and nothing but the

truth?

Mr. THURSTON. I do.

Colonel HAYNES. I do.

Ms. MYERS. I do.

Mr. PUTNAM. Thank you. Note for the record that the witnesses

responded in the affirmative.

We will begin the second panel with Dr. Margaret Myers, the

Deputy Assistant Secretary of Defense, Command, Control, Communications, and Intelligence.

Welcome. You are recognized.

STATEMENTS OF MARGARET MYERS, DEPUTY ASSISTANT SECRETARY OF DEFENSE, COMMAND, CONTROL, COMMUNICATIONS, AND INTELLIGENCE [C3I], DEPARTMENT OF DEFENSE; GARY THURSTON, DEFENSE CONTRACT MANAGEMENT AGENCY, DEPARTMENT OF DEFENSE; AND COLONEL

JAKE HAYNES, PROGRAM DIRECTOR, SPS PROGRAM OFFICE,

DEFENSE CONTRACT MANAGEMENT AGENCY, DEPARTMENT

OF DEFENSE

Ms. MYERS. Good morning. Mr. Chairman, the director of defense

procurement, Ms. Lee, regrets not being here today, but she had

a previous commitment to host the DOD-sponsored SPS users’ conference.

Mr. PUTNAM. We won’t hold it against her. Nobody would have

been here to listen, anyway, except me.

Ms. MYERS. All right. Well, I appreciate the opportunity to discuss the DOD chief information officer’s oversight of SPS. My organization is responsible for acquisition and Clinger-Cohen Act oversight of the SPS.

The DOD CIO, Mr. John Stenda, is the milestone decision authority for SPS. A key part of this responsibility is ensuring that

the program complies with the Department’s acquisition policies

and the Clinger-Cohen Act. The 1994 initiative of SPS as an acquisition program occurred prior to the Clinger-Cohen Act. By mid

1997, however, we began to retrofit SPS to meet the act’s requirements. One particularly bright spot is the procurement community’s initiative to document the as-is and to-be end-to-end procurement processes consistent with the Clinger-Cohen Act mandates for

enterprise architectures and business process reengineering.

In mid 1998 the Department set two performance goals that significantly impacted SPS. These were a successful Y2K changeover

and a transition to paperless contracting. As a result of senior leadership emphasis, both outcomes were achieved by January 2000.

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SPS played a critical role in retiring non-compliant legacy procurement systems and in making the contracting process over 80 percent paperless.

In spite of intensive management oversight, however, the SPS

program experienced some problems during this period, and we

took appropriate risk management actions, such as directing the

program manager to re-baseline the program.

We are aware that the SPS program still has issues that need

attention. Nearly a year ago, my boss formally asked the director

for Defense procurement to conduct a program review. As a result,

she sponsored two independent reviews, and we are in agreement

with the findings.

The director for Defense procurement and I will continue to review the program with the stakeholders to ensure that the acquisition direction is properly executed. We look forward to working

with the committee to ensure that this program is a success.

Mr. Chairman, this concludes my testimony. I would be happy to

answer any questions you may have.

Mr. PUTNAM. Thank you very much, Dr. Myers.

[The prepared statement of Ms. Myers follows:]

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Mr. PUTNAM. Thank you very much, Dr. Myers. At this time I’d

recognize Mr. Gary Thurston, Defense Contract Management Agency, Department of Defense.

You are recognized.

Mr. THURSTON. Good morning, Mr. Chairman. I appreciate the

opportunity to be here today to discuss the standard procurement

system. I will summarize my submitted testimony with a review of

some of the history of this program, outline the progress through

August 2001, and address some of the concerns that have been

raised about the system.

As the director of Defense procurement stated in her written testimony, the Department initiated the program in 1994. Most of the

Department’s contract writing and invoice payment systems were

then approaching the ends of their useful lives and would soon

need replacement. The Department decided that it would be far

more cost effective to develop just one standard system to create

and manage contracts and make invoice payments than to separately replace each of the systems being used. That way the Department would save on systems development costs and also enjoy

considerable additional savings by updating and maintaining only

one system instead of many. Thousands of users at 777 locations

are using the standard procurement system worldwide. Roughly

one-third of the Department’s contracting actions in both numbers

and dollars are being accomplished by the standard procurement

system. Four existing major contracting systems needing replacement have been retired, and plans are on hand to replace ten more

such major systems.

As regards to the economic value of this program, I understand

the General Accounting Office has criticized some of the methods

and assumptions used in the Department’s two analysis of the

value of the standard procurement system. I will only note here

that my staff, as well as staff from the Office of the Department

of Defense Chief Information Officer, have all reviewed the latest

economic analysis and have assured me that the program, despite

its increase in cost and schedule, still has a net positive return.

That makes sense to me, given what I know about the size and

complexity of some of the elderly contracting systems now in use.

They would have to be replaced separately if it were not for the

fact the standard system will replace them all.

I also suggest an additional value not yet fully accounted for in

any analysis will become apparent in the timeliness and accuracy

of the management information available to the Department once

all the new systems in the end-to-end procurement process model

are on line and fully operational.

In summary, we began the program with an open competition of

a commercial item from industry sources. We did a two-phase selection process. We used user assessment criteria and financial criteria for selecting the most-qualified vendor. We justified investment in the program. We have one-third of the Defense work force

using the standard system. Procurement professionals in the Army,

Navy, Air Force, and Defense agencies are performing their operational mission with the standard procurement system. We are improving the software to respond to user concerns. The SPS acquisiVerDate 11-MAY-2000 11:09 Mar 17, 2003 Jkt 000000 PO 00000 Frm 00068 Fmt 6633 Sfmt 6633 D:\DOCS\84232.TXT HGOVREF1 PsN: HGOVREF1
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tion is a major undertaking to revolutionize the procurement processes and systems operating with the Defense Department.

In response to your question—can the DOD procurement process

be standardized—I believe it can. The SPS software is only one

facet, though. Users’ willingness to change is also vital to the

standardization of the DOD procurement process.

That concludes my opening remarks. I look forward to answering

any questions you may have.

Mr. PUTNAM. Thank you very much, Mr. Thurston.

[The prepared statement of Mr. Thurston follows:]

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Mr. PUTNAM. At this time I would like to call upon Colonel Jake

Haynes, the program director for the SPS Program Office, Defense

Contract Management Agency, Department of Defense.

Colonel, welcome to this committee.

Colonel HAYNES. Mr. Chairman and members of the committee,

good morning. I appreciate the opportunity to appear before you

today to discuss the SPS program and its crucial role in standardizing Defense procurement practices. This program has tremendous

importance for our ability to meet the needs of our servicemen and

women and, consequently, has a vital impact upon our overall military readiness.

On 6 August of last year, I assumed the position of program

manager for the SPS system. As a result, other witnesses before

this committee can better address the history and the background

of the SPS program. I believe my testimony will avoid repetition

of other witnesses and contribute to the committee’s understanding

of the SPS program by focusing on three major areas.

First, I would like to contribute my initial impressions of the SPS

program upon assuming my current position.

Second, I would like to offer my perspective on some of my current concerns expressed about the SPS program.

Finally, I would like to make a few comments about the actions

that can help facilitate greater acceptance of the SPS program

throughout the Defense procurement community.

Upon assuming my current position, I was struck by the enormity of the SPS program. In many ways, it was unprecedented step

from both the Department of Defense procurement community and

information technology within the Department of Defense. This initiative was designed to replace several dozen existing legacy systems with a single system based upon commercial, off-the-shelf

COTS business software. Its reach included the entire Defense professional procurement community—over 43,000 different users in

all services and Defense agencies.

Finally, the comprehensive approach included both standardization of existing procurement functions as well as the inclusion of

enhanced contract management tools that will ultimately result in

end-to-end integrated processes with interoperability across the entire Department of Defense. When I fully understood the scope of

the SPS program, I was impressed by the progress reached prior

to my arrival.

SPS has now been deployed to 21,900 procurement professionals

at 773 sites, reaching over half of all intended users and over twothirds of intended sites. In fiscal year 2001, Defense procurement

professionals used SPS for over 480,000 contracting awards, procuring more than 36 billion in goods and services. The fact that

such a massive undertaking has advanced to the current level of

implementation is a credit to the numerous Defense officials, including my colleagues on this panel.

At the same time, I was also impressed by the enormous benefits

offered by standardizing of Defense procurement practices in general and the potential advantages of the SPS program, in particular.

A single, integrated procurement process would allow the Department of Defense advantages almost too numerous to mention,

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including greater financial accuracy, improved operational efficiency, and substantial cost savings. Implementation of this program will provide the Department with greater resource visibility

needed to optimize spending and track funding, improve management and oversight capabilities, and ultimately provide better support to America’s war fighters.

It will be accomplished—these objectives, by reducing administrative time required for contract management and allowing procurement personnel to focus on quality of goods and services, as

well as eventually reducing administrative or overhead costs associated with contract management and freeing more appropriated

funding to go to the needs of the war fighter.

SPS will also enhance productivity and interoperability of our

procurement work force. This standardization will be an important

component in the Department’s ability to comply with the requirements of the Chief Financial Officer Act and balance his books.

In summary, SPS is transforming the Defense procurement community, and its full benefits are just beginning to be recognized. An

appreciation of the size of the SPS program, both in terms of the

number of users and breadth of procurement functions, helps one

understand the likelihood, if not inability, of challenging in implementation phase. As I began reviewing various reports and talking

to numerous people involved in the program, from supervisory officials to end users, I developed an understanding of both the concerns expressed by this committee and the GAO and the actions

being taken to address them.

In reviewing comments on the SPS program to date, many have

focused on the lack of user satisfaction with the new system. I fully

appreciate the importance of acceptance of SPS within the user

community and would like to address the situation in a number of

different respects.

First, the Inspector General Audit on Standardized Procurement

System Use and User Satisfaction Report, number D2001–075,

dated March 13, 2001, noted many users—many areas for training

enhancements and improvement throughout the program. The current program budget includes extremely limited funds for exchange

management activities, which include training, business process reengineering, and dedicated communication activities dedicated at

end users. All parties, including the PMO, services, agencies, and

contractor believe that the program requires additional training efforts. We will be engaged in a continuing effort to identify means

and resources to enhance the quality and amount of training available to end users.

I would also like to stress the broader concept of change management with regard to end user acceptance of the SPS program. Communication and an understanding of the ultimate objectives of any

business change or technology implementation is critical for success. The evolving nature of the program and the focus on the technical and software resulted in less than clear communication to the

end users regarding the goals of the program and its impact on the

procurement work force, which, in turn, led to unmanaged and

often unrealistic expectation for both the SPS program and the implementation process.

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Greater communication on the broader goals of the SPS program

and the upcoming deployment of SPS version 4.2, with its improvements and add-in functionality, would help remedy their situation.

Nonetheless, we also recognize the absolute importance of being

responsive to the user needs and taking positive actions to meet

user expectation for the SPS program. My No. 1 focus is on user

satisfaction with SPS. As described in the testimony of Director

Lee, the Department has undertaken a number of steps designed

to ensure overall customer satisfaction with regards to all aspects

of the SPS program.

The Department has fully committed to taking actions to ensure

that end user needs are met by both the operational capabilities of

the new SPS version 4.2 and the overall deployment process.

I would like to address some of the new measures we have taken

within the Program Management Office to implement our new

focus on the end user satisfaction. We have adopted a two-prong

approach that involves improving both PMO processes and communications with the SPS users. Within the PMO, we have set up and

are enforcing discipline processes to handle all aspects of the SPS

program, including the requirements process for the new version

4.2. In this area, as in all areas of the SPS program, we are focusing on the SPS user. I also have a strong new management team

in place within the PMO with a defined set of responsibilities and

priorities, including monitoring and reporting on user satisfaction

issues.

We are also taking steps to increase communications with users

about the SPS program in both directions. First, we are continually

stressing to users the importance of their programs and the many

means of communications devices available to them. For example,

my first contribution to the SPS program newsletter stressed our

goals of addressing users’ concerns in improving communication.

We have also initiated an SPS communication survey that we expect to provide the PMO with both substantive comments on the

SPS program and ideas on how we can continue to improve our

communications with the SPS users.

Finally, this very week we have been conducting the SPS end

users conference sponsored by the PMO with the support of the

program contractor. I am confident this dialog would benefit the

program. At the same time, a vital part of the PMO dialog with

users must involve continuing efforts to explain why the SPS program is so important to the future of the Department. We understand the perspective of a user being faced with a challenging—a

challenge of learning a new system that does not seem to offer obvious advantage to their legacy systems. Once users better appreciate the Department’s commitment to the end-to-end model and

the critical importance of linking procurement, financial, and logistics communities in an integrated process, we believe that users

will then understand the need to implement the SPS program.

Since I assumed my responsibilities as program manager for the

SPS program, I believe that we have made major strides in restoring focus to the basic and crucial task of making SPS work at the

user level. I am convinced that the commitment of the Department’s team to identify and implement actions more oriented toVerDate 11-MAY-2000 11:09 Mar 17, 2003 Jkt 000000 PO 00000 Frm 00079 Fmt 6633 Sfmt 6633 D:\DOCS\84232.TXT HGOVREF1 PsN: HGOVREF1
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ward user satisfaction will have beneficial effects throughout the

SPS program.

I am also pleased to report that the program contract is fully

supportive of the need to increase end user satisfaction within the

SPS program and has cooperated fully with the efforts recently undertaken to devise an improved approach to resolving these issues.

In summary, the Department recognizes both the importance of

the SPS program and the continuing need to address the concerns

expressed to this committee. Achieving greater efficiency in the Department’s business practices is a crucial means of meeting modern

procurement challenges and enhancing overall readiness to meet

21st century missions. We recognize that we can only achieve our

goals through a more-focused effort to maximize our greatest resource—the skilled and dedicated professionals who serve our Nation at all levels.

We will be working to provide the committee with confidence

that ultimately standardization of the Department of Defense procurement process can and will occur in the years ahead and that

our national security will be improved as a result.

Thank you for the opportunity to appear before this committee.

I will be pleased to answer any questions at this time.

Mr. PUTNAM. Thank you very much, Colonel Haynes. We appreciate your being here.

[The prepared statement of Colonel Haynes follows:]

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Mr. PUTNAM. At this time the Chair recognizes and acknowledges

for the record that the gentleman from Massachusetts, Mr. Lynch,

has arrived, and we welcome him to the subcommittee.

Mr. LYNCH. Thank you, Mr. Chairman. I can say on this committee I am very proud to serve and I’m here to learn, here to listen,

so I thank you for your testimony.

Mr. PUTNAM. And the distinguished gentleman from New York,

the chairman emeritus of the International Relations Committee,

Mr. Gilman.

Mr. Gilman, I understand you have a statement. You are recognized.

Mr. GILMAN. Thank you very much, Mr. Chairman. I am being

called to another meeting, and I appreciate your calling on me at

this time, and I want to welcome our panelists on a very important

issue and thank you for convening today’s hearing to examine the

status of the standard procurement system for the Department of

Defense.

The oversight of Federal agencies is an extremely important congressional responsibility, and, of course, this committee carries out

that responsibility. Nowhere in today’s climate is it more important

than to make certain our Defense Department has the ways and

means to do whatever they need to do.

Given the current military environment in which we find ourselves, it is prudent and appropriate that we work to make certain

that the Department of Defense is getting the best value for the

money it spends on new equipment, and with the increased budget

it becomes even more important.

In 1992, the GAO listed DOD contract management as a high

risk component that required additional senior management oversight. This led the Department of Defense to initiate a 12-year program to create and implement a standard procurement system, the

SPS, which we are examining today to replace a myriad arrangement that evolved over 35 years, and when I take a look at DOD’s

chart on—GAO’s chart on DOD’s current systems environment for

contract and vendor pay, I wonder how anyone can keep up with

all of those crossed lines that take place and all of the other agencies that are involved.

We are now 7 years into that progress, and we’ve already missed

the original target date of March 2000, for full implementation of

this system. And the Defense Department revised its target date,

as I understand it, by 31⁄2 years to September 2003—is that correct?

Colonel HAYNES. Yes.

Mr. GILMAN. But that new goal may also be further delayed, as

I understand it.

Given the Administration has requested historic increases in Defense spending over the next 5 years, it makes sense then for the

Congress to require that the DOD’s procurement system be as

streamlined and as efficient as possible as we perform our oversight responsibilities.

Just two quick questions before I have to run.

What cost savings have been realized to date as a result of implementing SPS? I address that to any of our panelists who could tell

us that.

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Mr. THURSTON. We did a productivity study last summer, and we

have documented, we believe, around $75 million on an annual

basis.

Mr. GILMAN. And that has been the accumulation of savings each

and every year?

Mr. THURSTON. That was just during 2001 with the deployments

that happened from 1997 through 2001. We expect that number to

grow as more deployments would happen and more use would happen.

Mr. GILMAN. And how do you determine those cost savings?

Mr. THURSTON. We took a team and went out to 50-some sites

and actually conducted interviews with the people who were using

the system and went through a list of productivity factors that we

had.

Mr. GILMAN. Now, can the panelists tell me about the justification that exists for the Department’s continued investment in SPS?

Any of the panelists? Is there justification? I notice that GAO has

raised some issues about the continued investment, and they say

it has yet to be justified. What are your thoughts?

Ms. MYERS. The SPS has followed all of the Defense Department’s acquisition policies, to include doing an economic analysis.

I believe the disagreement comes in that the GAO doesn’t like the

way we did the economic analysis.

I heard the number cited earlier of this is a $1 billion program.

From our perspective, it is about a $300 million program. The difference comes in that the GAO would like us to account for infrastructure and program cost.

Let me give you an example. If I have a computer on my desktop

and somebody comes to me and asks me to load SPS so that I can

write a contract, or whatever, we would not count the cost of that

computer on my desk. We would consider it part of the infrastructure that’s already there. It would be subject to normal upgrades

with all desktop automation, as is normal. The GAO believes that

we should have counted all that infrastructure, and if you do count

it, that’s where they get up to $1 billion.

Mr. GILMAN. Let me ask, then, if the program costs over $300

million, is that right, and you’re getting a savings of $75

million——

Ms. MYERS. Per year.

Mr. GILMAN. Yes. Where is the cost—where is the benefit of that

system? Where is the actual benefit in dollars?

Mr. THURSTON. The $300 million cost was from 1995 when we

started the program through 2005, a 10-year program cost. And

what I was suggesting was a $75 million on an annual basis. So

the accumulation over once we started the full-scale deployment

from 1999 and on, you will have a 75 million, so in 4 years you

would recoup that investment.

Mr. GILMAN. Thank you very much.

Thank you, Mr. Chairman.

Mr. PUTNAM. Thank you, Mr. Chairman.

Dr. Myers, my understanding is your office is in charge of the

milestones. What is the next milestone for SPS and when will we

know whether it has been achieved?

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Ms. MYERS. We have directed the program manager to take what

we’ve called a ‘‘strategic pause,’’ and he has, at this point in time,

some number of requirements that he has assembled that will comprise release 4.2. He has also taken a cut in his budget for this fiscal year. So we have asked him to baseline or re-baseline release

4.2 based on the funding that is available and determine what requirements he can deliver with that funding and how long it will

take. His current schedule looks like we’re talking this would happen roughly in the next year.

That is essentially part one is baseline 4.2, and we will do the

economic analysis that the GAO has requested for that increment.

Anything beyond that we consider part of release 5.0, and we

have directed the procurement users community to identify and to

essentially re-look the requirements for release 5.0. This is where

we got into the discussion in the last panel of the major weapons

systems. So we, the acquisition community, have asked the functional owners of this process to take a look at their requirements

and reassess whether it is prudent to proceed with 5.0. It is entirely possible that they will do that analysis of alternatives and

come back and say that we will stop this program at the end of release 4.2. They may come back and say, ‘‘No, we want to proceed.’’

They may come back and say, ‘‘We found a system in the Air Force

that we think we could adopt.’’ At this point, they are just beginning that analysis.

Mr. PUTNAM. These milestone 4.2 and 5, those are versions?

Ms. MYERS. Yes.

Mr. PUTNAM. OK.

The gentleman from Massachusetts, Mr. Lynch, is recognized.

Mr. LYNCH. Thank you, Mr. Chairman.

Given the significant increase in Defense spending—and certainly we all want to support this President, and especially under

today’s circumstances—I think it would be important, however, to

make sure that we are spending all this money wisely.

One of the things that I find disturbing in the GAO report—and

I don’t accept it all as gospel, but they certainly know when they’re

not getting information that they request, and that’s one of the

troubling parts of their report is that they, when they asked for information, they didn’t get it. And I want you to address that concern, as well as the GAO’s assessment that there was no system

of accountability to know whether we are meeting certain goals

along the way. That is troubling, as well. So I don’t know which

of the panelists would like to address the GAO’s concerns, and if

you can’t address those specifically, then suggest to me what the

source of the GAO’s concerns are or why they would take this position.

Colonel HAYNES. Sir, I would like to address it.

Mr. LIEBERMAN. Sure.

Colonel HAYNES. From 6 August as the new program manager or

the program manager of the system, I can say that we have engaged fully with GAO to address their concerns, to provide the information that they have requested in a timely manner, and we

have a track record of everything that we’ve released to them.

In addition, we have invited GAO to come in and be a part of

our integrated process, our reviews where we go through every asVerDate 11-MAY-2000 11:09 Mar 17, 2003 Jkt 000000 PO 00000 Frm 00089 Fmt 6633 Sfmt 6633 D:\DOCS\84232.TXT HGOVREF1 PsN: HGOVREF1
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pect of the program addressing the processes normalized in software development, and they have been a part of that.

Approximately 2 weeks ago members of the GAO staff came and

spent approximately 8 hours in the office to better understand our

path forward, our get well plan, and the processes that we currently have in place to ensure that the quality of the software

meets the users’ needs.

So I can only speak from 6 August and to the current time, and

I can attest to the fact that we have been fully engaged with GAO

and very cooperative in their requests.

Mr. LYNCH. Thank you, Colonel.

What of the other sense that there was not a reliable system

of——

Mr. PUTNAM. Mr. Lynch, I think Mr. Thurston wanted to answer

your first question.

Mr. LYNCH. Sure. That would be great.

Mr. PUTNAM. I didn’t mean to cut you off, but——

Mr. LYNCH. All right.

Mr. PUTNAM [continuing]. I wanted you to get a full——

Mr. LYNCH. Thank you, Mr. Chairman.

Mr. THURSTON. Since the report was on my watch, I wanted to

respond about not getting the information that they were requesting.

I’m not sure exactly what specific text. If it was in the area that

we were not able to supply actual cost of the program—was that

related to——

Mr. LYNCH. That would do it. Yes.

Mr. THURSTON. OK. That’s a difficult job in our Department

when we look at implementing an information technology system.

As Dr. Myers talked about, when we have 700 sites and 20,000

users, what expense has been spent at each of those sites on the

IT information was not something that us, as a program office,

could go out and collect, nor, when we asked for that from the military departments, we were provided some ballpark information,

but, again, it is a tiering or layering effect of how a site through

a command into a military department. So when they asked why

we could not report actual cost, we had no way to collect actual

cost. That’s one of our issues in the Department.

Mr. LYNCH. So no one is tracking that?

Mr. THURSTON. Well, not to say that no one is tracking it. When

you look at the whole Department and try to understand, in all the

different pieces that we were touching, it was not obtainable. I

think even Mr. Lieberman talked about it is not that it’s illogical

in an audit statement, but to go down to the very specifics is an

issue for the Department, that it’s tracked about many different

levels.

Mr. LYNCH. OK. Well, at least you’re honest. Thank you. That

will undoubtedly shake the confidence of some Members who would

otherwise be willing to vote for—you know, go to appropriations. If

we don’t have a reliable system of accounting for when and where

and how these dollars are being spent, it’s sort of a blank check,

don’t you think?

Mr. THURSTON. I don’t see it as a blank check, sir. I think it is

the scope of what the GAO is requiring us to obtain information

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on as a program office. Just as Dr. Myers talked about, trying for

us as a program office to track all the individual expense at each

of the sites of what they’re spending on information technology—

their personal computers, their servers, their communication

lines—where I’m just providing software to that operation to perform their mission, but I’m not out there collecting all the information on all of their finances of putting in support infrastructure.

Mr. LYNCH. But as a business practice, building in accountability, that would be an important part of that.

Mr. THURSTON. Well, that’s a part that we’re heading down with

the standardization for the procurement community and the standardization of the finance community and the standardization of the

logistics community that have all of these systems that can interact

and flow data to provide those type of an accounting process.

Ms. MYERS. I believe there is a nuance here in that the Army,

Navy, and Air Force, and the Defense agencies account for what

they spend on information technology infrastructure, so they know

what they spend. The program office doesn’t know what the Navy

spent to put—to upgrade the computers on people’s desktops that

they might have upgraded anyway and SPS happens to be one of

the applications running on those computers.

Mr. LYNCH. I understand what you’re saying in a general sense,

but I don’t—I mean, what—apparently what the GAO was looking

for was a breakdown on a per-site basis, what we’re spending here,

and, at least in their report that I have here, they’re not satisfied

that anybody knew what these things cost and, you know, there’s

no sense of accountability. So that would appear to be a problem.

Ms. MYERS. I think the issue——

Mr. LYNCH. From up here, anyway.

Ms. MYERS [continuing]. Is different channels of accountability,

and that we do not have an easy means to marry up what is spent

through one channel in IT infrastructure with what the program

manager was spending on SPS.

Mr. LYNCH. I must be honest with you. I find this conversation

surprising. It just—it would appear that, given the size of the

budget, there would be a greater level of accountability and a more

precise response to the GAO, that someone would find a way to respond to them so that they could do their job. That’s all I’m saying.

That’s all I have.

Mr. PUTNAM. Thank you, Mr. Lynch.

The Clinger-Cohen Act and OMB guidance provided framework

for IT investment management by setting the requirements for economically justifying proposed projects on the basis of reliable analysis of life cycle cost, benefits, risk, using those analysis throughout

the project’s life cycle, and doing so for large projects by dividing

them into a series of smaller incremental sub-projects or releases.

Now, in doing that the risk associated with these huge investments ought to be able to be effectively measured against cost,

schedule, capability, and our benefit expectations.

Now, we’ve heard testimony that DOD has not followed this incremental approach for funding and cost/benefit analysis. You represent those who are—those positions that are responsible for this,

so how do you respond to the criticism that it is not being acquired

and deployed under the specific guidance of Clinger-Cohen?

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Ms. MYERS. I think there are a couple of reasons here. No. 1, the

program was initiated before the Clinger-Cohen Act was passed, so

that it was—to as great as an extent as we could, we tried to retrofit the incremental strategy, but, again, it was difficult to change—

to make significant changes. We did, at the beginning of the SPS

program, require a thorough economic analysis, so the implication

is that none was done. There was one done. The issue is the GAO

would like to see a follow-on analysis for each increment.

We, in fact, had a difference of opinion with the GAO on whether

that was required. There were within my office several people who

worked on Senator Cohen’s staff at the time that the legislation

was written, and they believe that our methodology—our people believe that our methodology was appropriate. GAO felt otherwise.

We just found out last week—we asked GAO to go back and verify that, and their lawyers determined, I heard last week, that they

thought they were right, so we have agreed and the program manager will follow their guidance for doing any—an economic analysis

for increment 4.2.

Mr. PUTNAM. Anybody else want to pitch in on that one?

Colonel HAYNES. I’d like to also add that this, the EA, a scalable

EA to support incremental releases is something that we feel is in

concert with the GAO’s vision. More importantly is that the EA is

not used to satisfy a requirement but used in our business case

analysis to determine what the future of the program and how we

build version four, our user community.

So it is a—we’ve taken a very proactive stance, and we’ll feed the

data in real time to GAO and all of the other bodies that help support the program, to include OSD and the integrated process team

that provides oversight to our program prior to a milestone decision.

Mr. PUTNAM. Colonel, you’ve testified that 22,000 people in twothirds of the desired sites, half the users are equipped with the

SPS system, and last year it was used to purchase $36 billion

worth of whatever.

Colonel HAYNES. Yes, sir.

Mr. PUTNAM. How much—if we’re that far along in the process

on the ground, if two-thirds of the sites already have it and half

the people have it, then why at the macro level does it appear to

be so far behind, and why is there such a high level of dissatisfaction amongst those who are using it?

Colonel HAYNES. Sir, I’d like to answer the question in two parts.

First, I’d like to start with the latter part of your question. I mentioned in my testimony that when we deployed SPS to the user

community we, at the Department, did not communicate the overall benefits to the Department to the actual users on the ground,

and we could have done a better job, and we’re currently doing that

through our communication process to the users. Ms. JoAnn Patell

for DFAS, for example, is a keynote speaker at the SPS conference

in San Diego, ongoing as we speak.

Once the users understand what the benefits of the Department

from an end-to-end perspective, they then understand that the additional keystrokes or the source edits that we enforce on the front

end of SPS satisfies a greater need.

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Initially, most of the users thought that SPS would replace their

legacy system one for one, and that was not the case. The power

of SPS in providing end-to-end through EDI is much greater than

any legacy system that they currently have.

So as we communicate to our users, we are finding that the user

satisfaction is increasing through that process.

On the second part of the question, on the remaining one-third,

which does represent some of the weapons system community and

the ICP community, the original strategy to wait for 5.0 and 5.1

to deploy to those sites we have found was probably a flawed strategy in that it was a good deployment strategy, but for incremental

releases it is functionality that is required throughout the entire

SPS community.

We have seen some success in the weapons system community

with the current 41E version that’s currently in the Navy today in

the NAV-AR community. So we are starting to see SPS moving to

the other communities and satisfying some of those requirements.

Mr. PUTNAM. Another key SPS program commitment which was

indicated DOD failed to attain was to use commercially available

software, and this was discussed a little bit in the first panel. The

contractor has modified the commercial product extensively in an

attempt to tailor it to meet your needs. As a result, it has become

a DOD unique solution rather than a truly COTS product, and I’ve

got to tell you that all these acronyms sounds like a ‘‘Saturday

Night Live’’ skit. According to the program manager, SPS as a commercial product provided 45 percent of the functionality that you

need, but according to the industry best practices, software modifications to a commercial product should have 90 to 95 percent

functionality. Since it is now essentially a DOD-specific solution,

the Department will not be able to take advantage of the reduced

risk associated with using proven technology that a wide consumer

base participates in. As a result, DOD may not accrue the reduced

costs and greater benefits associated with the use of a COTS product.

Now, recognizing, of course, that there isn’t really anybody else

in the world out there like the Department of Defense, and so I

stipulate that, was it ever intended to be a true COTS product, and

why has it had to be modified so extensively after the original

choice was made that particular program was what met your

needs?

Mr. THURSTON. I’d like to respond to that. In 1994 the Department was assessing what to do to standardize its different business

communities. Each of the different business communities took an

approach of whether to do development for a unique system or go

to a commercial and determine which would be the best.

We did a request to industry, and they delivered about eight different systems that we looked at, and we found out that there were

systems that could do procurement. So when we ran the competitive process, we found that the best system could only do 45 percent, and none of the other systems were even above that, so we

knew we were starting with a commercial base that did have a

proven technology that could operate, but we knew that it would

only perform a piece of the Defense method of doing procurement.

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Most of the standardization has been about connecting all the

systems, as Mr. Gilman pointed out, among the different finance

and logistics systems. That is where a lot of the development has

been. There has been some development in tailoring the way we do

procurement, because, as you know, there is a Federal acquisition

regulations and then there is the Defense Federal acquisition regulations, and so we knew that we would be commercially derived but

that we would have to do development to meet the full DOD commitment of procurement.

Mr. PUTNAM. Dr. Myers, did you want to add anything to that?

I’m not putting you on the spot.

Ms. MYERS. No, thank you.

Mr. PUTNAM. Colonel.

Colonel HAYNES. No, sir.

Mr. PUTNAM. Are all DOD components and agencies required to

acquire and deploy SPS?

Colonel HAYNES. As part of our deployment strategy, the 43,000

users that is the target audience for SPS will accommodate all of

the DOD and the majority of the other Defense agencies.

Mr. PUTNAM. At this time we are going to have another vote. I

would ask the commitment from each of you to submit answers to

questions that the subcommittee may present to you in writing. I

appreciate that commitment and I thank you very much for your

time. I apologize that we’re cutoff and aren’t able to more fully explore these and give you an opportunity to be more fully heard. It

is a crazy congressional schedule and I apologize for that, but we

thank you again for being here. We thank the first panel. We

thank our guests. With that, the subcommittee stands adjourned.

[Whereupon, at 11:38 a.m., the subcommittee was recessed, to reconvene at the call of the Chair.]

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