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. The department is currently facing near- and long-term internal fiscal pressures as it attempts to balance competing demands to support ongoing operations, rebuild readiness following extended military operations, and manage increasing personnel and health care costs and significant cost growth in its weapons systems programs. For more than a decade, DOD has dominated GAO’s list of federal programs and operations at high risk of fraud, waste, abuse, and mismanagement. In fact, all of the DOD programs on GAO’s High-Risk List relate to business operations, including systems and processes related to management of contracts, finances, the supply chain, and support infrastructure, as well as weapon systems acquisition. Long-standing and pervasive weaknesses in DOD’s financial management and related business processes and systems have (1) resulted in a lack of reliable information needed to make decisions and report on the financial status and cost of DOD activities to Congress and DOD decision makers, (2) adversely affected its operational efficiency in business areas, such as major weapon systems acquisition and support and logistics, and (3) left the department vulnerable to fraud, waste, and abuse. In support of its military operations, DOD performs an assortment of interrelated and interdependent business functions, such as logistics management, procurement, health care management, and financial management. 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. The department has stated that the following ERPs are critical to transforming the department’s business operations and addressing some of its long-standing weaknesses. A brief description of each of the ERPs is presented below.  The General Fund Enterprise Business System (GFEBS) was initiated in October 2004 and is intended to support the Army’s standardized financial management and accounting practices for the Army’s general fund, with the exception of that related to the Army Corps of 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.  The Global Combat Support System-Army (GCSS-Army) was initiated in December 2003 and is expected to integrate multiple logistics functions by replacing numerous legacy systems and interfaces. The system is intended to 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 provide asset visibility for accountable items. GCSS-Army will manage over $49 billion in annual spending by the active Army, National Guard, and Army Reserve.  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 of LMP 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.  The Defense Enterprise Accounting and Management System (DEAMS) was initiated in August 2003 and is intended to provide the Air Force 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 spending.  The Expeditionary Combat Support System (ECSS) was initiated in January 2004 and is intended to provide the Air Force 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. Additionally, ECSS is 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 $36 billion of inventory.  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. Implementation of the ERPs is intended to standardize and streamline DOD’s financial management and accounting systems, integrate multiple logistics systems and finance processes, and provide asset visibility for accountable items. Effective implementation of the ERPs is also critical to DOD’s auditability efforts and goals. However, to date, DOD’s ERP implementations have been negatively impacted by schedule delays, cost increases, failures in delivering the necessary functionality, and a lack of compliance with required standards. Delays in the implementation of ERPs increase costs with the additional time and rework needed on the new system. The cost of additional time and rework needed have continued the funding of these legacy systems longer than anticipated and further eroded the estimated savings that were to accrue to DOD as a result of modernization. If the ERPs do not provide the intended capabilities, DOD’s goal of modernizing and streamlining its business processes and strengthening its financial management capabilities leading to auditable financial statements could be jeopardized. The following are examples of weaknesses in DOD’s implementation efforts. Accurate and reliable schedule and cost estimates are essential for DOD management to make good decisions regarding ERP implementation and for overseeing progress of the project. The success of any program depends on having a reliable schedule of the program’s work activities that will occur, how long they will take, and how the activities are related to one another. As such, the schedule not only provides a road map for systematic execution of a program, but also provides the means by which to gauge progress, identify and address potential problems, and promote accountability. As highlighted below, we and the DOD IG have questioned the accuracy and reliability of the ERPs’ schedule and cost estimates. In October 2010, we reported that based upon the 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 five had incurred cost increases totaling an estimated $6.9 billion. DOD told us that the ERPs will replace hundreds of legacy systems that cost hundreds of millions of dollars to operate annually. According to the program management officers, while there had been schedule slippages and cost increases for several of the ERP efforts, the functionality that was envisioned and planned when each program was initiated remained the same. While the original intent of each program remained the same, the anticipated savings that were to accrue to the department may not be fully realized. Our October 2010 report also noted that our analysis of the schedule and cost estimates for four ERP programs—DEAMS, ECSS, GFEBS, and GCSS-Army—found that none of the programs were fully following best practices for developing reliable schedule and cost estimates. More specifically, none of the programs had developed a fully integrated master schedule that reflected all activities, including both government and contractor activities. In addition, none of the programs established a valid critical path or conducted a schedule risk analysis. The report also noted that in July and September 2008, we reported that the schedules for the GCSS-MC and the Navy ERP were developed using some of these best practices, but several key practices were not fully employed that are fundamental to having a schedule that provides a sufficiently reliable basis for estimating costs, measuring progress, and forecasting slippages.