DOD Financial Management: Implementation Weaknesses in Army and Air Force Business Systems Could Jeopardize DOD's Auditability Goals
Published: 2012-02-28T00:00:00

Fast Facts:

Highlights:
section_title: Why GAO Did This Study
paragraphs: The Department of Defense (DOD) has stated that successful implementation of its enterprise resource planning (ERP) systems is critical to DODs auditability goals. An ERP is an automated system that performs a variety of business-related functions. The National Defense Authorization Act for Fiscal Year 2010 mandates that DOD be able to validate its financial statements as audit ready by September 30, 2017. GAO has previously reported that DOD has not effectively employed acquisition management controls to help ensure that the ERPs deliver the promised capabilities on time and within budget. GAO was asked to determine issues being encountered by the Army and the Air Force in the implementation of selected ERPs. GAO reviewed independent assessments and reports and interviewed the systems users and program management office officials.
section_title: What GAO Found
paragraphs: DOD has invested billions of dollars and will invest billions more to develop and implement its ERPs. The ERPs play a key role in DODs goal of audit readiness by fiscal year 2017. Furthermore, in light of the Secretary of Defenses decision that the Statement of Budgetary Resources is to be audit ready by fiscal year 2014, it is critical that DOD effectively implement the ERPs to support its auditability goals.
Assessments by independent agencies of the Armys General Fund Enterprise Business System (GFEBS) and the Global Combat Support System and the Air Forces Defense Enterprise and Accounting Management System (DEAMS) and Expeditionary Combat Support System identified operational problems, such as deficiencies in data accuracy, inability to generate auditable financial reports, and the need for manual workarounds. Further, according to DFAS users, GFEBS and DEAMS did not provide all expected capabilities in accounting and decision support. For example:
Approximately two-thirds of invoice and receipt data must be manually entered into GFEBS from the invoicing and receiving system due to interface problems. Army officials explained that the primary cause of the problem is that the interface specification that GFEBS is required by DOD to use does not provide the same level of functionality as the interface specification used by the legacy systems. At the time of our review, Army officials stated that they are working with DOD to resolve the problem, but no time frame for resolution had been established.
DEAMS cannot produce the monthly accounts receivable aging report as intended. The DEAMS Financial Management Office is aware of the problems and is in the process of resolving them. However, at the time of our review, no timetable had been set for the problems resolution.
DOD oversight authority has limited the deployment of GFEBS and DEAMS based upon the results of the independent assessments. Continued monitoring of DOD ERPs is essential to identify system weaknesses and to help ensure that the systems provide the promised capabilities. Without timely and effective corrective action, the department is at risk of making investment and system deployment decisions that may not provide the desired resultsimprovements in the departments business operations.
According to DFAS personnel, the training they received for GFEBS and DEAMS did not fully meet their needs. DFAS personnel informed us that the training focused on an overview of GFEBS and DEAMS and how the systems were supposed to operate. While this was beneficial in identifying how GFEBS and DEAMS were different from the existing legacy systems, the training focused too much on concepts rather than the skills needed for DFAS users to perform their day-to-day operations.
section_title: What GAO Recommends
paragraphs: GAO is making five recommendations to the Secretary of Defense to ensure the correction of system problems prior to further system deployment, including user training. DOD concurred with four and partially concurred with one of the recommendations and described its efforts to address them.

section_title: Letter
subsections: section_title: Objective, Scope, and Methodology
paragraphs: GAO, Defense Logistics: Actions Needed to Improve Implementation of the Army  Logistics Modernization Program, GAO-10-461 (Washington, D.C.: Apr. 30, 2010); DOD  Business Systems Modernization: Important Management Controls Being Implemented on  Major Navy Program, but Improvements Needed in Key Areas, GAO-08-896 (Washington,  D.C.: Sept. 8, 2008); DOD Business Transformation: Air Force’s Current Approach  Increases Risk That Asset Visibility Goals and Transformation Priorities Will Not Be  Achieved, GAO-08-866 (Washington, D.C.: Aug. 8, 2008); DOD Business Systems  Modernization: Key Marine Corps System Acquisition Needs to Be Better Justified,  Defined, and Managed, GAO-08-822 (Washington, D.C.: July 28, 2008); and DOD  Business Transformation: Lack of an Integrated Strategy Puts the Army’s Asset Visibility  System Investments at Risk, GAO-07-860 (Washington, D.C.: July 27, 2007). because of the concerns discussed in our October 2010 report,importance of these systems to the Army, the Air Force, and the  department’s audit-readiness goals.
The Deputy Chief Management Officer of the department assists the Chief Management  Officer (CMO), who is responsible for strategic planning, performance management,  process improvement, and defense business system oversight. The individual military  services each have a CMO and DCMO, as well. findings and conclusions based on our audit objective. We requested  comments on a draft of this report from the Secretary of Defense or his  designee. We received written comments from the Department of  Defense Deputy Chief Management Officer, which are reprinted in  appendix I.
section_title: Background
paragraphs: DOD is one of the largest and most complex organizations in the world.  For fiscal year 2012, the budget requested for the department was  approximately $671 billion—$553 billion in discretionary budget authority  and $118 billion to support overseas contingency operations. To support  its operations, DOD performs an assortment of interrelated and  interdependent business functions, such as logistics, procurement, health  care, and financial management. As we have previously reported, the  DOD systems environment that supports these business functions has  been overly complex and error prone, characterized by (1) little  standardization across the department, (2) multiple systems performing  the same tasks, (3) the same data stored in multiple systems, and (4) the  need for data to be entered manually into multiple systems. For fiscal  year 2012, the department requested about $17.3 billion to operate,  maintain, and modernize its business systems. DOD has reported that it  relies on 2,258 business systems, including 335 financial management  systems, 709 human resource management systems, 645 logistics  systems, 243 real property and installation systems, and 281 weapon  acquisition management systems.
subsections: section_title: DOD’s ERP Efforts
paragraphs: As we reported in our October 2010 report, DOD has identified 10 ERPs  as critical to transforming the department’s business operations and  addressing some of its long-standing weaknesses in financial  management, business systems modernization, and supply chain  management. The department has estimated that the successful  implementation of these 10 ERPs will replace over 500 legacy systems  that reportedly cost hundreds of millions of dollars to operate annually.  We further reported that, based upon data provided by DOD, 6 of the 10  ERPs DOD had identified as critical to transforming its business  operations had experienced schedule delays ranging from 2 to 12 years,  and 5 had incurred cost increases totaling an estimated $6.9 billion. The 4  ERPs we reviewed for this report are briefly described below. The 6  ERPs we did not review for this report are described in appendix II.
GFEBS was initiated in October 2004 and is intended to support the  Army’s standardized financial management and accounting practices   with the exception of the Army Corps of  for the Army’s general fund, Engineers, which will continue to use its existing financial system, the  Corps of Engineers Financial Management System. GFEBS is  intended to allow the Army to share financial, asset, and accounting  data across the active Army, the Army National Guard, and the Army  Reserve. The Army estimates that when fully implemented, GFEBS  will be used to control and account for about $140 billion in annual  spending. According to the Army DCMO, GFEBS will be fully  deployed to all intended users by July 2012. According to the Army,  the GFEBS life-cycle cost estimateof September 30, 2011, the Army reported that it had obligated  approximately $770 million and expended $684 million for GFEBS.  is approximately $1.3 billion. As
GCSS-Army was initiated in December 2003 and is expected to  integrate multiple logistics functions by replacing numerous legacy  systems and interfaces. The system will provide tactical units with a  common authoritative source for financial and related nonfinancial  data, such as information related to maintenance and transportation of  equipment. The system is also intended to help the Army achieve total  asset visibility. GCSS-Army will manage over $49 billion in annual  spending by the active Army, National Guard, and the Army Reserve.  The May 2011 Financial Improvement and Audit Readiness (FIAR)  Plan notes that the full-deployment date has been changed from the  fourth quarter of fiscal year 2015 to the fourth quarter of fiscal year  2017 in order to reduce the operational risk of having tactical units in  training and combat in a mixed logistics information systems  environment. In August 2011, the program received approval to be  placed into limited deployment to support operational testing. The  Army estimates the life-cycle cost to be approximately $4.2 billion. As  of September 30, 2011, the Army reported that it had obligated  approximately $890 million and expended $804 million for GCSS- Army.
DEAMS was initiated in August 2003 and is intended to provide the  Air Force with the entire spectrum of financial management  capabilities, including collections, commitments and obligations, cost  accounting, general ledger, funds control, receipts and acceptance,  accounts payable and disbursement, billing, and financial reporting for  the general fund. According to Air Force officials, when DEAMS is  fully operational, it is expected to maintain control and accountability  for about $160 billion in annual spending. The Air Force anticipates  that DEAMS will be fully deployed by July 2016. Air Force officials  estimate the DEAMS life-cycle cost estimate to be approximately      $2 billion. As of September 30, 2011, the Air Force reported that it had  obligated approximately $315 million and expended $301 million for  DEAMS.
ECSS was initiated in January 2004 and is intended to provide the Air  Force with a single, integrated logistics system—including  transportation, supply, maintenance and repair, engineering and  acquisition—for both the Air Force’s general and working capital  funds. ECSS is also intended to provide the financial management  and accounting functions for the Air Force’s working capital fund  operations. When fully implemented, ECSS is expected to control and  account for about $122 billion of inventory. As noted in the May 2011  FIAR Plan, the full-deployment decision and the full deployment for  the first release only are scheduled for the first and fourth quarters of  fiscal year 2013. According to the May 2011 FIAR Plan, the two  events had originally been scheduled for the third quarter of fiscal  year 2012 and the third quarter of fiscal year 2013. According to Air  Force officials, the ECSS life-cycle cost estimate is approximately  $5.2 billion. As of September 30, 2011, the Air Force reported that it  had obligated approximately $986 million and expended $876 million  for ECSS.
section_title: Deficiencies in ERP Capabilities and Implementation Could Jeopardize DOD’s Progress toward Accountability and Auditability
paragraphs: Deficiencies in the capability of GFEBS, GCSS-Army, DEAMS, and  ECSS to perform essential functions as intended at sites of deployment  have impaired the systems’ efficiency and effectiveness in accounting for  business transactions and reporting reliable financial information.  Independent assessments conducted by ATEC and AFOTEC have  identified operational problems with each system. The reported problems  include areas such as data quality, data conversion, system interfaces,  and training. DFAS users of GFEBS and DEAMS also told us they were  having difficulties in using the systems to perform their day-to-day  operations. The problems identified by DFAS users include  interoperability deficiencies between legacy systems and the new ERP  systems, lack of query and ad hoc reporting capabilities, and reduced  visibility for tracing transactions to resolve accounting differences. To  compensate, DFAS users were relying on manual workarounds to enter  data into the ERPs, thus adversely impacting operational efficiency. Using  manual workarounds to accomplish day-to-day tasks falls far short of the  vision DOD has for its business system investments, which is to improve  the efficiency and effectiveness of its support operations. Army and Air  Force officials told us that they have plans to address these issues, and  the Army has plans to validate the audit readiness of GFEBS in a series  of independent auditor examinations of selected business processes and  controls in the GFEBS environment over the next several fiscal years.
While we were told that the Army and the Air Force have corrective  actions underway to address identified deficiencies, specific time lines  have not been developed for purposes of tracking and monitoring  progress. Monitoring the status of the corrective actions, along with the  overall progress of DOD ERPs, is essential to help ensure that the  systems are implemented on schedule and within budget, and provide the  promised capabilities. We have previously reported that if a system is  deployed and not providing users with the intended capabilities, it can  have an adverse effect on agency operations.
Implementation efforts for both GFEBS and DEAMS have been impacted  by inadequate training that did not meet the needs of users. The system  training that DFAS users received, officials told us, presented an overview  of how the systems were supposed to operate rather than the training  necessary for users to perform day-to-day operations. According to DFAS  officials, the training was not user role-based and lacked instructions for  data mining and managerial reporting.
subsections: section_title: Independent Assessments and DFAS Users Have Identified Implementation Problems with Army and Air Force ERPs
paragraphs: Independent testing and evaluation by ATEC and AFOTEC have  identified operational deficiencies in GFEBS, GCSS-Army, DEAMS, and  ECSS that impaired the systems’ efficiency and effectiveness in  accounting for business transactions and reporting reliable financial  information. Further, at the time of our review, GFEBS and DEAMS were  not providing DFAS users with the expected capabilities in accounting,  management information, and decision support. According to the Office of  Federal Financial Management, “Core Financial System Requirements,” a  system must be able to provide consistent, standardized information for  program managers, financial managers, agency executives, and  oversight organizations.
According to the Army, when completed, GFEBS will be operational at  200 locations and will have approximately 79,000 users. Currently,  GFEBS is deployed to about 160 locations and is being used by  approximately 38,000 individuals.
In December 2009, ATEC reported on deficiencies in GFEBS Release  1.3 data accuracy, reliability, and timeliness. More specifically, the  report noted that Army “installations were certifying year-end data with  caveats and notes related to inaccurate, incomplete, and missing data.”  Furthermore, the report noted that “because of incomplete or not  implemented business processes, users at times, executed their mission  using the workarounds of the legacy systems that the GFEBS is intended  to replace or subsume.” The report recommended that the deployment of  GFEBS be limited until the problems are resolved and the corrective  actions have been validated by ATEC. According to the PMO, a plan of  action and milestones has been developed in conjunction with ATEC, to  address the issues. The PMO noted that GFEBS is undergoing an  additional operational test and evaluation limited user test, and at the  conclusion of the testing, a determination will be made whether the ATEC  issues have been addressed.
Further, in November 2010, ATEC reported that while GFEBS Release  1.4.1 successfully executed core business mission transactions for every  functional area, except funds management, the system did not meet  standards for generating auditable financial management reports and  period-end data. The report further noted that overall GFEBS’s  limitations significantly affected users’ abilities to perform their daily tasks  and that GFEBS did not improve accountability and oversight of  budgetary resources. The report also stated that GFEBS’s reporting  capabilities, including ad hoc query reports, were inadequate and  unreliable. For example, operational testing found that GFEBS accurately  captured user data entries, but internal data processing did not always  reflect the original input. There were other cases where missing data  caused delays and rework for users, as well as many workarounds, which  need programming improvements to GFEBS. According to the Milestone  Decision Authority (MDA), ATEC will conduct continuous evaluation to  validate any remaining problems and additional operational testing for  future releases.
To help identify operational issues with GFEBS, we met with DFAS  personnel who use the system in performing their daily duties and  responsibilities. According to DFAS, the backlog of unresolved GFEBS  trouble tickets increased from about 250 in September 2010 to  approximately 400 in May 2011. Most of the problems are related to  areas such as system security, the entitlement process, unmatched  disbursements, and cash reconciliation with the Fund Balance with  Treasury. According to Army officials, this increase in the number of  tickets was not unexpected because the number of users and the number  of transactions being processed by the system has increased, and the  Army and DFAS are taking steps to address the problems identified by  DFAS. However, the Army had not developed a specific time frame for  completion of the actions.
DFAS users stated that approximately two-thirds of invoice and receipt  data must be manually entered into GFEBS from the invoicing and  receiving system (i.e., Wide Area Work Flow) due to interface problems.DFAS personnel told us that manual data entry will eventually become  infeasible due to increased quantities of data that will have to be manually  entered as GFEBS is deployed to additional locations. Army officials  explained that the primary cause of the problem is that the interface  specification that GFEBS is required to use by the department does not  provide the same level of functionality as the interface specification that  the legacy systems are allowed to use. Army officials stated they are  working with DOD to resolve the problem. Again, the Army had not  developed a specific time frame for completion of the corrective actions.
DFAS users also noted that GFEBS does not provide users the ability to  run ad hoc queries or to research data to resolve problems or answer  questions. developing a system enhancement that Army officials expect will better  support the users’ needs. However, a specific time frame for completion  of corrective actions had not yet been developed. At the time of our  review, some reports were created by extracting the data from GFEBS  and downloading reports into applications or copying the data into  spreadsheets before analyses can be performed. This workaround  increases the difficulty in performing some account analyses such as  aging analysis. More specifically, DFAS officials told us that the Army has  initiated a pilot providing DFAS with 30 enhanced licenses to strengthen  connectivity to GFEBS and permit users to pull moderate quantities of  data without the system’s timing out. However, the limited number of  licenses does not fully satisfy DFAS user needs and cannot sustain future  GFEBS deployments which will increase the number of transactions.
The Army has recognized this limitation and is currently  Another interoperability deficiency is the manual transfer of accounts  receivable transactions from legacy financial systems into GFEBS.
Office of Federal Financial Management, Core Financial System Requirements  (Washington, D.C.: January 2006), states that a core financial system must provide an  integrated ad hoc query capability to support agency access to and analysis of system- maintained financial data.
According to DFAS officials, this problem is the result of the relevant  business processes not being incorporated within GFEBS. Although the  Army has debt management pilots under way, debt collection will  continue to be nonoptimal until the functionality is developed and  operational within GFEBS. DFAS officials were not certain whether or  when the functionality would be incorporated.
According to the Army DCMO, when fully deployed, GCSS-Army will be  operational at 379 locations and will have approximately 170,000 users.  Currently, GCSS-Army is undergoing initial operational test and  evaluation activities that began in March 2011 and will continue through  October 2011 at Ft. Bliss, Texas.
In April 2011, ATEC reported on the results of its user testing of the  GCSS-Army Release 1.1. The report noted that its primary purpose was  to ascertain whether the system has the potential to be operationally  effective, suitable, and survivable. The report noted that the limited  testing found that logistics information processing is near real time and  that supervisor-level users were satisfied and expressed confidence in  the accuracy of the transactions processed by the system. However, the  report also noted that at times the users needed to implement manual  workarounds to accomplish their mission. Further, at the time of the  review, ATEC found that GCSS-Army was not compliant with certain  standards in DOD’s business enterprise architecture, such as DOD’s  Standard Financial Information Structure (SFIS), or requirements of the  Federal Financial Management Improvement Act of 1996 (FFMIA). The  report also pointed out that training could be improved through the use of  hands-on training in addition to instructor-led training. The PMO is  currently implementing a “get-well plan” to ensure that GCSS-Army is  effective in the deployed environment and compliance efforts are  underway to address the SFIS and FFMIA compliance issues. A specific  time frame for the resolution of the identified problems is being  developed.
When completed, DEAMS is to be deployed to 179 locations and used by  30,000 individuals. DEAMS is currently being tested at Scott Air Force  Base and DFAS Limestone and has been in use there since 2010 by  about 1,050 individuals.
In January 2011, AFOTEC reported on the Air Force’s implementation  efforts at Scott Air Force Base and found that substantial manual  intervention is required on a daily basis to keep DEAMS working as  intended.required reports were not being produced or were inaccurate or  incomplete. AFOTEC also found that training was inadequate and system  deficiencies were present when the assessment started and had  continued to accrue. In May 2011, we interviewed the DEAMS PMO who  told us that 245 problems needed to be addressed. The Air Force is in the  process of developing a time line to show when each problem needs to  be addressed and the specific actions that must be taken to resolve the  problem. At the time of our review, a specific time frame for completion of  the corrective actions had not been developed.
It was further noted that many interfaces were inoperable and  In interviews, DFAS officials and users of DEAMS identified problems in  the system’s operation. DEAMS is not able to produce the monthly  accounts receivable aging report as intended, officials told us, and  therefore, the report is produced manually.capability to produce the aging report existed in the legacy systems.  Manual workarounds are also needed to process certain accounts  receivable transactions such as travel debts. DFAS personnel told us that  these accounts receivable-related problems are the result of the improper  conversion of data transferred from the legacy systems to DEAMS. The  DEAMS Financial Management Office (FMO) is aware of the problems  and is in the process of resolving them. However, at the time of our  review, no timetable had been set for the problem resolution.
According to the officials, the  DFAS users told us they were experiencing difficulty with some DEAMS  system interfaces. For example, the interface problem with the Standard  Procurement System had become so serious that the interface had been  turned off, and the data were manually entered into DEAMS. In  September 2011, the Air Force testified that there were problems with the  interface because the data in the procurement system is not accurate. A  DOD DCMO official stated that the Standard Procurement System will be  replaced, but a time frame has not been established for the system  initiative start date or estimated completion date.
DFAS users also told us that DEAMS does not provide the capability— which existed in the legacy systems—to produce ad hoc query reports  that can be used to perform the data analysis needed for daily  operations. For example, they said that legacy systems had a support- system tool called On-Line Report View that allowed data normally  printed to be generated for an electronic report. DFAS considers this a  useful tool for viewing fund-status reports and other reports generated  from the legacy systems. However, they noted that when some reports  are produced, the accuracy of those reports is questionable. According to  DFAS officials, they are currently working with the DEAMS FMO to design  the type of reports DFAS needs. DFAS personnel further noted that  DEAMS’ current processes are not streamlined and have not made the  process easier. Further, an external survey report issued in April 2011,  noted that about 48 percent of DEAMS users said that their workload  increased as a result of the tasks they perform in DEAMS, 15 percent felt  satisfied with DEAMS, and 10 percent felt their work was more  accurate.
According to the Air Force PMO, when fully implemented, ECSS is to be  deployed to 186 locations and used by approximately 250,000 individuals.  ECSS is currently being tested at 10 locations at Hanscom Air Force  Base with a total of 225 users and has been in use there since December  2010.
In April 2010, AFOTEC reported on its review of Release 1 Pilot AECSS. The review was conducted to assess the system’s progress  toward operational effectiveness, suitability, and mission capability. Due  to the limited scope of Pilot A (with less than one-tenth of the planned  Release 1 capability), AFOTEC was not able to collect sufficient  quantitative data to determine whether the program was on track to   for  deliver desired performance at the conclusion of Release 1. However,  interviews with subject matter experts and analysis of the limited data  identified several areas of concern, including data quality, data  conversion, interoperability, usability, information assurance, and  requirements testability. For example, ECSS will have approximately 230  one-way interfaces, with approximately 120 to be implemented in Release  1. However, Pilot A had only implemented two, so there were insufficient  data to assess interface development.
The report further noted that many requirements were written at a high  level and were not written specifically to address the performance of  ECSS and that the ECSS requirements needed to be significantly refined.  In a July 2010 memorandum, the Director of the DOD Operational Testing  and Evaluation Office noted that the ECSS PMO had taken actions and  conducted additional tests to mitigate the areas of concern. In October  2011, the Air Force DCMO testified that “the development and  implementation of ECSS have lagged.” According to the Air Force  DCMO, the Air Force raised concerns to the DOD MDA and noted that  “the department is now engaged in a strategic reassessment of the  overall program.” The Air Force DCMO further noted that the  reassessment maintains focus on addressing both audit readiness and  achievement of genuine return on investment. The joint DOD and Air  Force team is to make recommendations on the way ahead for ECSS to  the MDA by December 2011. Alternatives under consideration include  building on the current ERP software, leveraging other service/defense  agency solutions, and/or modifying legacy capability.
Army and Air Force officials told us that they have plans to address these  issues, and the Army has plans to validate the audit readiness of GFEBS  in a series of independent auditor examinations auditing selected  business processes and controls in the GFEBS environment over the  next several fiscal years. Regarding DEAMS, the MDA has directed that  the system not be deployed beyond Scott Air Force Base until the known  system weaknesses have been corrected and the system has been  independently tested to ensure that it is operating as intended.
section_title: Continual Monitoring of ERPs Is Needed to Help Ensure Successful Implementation
paragraphs: Monitoring is essential to help ensure that systems are implemented on  schedule and within budget, and provide the promised capabilities. It  helps to ensure that identified deficiencies are corrected prior to full  deployment, and also helps to provide visibility for senior management  into investment management activities. Standards for internal control note  that monitoring should be ongoing and be performed continually.
At DOD, the MDA plays a crucial role in monitoring as the senior official  with overall authority to approve the advancement of ERPs through the  phases of the acquisition process. For the ERPs we reviewed, the MDA  authority is divided between two officials. For GFEBS and DEAMS, the  MDA is the DOD DCMO and for GCSS-Army and ECSS, the MDA is the  Under Secretary of Defense for Acquisition, Technology and Logistics.  The MDA determines the entry point of an acquisition program in the  acquisition process and is accountable for cost, schedule, and  performance reporting, including congressional reporting. While factors  such as cost, schedule, performance, risk, and technical maturity are  considered by the MDA, the entrance criteria for each phase of the life  cycle guide the MDA in determining the appropriate entry point for a  program.
The MDA for GFEBS and DEAMS has responded to the results of ATEC  and AFOTEC reviews with actions to help ensure the systems’ readiness  for full deployment. The MDA limited the deployment of GFEBS when the  two ATEC reports previously mentioned noted deficiencies in the  operation of the system. In regard to DEAMS, the MDA has directed that  the system not be deployed beyond Scott Air Force Base until the known  system weaknesses have been corrected and the system has been  independently tested to ensure that it is operating as intended. Regarding  GCSS-Army and ECSS, ATEC and AFOTEC have identified  implementation issues. Once ATEC and AFOTEC have performed  additional testing of the systems, and if deficiencies are identified, the  MDA for the systems will have an opportunity to evaluate the results, as  did the MDA for GFEBS and DEAMS, and take appropriate corrective  actions. The resolution or mitigation of these system deficiencies is critical  prior to the approval of further deployment of the systems.
While we were informed that the Army and the Air Force have corrective  actions underway or planned, they have not established specific time  frames for the purposes of tracking and monitoring progress of the  corrective actions needed to address the issues identified by DFAS. The  timely resolution of these issues is important in order for DFAS users to  perform their day-to-day operations as the department’s primary  accounting entity. The establishment of a time frame and milestone dates  by the Army and the Air Force is important for measuring and monitoring  progress. If a planned milestone date is not achieved, Army and Air Force  management can then ascertain what additional actions are needed to  help ensure that the problem is resolved promptly.
Further, given the Secretary of Defense’s goal for the department, that  the Statement of Budgetary Resources is to be audit ready by fiscal year  2014, the resolution of the issues identified at DFAS is even more critical  since GFEBS and DEAMS are an essential part of the ability of the Army  and the Air Force to meet the Secretary’s goal. Without timely and  effective corrective action, the department is at risk of making investment  decisions that may not provide the desired results—improvements in the  department’s business operations—and the ERP efforts could continue to  experience unnecessary schedule delays and cost increases.
section_title: System Training Does Not Fully Meet User Needs
paragraphs: Army and Air Force ERP training strategies were intended to provide ERP  users with the skills and knowledge they need to successfully perform  their new roles. However, according to DFAS personnel, the training they  received for GFEBS and DEAMS, prior to the systems becoming  operational at the various DFAS locations, did not fully meet their needs  as users. DFAS personnel informed us that the training focused on an  overview of GFEBS and DEAMS and how the systems were supposed to  operate. While this was beneficial in identifying how GFEBS and DEAMS  were different from the existing legacy systems, the instruction focused  too much on concepts rather than the skills needed for DFAS users to  perform their day-to-day operations. The training problems raised by  DFAS, were also reported in an April 2011 external review of the DEAMS  program. The report noted that for instructor-led training, 53 percent of  the system users that responded to the survey indicated that the training  did not prepare them for using DEAMS. For web-based training, 40  percent of the users indicated that the training did not prepare them to  use DEAMS.
To address the training problems, DFAS is in the process of developing  training courses and desk guides that would be more beneficial to DFAS  employees who have to use GFEBS and DEAMS on a day-to-day basis.  DFAS is in the process of developing 4 specific courses related to  GFEBS. Besides the courses, DFAS is also in the process of developing  desk guides for use by DFAS personnel. These guides are intended to  explain further how an individual is to perform an assigned task within  GFEBS and DEAMS. Because DFAS is developing these training  courses and the operational materials on its own, the cost incurred by  DFAS will be billed to the Army and the Air Force through the prices they  charge for the services provided. As a working-capital-fund entity, DFAS  is required to recover all costs incurred; therefore, the annual amounts  billed to the Army and the Air Force for services provided may be higher  than anticipated because of the additional training DFAS is developing.  As a result, it is incumbent upon the Army and the Air Force to ensure  that the training provided to DFAS users of GFEBS and DEAMS prepares  them to perform their day-to-day mission effectively. Without this  knowledge base and proficiency in the operation of the systems, some of  the benefits that were intended with the implementation of GFEBS and  DEAMS may not be achieved.
section_title: Conclusions
paragraphs: Modernizing DOD’s business systems is a critical part of transforming  DOD’s business operations, providing more accurate and reliable  financial information to DOD management on the results of the  department’s operations, and providing the processes and data reliability  that DOD needs to produce auditable financial statements. Successful  implementation can help to standardize and streamline DOD’s financial  management and accounting systems, logistics systems, and finance  processes, provide asset visibility for accountable items, and integrate  personnel and pay systems.
DOD is currently in the midst of implementing numerous ERPs that are  critical to improving its business operations and achieving auditability.  During its implementation efforts, the department has identified system  weaknesses. It is critical that these problems be corrected as early as  possible to help ensure that the billions of dollars spent annually are used  effectively and to achieve effective implementation of the ERPs so that  DOD can begin to fully realize the systems’ intended benefits.
The monitoring of the status of DOD’s ERPs implementation efforts is an  essential part of helping to ensure that the billions of dollars being  invested provide the intended capabilities. The MDA for GFEBS and  DEAMS has taken steps to help ensure that identified system  weaknesses are resolved before full deployment of the systems. The  action by the MDA provides an opportunity to prevent known weaknesses  from persisting into deployment and negatively affecting the efficiency  and effectiveness of the systems in operation. It is equally important that  the Army and the Air Force establish time lines and monitor the status of  the corrective actions to help ensure that the issues identified by DFAS  users are resolved in a timely manner. The implementation of the ERPs is  a long-term endeavor that will require the sustained and active  involvement of senior management at all levels of the department.
The training provided to DFAS users did not adequately demonstrate how  users were to perform their expected duties using the systems. While the  training explained how the systems were different than the existing legacy  systems, it did not completely provide them with the skills needed to  perform their day-to-day operations.
In light of the Secretary of Defense’s recent decision that the Statement of  Budgetary Resources is to be audit ready by fiscal year 2014, it is critical  that the department have effective business systems in place to support  its auditability goals. If these business systems do not provide the  intended capabilities by the expected deadlines, DOD’s goal of improving  financial management operations and becoming audit ready could be  jeopardized.
section_title: Recommendations for Executive Action
paragraphs: To help provide for the successful implementation of Army and Air Force  ERPs, and to help ensure that DFAS users have the training needed, we  recommend that the Secretary of Defense take the following five actions:
Direct that the MDA for GFEBS, GCSS-Army, DEAMS, and ECSS  ensure that any future system deficiencies identified through  independent assessments are resolved or mitigated prior to further  deployment of the systems.
Direct the Secretary of the Army to ensure that time lines are  established and monitored for those issues identified by DFAS that  are impacting their efficient and effective use of GFEBS.
Direct the Secretary of the Air Force to ensure that time lines are  established and monitored for those issues identified by DFAS that  are impacting their efficient and effective use of DEAMS.
Direct the Secretary of the Army to improve training for GFEBS users  by providing training on actual job processes in a manner that allows  users to understand how the new processes support their job  responsibilities and the work they are expected to perform.
Direct the Secretary of the Air Force to improve training for DEAMS  users by providing training on actual job processes in a manner that  allows users to understand how the new processes support their job  responsibilities and the work they are expected to perform.
section_title: Agency Comments and Our Evaluation
paragraphs: DOD concurred with four and partially concurred with one of the  recommendations in our draft report. In regard to the four  recommendations with which the department concurred, DOD identified  specific actions that it has completed, underway, or planned to establish  time lines for addressing GFEBS and DEAMS issues identified by DFAS  users and for improving training provided to GFEBS and DEAMS users.  For example, with respect to our recommendations concerning the  establishment of time lines for GFEBS and DEAMS issues, the  department cited actions taken or underway to provide for greater DFAS  involvement in the ERP systems’ implementation. Also, regarding  recommendations to improve training provided to GFEBS and DEAMS  users, DOD cited actions taken or underway to provide additional or  expanded user training on roles and job responsibilities under the new  ERP systems’ environments.
DOD partially concurred with our recommendation that the Milestone  Decision Authority for GFEBS, GCSS-Army, DEAMS, and ECSS ensure  that any future system deficiencies identified through independent  assessments are resolved or mitigated prior to further deployment of the  systems. The department agreed that high severity system deficiencies  identified through independent assessments should be resolved or  mitigated prior to deployment. DOD cited Army and Air Force progress  towards the resolution of the deficiencies noted in our report. For  example, DOD stated that the Air Force is aggressively resolving the 245  DEAMS deficiencies identified in the January 2011 independent  assessment. However, it also commented that all system deficiencies are  not required to be remediated prior to deployment. In this regard, DOD  commented that lower severity level deficiencies may be deferred, if an  acceptable workaround exists, to avoid schedule slippages and added  cost.
Prioritization is an important part of an effective risk-based process for  addressing deficiencies. As such, the most severe deficiencies should be  fully addressed prior to deployment. To the extent that any deficiencies  are designated as “lower priority” and allowed to continue, at a minimum,  acceptable short-term workarounds should be in place to mitigate the  impact on operational efficiency. However, as discussed in our report, it is  also essential that corrective actions for all identified deficiencies include  specific time lines for tracking and monitoring progress. Consequently, we  continue to believe that comprehensive corrective actions should be  established for all identified deficiencies. Until DOD takes such action to  fully address all identified deficiencies, the department’s ERP systems are  at risk of not being implemented on schedule, within budget, or with the  intended capabilities. The written comments on a draft of this report  received from the Department of Defense Deputy Chief Management  Officer are reprinted in appendix I.
As agreed with your offices, unless you publicly announce the contents of  this report earlier, we plan no further distribution until 30 days from the  report date. At that time, we will send copies of this report to the  Secretary of Defense; the Secretary of the Army; the Secretary of the Air  Force; the Deputy Secretary of Defense; the Deputy Chief Management  Officer; the Under Secretary of Defense (Comptroller); the Under  Secretary of the Army and the Under Secretary of the Air Force, in their  capacity as the Chief Management Officer of their respective service; the  program management office for each business system that was included  in the audit; and other interested congressional committees and  members. This report also is available at no charge on the GAO website  at http://www.gao.gov.
Please contact Asif A. Khan at (202) 512-9869 or khana@gao.gov or  Nabajyoti Barkakati at (202) 512-4499 or barkakatin@gao.gov if you or  your staff have questions on matters discussed in this report. Contact  points for our Offices of Congressional Relations and Public Affairs may   be found on the last page of this report. Key contributors to this report are  listed in appendix III.
section_title: Appendix I: Comments from the Department of Defense
section_title: Appendix II: Six ERPs Not Discussed In This Report
paragraphs: Provided below is a brief description of the six critical enterprise resource  planning (ERP) systems for addressing long-standing weaknesses in  financial management and resolving weaknesses in other high-risk areas  such as business systems modernization and supply chain management.  (See the background section of this report for brief descriptions of the four  ERPs discussed in this report.)
The Logistics Modernization Program (LMP) was initiated in  December 1999 and is intended to provide order fulfillment, demand  and supply planning, procurement, asset management, material  maintenance, and financial management capabilities for Army’s  working capital fund. The third and final deployment occurred in  October 2010.
The Navy Enterprise Resource Planning System (Navy ERP) was  initiated in July 2003 and is intended to standardize the acquisition,  financial, program management, maintenance, plant and wholesale  supply, and workforce management capabilities at Navy commands.
The Global Combat Support System-Marine Corps (GCSS-MC)  was initiated in September 2003 and is intended to provide the  deployed warfighter with enhanced capabilities in the areas of  warehousing, distribution, logistical planning, depot maintenance, and  improved asset visibility.
Each of the military departments is in the process of developing its  own Service Specific Integrated Personnel and Pay System. The  military departments’ integrated personnel and pay systems replace  the Defense Integrated Military Human Resources System that was  initiated in February 1998 and intended to provide a joint, integrated,  standardized personnel and pay system for all military personnel.
The Defense Agencies Initiative (DAI) was initiated in January 2007  and is intended to modernize the defense agencies’ financial  management processes by streamlining financial management  capabilities and transforming the budget, finance, and accounting  operations. When DAI is fully implemented, it is expected to have the  capability to control and account for all appropriated, working capital,  and revolving funds at the defense agencies implementing the  system.
The Enterprise Business System (EBS) is the second phase of the  Defense Logistics Agency’s (DLA) Business System Modernization  (BSM) effort, which was initiated in November 1999 and implemented  in July 2007. BSM focused on DLA’s operations in five core business  processes: order fulfillment, demand and supply planning,  procurement, technical/quality assurance, and financial management.  In September 2007, the name of the program was changed to  Enterprise Business System as it entered the second phase, and  according to the agency, EBS will further enhance DLA’s supply chain  management of nearly 6 million hardware and troop support items.
section_title: Appendix III: GAO Contacts and Staff Acknowledgments
subsections: section_title: GAO Contacts
section_title: Staff Acknowledgments
paragraphs: In addition to the contacts named above, the following individuals made  key contributions to this report: J. Christopher Martin, Senior-Level  Technologist; Darby Smith, Assistant Director; Beatrice Alff; Jacquelyn  Hamilton; Maxine Hattery; Jeffrey Isaacs; Jason Kirwan; Katherine  Lenane; Julia Matta; and Brian Paige.