As one of the largest and most complex organizations in the world, DOD spends billions of dollars each year to operate, maintain, and modernize IT systems that support core business operations. These business operations consist of various interrelated and interdependent business functions, including logistics management, procurement, health care management, and financial management. Further, execution of these business operations span a wide range of defense organizations, including the military services and their respective major commands and functional activities, defense agencies and field activities, and combatant and joint operational commands that are responsible for military operations in geographic regions or theaters. For fiscal year 2005, DOD requested approximately $13 billion to operate, maintain, and modernize about 4,150 business systems and related IT infrastructure. The Army’s share of this funding and systems is about $2.7 billion and 727 systems. In 1995, we designated DOD’s business systems modernization efforts as a high-risk program, and we continue to designate it as such today for several reasons, including the department’s challenges in implementing effective IT investment management structures and processes, developing and implementing an enterprise architecture, and implementing effective IT system acquisition and development processes. In the early 1990s, DOD recognized the need to integrate defense IT systems by ordering the consolidation of systems that serve multiservice purposes. Accordingly, it directed that approximately 150 operating transportation systems be evaluated for consolidation opportunities. In 1995, DOD initiated TC-AIMS II as one of a number of programs that were commenced following this evaluation to consolidate and replace existing systems, and to automate transportation management function areas for all services. In doing so, DOD designated the Army as the “executive agent” responsible for managing TC-AIMS II, including acquiring the system. Expected TC-AIMS II benefits included enhancing and improving the efficiency and effectiveness of the support planning needed to deploy and redeploy forces and equipment, both within the United States and abroad; improving the visibility of assets; and enhancing cargo and passenger receiving, controlling, and shipping. The system is also expected to enable decision makers at various command levels to access information about unit movement and installation transportation, and is to provide key shared functionality related, for example, to load planning. The Army defined the following five-block acquisition and implementation strategy for TC-AIMS II. According to the strategy, each block is to address a functional portion of the requirements. Block 1: This block is to import data about assets (people, equipment, and supplies) from the services’ existing systems and is to manage these data to (1) plan and execute organizational moves (i.e., provide documentation, packing and shipping labels, and orders) and (2) request and schedule strategic and local transportation vehicles (e.g., trucks, ships, airplanes, motor pools, and trucks). Block 2: This block is to add Web access to permit automated data exchange with related systems, such as airlift load planning systems and global transportation networks. This increment is to link and track cargo and personnel (via DOD’s standard smart cards), and their corresponding transports. It also is to generate and manage the documentation associated with these functions. Block 3: This block is to add interfaces to both supply and personnel systems to facilitate control over “in theater” operations, such as reception (unit arrival and off-loading in theater), staging (preparation for departure to assigned locations), onward movement (transit to assigned locations), and integration (coordinating and linking the movement of multiple related units). It also is to generate and manage documentation associated with these functions. Block 4: This block is to add the capability to manage maritime forces associated with prepositioned equipment and cargo (e.g., tank ammunition for an armored cavalry unit), including the ability to manage cargo logistics (loading and off-loading), as well as greater capability to manage theater operations, including the availability, distribution, and dispatch of vehicle fleets and drivers. It also is to generate and manage documentation associated with these functions. Block 5: This block is to automate the management of transportation assets and traffic operations at military installations both in the United States and worldwide. At this point, TC-AIMS II is to be able to generate and manage all data and documentation related to moving units within DOD’s transportation system. As part of this block, the interfaces to systems that are to be integrated with TC-AIMS II are to be upgraded or created, as required, in response to changes in technology. Figure 1 shows the Army’s timeline for acquiring the five TC-AIMS II blocks. In particular, the Army reports that it is currently acquiring Block 3 with the goal of making it operational by late 2006. The Army estimates the total life-cycle cost of TC-AIMS II to be $1.7 billion over 25 years, including $569 million for acquisition and $1,168 million for operations and maintenance. The Army reports that it has spent approximately $751 million on TC-AIMS II since its inception. A number of DOD and Army organizations are involved in managing the TC-AIMS II program and acquisition. Briefly, they are as follows: The Assistant Secretary of Defense for Network Information and Integration, who has overall responsibility for the program. The Army’s Program Executive Office for Enterprise Information Systems, Transportation Information Systems, oversees the management of TC-AIMS II, which is managed on a day-to-day basis by the Project Manager, Joint Program Management Office. The Joint Requirements Board represents TC-AIMS II users and includes stakeholders from the military services and other DOD organizations. The board is responsible for managing TC-AIMS II requirements development activities. These and other key organizations and their roles and responsibilities are described in more detail in table 1. The Army uses a system integration contractor to support the program office in managing the acquisition of TC-AIMS II. Most recently, it awarded a firm, fixed-price contract to a contractor in April 2004 to deliver the Block 3 solution. The contract has 5 option years, which are 1 year in duration. To help it oversee contractor activities, the program office has employed the help of the General Service Administration’s Federal Systems Integration and Management Center, whose mission is to provide acquisition management expertise and support to DOD and other federal agencies on large, complex IT projects. In July 2004, we reported that DOD’s revised systems acquisition policies and guidance incorporated many best practices for acquiring business systems, such as (1) justifying system investments economically, on the basis of costs, benefits, and risks, and (2) continually measuring an acquisition’s performance, cost, and schedule against approved baselines. However, the revised policies and guidance did not incorporate a number of other best practices, particularly those associated with acquiring commercial component-based business systems, and DOD did not have documented plans for incorporating these additional best practices into its policies. We also reported that the department’s revised acquisition policies did not include sufficient controls to ensure that military services and defense agencies would appropriately follow these practices. We concluded that until these additional best practices were incorporated into DOD’s acquisition policies and guidance, there was increased risk that department system acquisitions would not deliver planned capabilities and benefits on time and within budget, and increased risk that DOD organizations would not adopt and use best practices that were defined. Accordingly, we made 14 recommendations to the Secretary of Defense that were aimed at strengthening DOD’s acquisition policy and guidance by including additional IT systems acquisition best practices and controls for ensuring that these best practices were followed. DOD agreed with most of our recommendations and has since issued additional system acquisition guidance. The Army, as DOD’s acquisition agent for TC-AIMS II, has not managed this program in accordance with certain department acquisition policies, and related guidance, that are intended to reasonably ensure that a proposed system is the right solution to meet mission needs. In particular, the Army has not economically justified the program on the basis of reliable estimates of life-cycle costs and benefits, and it has not ensured that this program, which is intended to produce a departmentwide military deployment management system, is aligned with a departmentwide business enterprise architecture or an integrated blueprint for business systems modernization. As a result, the Army does not know that investment in TC-AIMS II as planned is warranted, represents a prudent use of limited DOD resources, and will be interoperable with and not be duplicative of related systems. Even if TC-AIMS II happens to be the right system, both economically and architecturally, the Army has not fully implemented risk management and has not fully employed performance-based contracting practices. However, it has largely managed system requirements, commercial components, and contractor tracking and oversight in accordance with DOD policies and related guidance. If the program can be economically justified and architecturally defined, then fully addressing these key acquisition management areas will be essential to the program’s success. DOD’s acquisition management policy and related guidance recognize the importance of developing reliable economic analyses to support investment decision making. Accordingly, they describe how these analyses should be developed and used. For TC-AIMS II, the Army has not adhered to important aspects of departmental policy and related guidance, such as updating analyses to reflect material changes in program scope and justifying investment in large, multiyear programs on an incremental basis. As a result, the Army currently lacks an adequate basis to justify its planned investment in TC-AIMS II. DOD policy and guidance state that projects should be economically justified on the basis of reliable analyses of expected life-cycle costs and benefits and that cost and benefit estimates should be based on realistic plans for the program’s scope.