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entitled 'Defense Transportation: DOD Needs a Comprehensive Approach to 
Planning for Implementing Its New Personal Property Program' which was 
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Report to Congressional Committees: 

United States Government Accountability Office: 

GAO: 

May 2007: 

Defense Transportation: 

DOD Needs a Comprehensive Approach to Planning for Implementing Its New 
Personal Property Program: 

GAO-07-671: 

GAO Highlights: 

Highlights of GAO-07-671, a report to congressional committees 

Why GAO Did This Study: 

The Department of Defense (DOD) has been working to improve its 
personal property program since the mid-1990s to fix long-standing 
problems, such as excessive loss or damage to servicemembers’ property 
and poor quality of service from moving companies. DOD plans to replace 
its current program with Families First, a program that promises to 
offer servicemembers an improved claims process and quality of service. 
GAO was mandated to (1) assess the steps DOD has taken to achieve the 
goals and benefits of the Families First program; (2) evaluate the 
growth in costs of the program, including the costs for a new 
information management system, since GAO’s last assessment in 2003; and 
(3) assess the extent to which DOD faces management challenges—such as 
staffing—in implementing Families First. To address these objectives, 
GAO analyzed DOD’s program, funding and staffing data, and interviewed 
personal property officials and stakeholders. 

What GAO Found: 

DOD has taken some initial steps to achieve the goals and benefits of 
Families First, but delays in developing a new information management 
system have put the overall goals of improving the quality of service 
from moving companies and streamlining the claims process at risk. The 
information management system, the Defense Personal Property System 
(DPS), is now more than 2 years behind schedule. DOD has missed DPS 
milestones because of software development issues and is now working to 
address issues identified in recent software testing. Since DPS has 
been delayed, DOD is in the process of implementing a backup plan to 
meet a statutory mandate to provide servicemembers with the full 
replacement value of goods lost or damaged during a move by March 1, 
2008. However, there are risks and costs associated with DOD’s backup 
plan because it relies on an increasingly unreliable legacy computer 
system; also, DOD’s plan may not cover all moves by March 1, 2008. 

The Families First program could increase costs to DOD by $1.4 billion 
over current program costs through fiscal year 2011 for two main 
reasons: (1) DOD estimates the program will increase costs to the 
services’ household goods budgets by 13 percent and (2) DOD has 
significantly increased the cost estimate for a new information 
management system since GAO’s last assessment. While DOD’s estimate 
that the Families First program will increase costs by 13 percent has 
not changed since 2005, all of the services have not yet fully budgeted 
for this cost increase, which GAO analysis shows could be about $1.2 
billion. Additionally, DOD has increased its estimate for an 
information management system for Families First because it decided to 
develop DPS rather than upgrade the legacy system. DOD estimated that 
the upgrade would cost $4 million to $6 million, and the program office 
estimated that DPS will cost about $180 million through fiscal year 
2011. 

DOD’s personal property program faces many management 
challenges—especially staffing, in addition to program requirements and 
funding problems—because it has not employed comprehensive planning. 
Sound management practices require a comprehensive approach that 
includes plans to assemble a qualified, trained, and well-led team; 
gain stakeholders’ agreement about key program elements, such as 
business rules to define how the moving industry will serve military 
members; and estimate and plan for adequate resources. DOD has 
developed several draft plans to address individual portions of 
Families First and DPS, such as the draft transition plan for moving 
the DPS program office as part of a base realignment and closure move 
from Virginia to Illinois, but there is no overall plan that addresses 
how DOD will (1) fill significant staffing shortfalls in the newly 
formed DPS program office, (2) gain agreement from stakeholders, and 
(3) fund the significant and growing costs associated with the program. 
For example, DOD has not identified sources to fully fund DPS 
development and operations. Without a comprehensive plan, achieving the 
goals of the Families First program will likely remain difficult. 

What GAO Recommends: 

GAO recommends that DOD expedite an evaluation of its Families First 
program and employ comprehensive planning to implement Families First 
that includes specific steps to address staffing problems, gain 
stakeholders’ agreement on Defense Personal Property System (DPS) 
requirements, and seek adequate funding to implement the program. DOD 
concurred with both of our recommendations. 

[Hyperlink, http://www.gao.gov/cgi-bin/getrpt?GAO-07-671]. 

To view the full product, including the scope and methodology, click on 
the link above. For more information, contact John Pendleton at (404) 
679-1816 or pendletonj@gao.gov. 

[End of section] 

Contents: 

Letter: 

Results in Brief: 

Background: 

DOD Has Taken Some Initial Steps for Families First, but DPS Delays Put 
Achievement of Program Goals and Benefits at Risk: 

Families First Program Could Increase DOD Costs by About $1.4 Billion 
over Current Program Costs through Fiscal Year 2011: 

DOD Faces Management Challenges for Families First Program and Has Not 
Developed a Comprehensive Implementation Plan: 

Conclusions: 

Recommendations for Executive Action: 

Agency Comments and Our Evaluation: 

Appendix I: Scope and Methodology: 

Appendix II: Comments from the Department of Defense: 

Appendix III: GAO Contact and Staff Acknowledgments: 

Related GAO Products: 

Tables: 

Table 1: Coverage and Cost Comparisons for DOD's Current Personal 
Property Program versus Families First: 

Table 2: Comparison of Timelines to Implement DPS: 

Table 3: Summary of Information Management System Cost Estimates: 

United States Government Accountability Office: 

Washington, DC 20548: 

May 31, 2007: 

The Honorable Carl Levin: 
Chairman: 
The Honorable John McCain: 
Ranking Member: 
Committee on Armed Services: 
United States Senate: 

The Honorable Ike Skelton: 
Chairman: 
The Honorable Duncan Hunter: 
Ranking Member: 
Committee on Armed Services: 
House of Representatives: 

Military servicemembers and their families are typically relocated many 
times during servicemembers' careers. The Department of Defense's (DOD) 
personal property program provides household goods transportation and 
storage services[Footnote 1] for military personnel and their families 
when they relocate. DOD spent more than $1.8 billion in fiscal year 
2006 to move more than 680,000 shipments. The quality of these moving 
services directly affects the quality of life for servicemembers and 
their families, which has become increasingly important as 
servicemembers face increased demands. However, as we have previously 
reported, DOD has experienced long-standing problems with its personal 
property program, especially poor quality of service from moving 
companies that results in excessive loss or damage to servicemembers' 
property and high claims costs incurred by the government. Moreover, a 
DOD analysis indicated that the program's legacy computer system for 
data management does not meet DOD's information technology standards 
and is costly to operate and maintain. In an effort to test alternative 
approaches and address some of these problems, DOD has spent more than 
11 years trying to improve the program through lessons learned from its 
pilot programs. 

DOD decided to replace its personal property program with a new program 
known as Families First. The three goals of the Families First program 
are improving the quality of service from moving companies,[Footnote 2] 
streamlining the claims process for losses or damages incurred during a 
move, and developing an integrated information management system. In 
addition, the John Warner National Defense Authorization Act for 
2007[Footnote 3] mandated that DOD provide full replacement value 
coverage to servicemembers for damages or losses incurred during their 
moves by March 1, 2008. With full replacement value, a servicemember 
would receive enough funds to replace or repair a lost or damaged item 
at its present value. DOD's current personal property program provides 
servicemembers a minimum level of depreciated value coverage that does 
not fully compensate them for lost or damaged goods. DOD plans to 
incorporate full replacement value as an additional benefit of Families 
First and provide this coverage at no additional cost to 
servicemembers. 

Since 1999, we have completed several assessments of DOD's personal 
property program, including reviews of several aspects of DOD's 
personal property pilot programs. In 2003, we evaluated the methodology 
used to estimate the costs associated with Families First that the 
services would incur. The Families First program was initially expected 
to increase the services' costs for DOD's personal property program by 
13 percent, but we questioned part of the methodology used to generate 
this estimate and recommended that DOD provide the military services 
and Congress additional information to quantify the risk associated 
with achieving the projected 13 percent cost estimate. In 2005, DOD 
reevaluated its estimated 13 percent cost increase and quantified the 
risks of implementing Families First within the expected cost increase. 
We reviewed the methodology DOD used to estimate the cost of 
implementing the Families First program.[Footnote 4] We found at that 
time that DOD used a reasonable methodology to validate the estimated 
increase and quantify the risk. 

In 2004, DOD began developing the Defense Personal Property System 
(DPS), an integrated information management system that will be used to 
support Families First. DOD's initial assumption was that DPS could be 
developed quickly using commercially available software. However, our 
analysis indicates that DOD has missed milestones and costs have grown 
in developing and implementing DPS. DOD entered into an 11-month 
strategic pause in October 2005 to assess the next steps for DPS. DOD 
has a history of challenges in implementing information management 
systems similar to DPS, such as the Defense Integrated Military Human 
Resources System and the Defense Travel System, which are part of DOD's 
business systems modernization efforts. Because of management 
challenges in implementing these types of systems, we have placed DOD's 
business systems modernization on our high-risk list[Footnote 5] of 
programs that are at risk because of their greater vulnerabilities to 
fraud, waste, abuse, and mismanagement. 

The John Warner National Defense Authorization Act for Fiscal Year 
2007[Footnote 6] mandated that we review the Families First program. 
Specifically, we (1) assessed the steps DOD has taken to achieve the 
goals and benefits of the Families First program; (2) evaluated the 
growth in the cost of the program since the previous assessment, 
including the costs for DPS; and (3) assessed the extent to which DOD 
faces management challenges--such as with staffing, developing 
capabilities, and resources within the DPS program office--in 
implementing Families First. 

To conduct our assessment of the Families First program, including its 
costs, we reviewed prior DOD and GAO reports, documentation regarding 
program development, program management staffing and resources, and 
cost analyses for Families First and DPS. We also interviewed DOD 
officials, private sector moving industry associations, and contractors 
supporting DOD efforts. While we did not independently verify DOD's 
staffing and resource needs or its cost data, we did determine that the 
data were sufficiently reliable for our purposes. We performed our 
audit work from September 2006 through May 2007 in accordance with 
generally accepted government auditing standards. The scope and 
methodology we used is described in greater detail in appendix I. 

Results in Brief: 

DOD has taken some initial steps to achieve the goals and benefits of 
Families First, but delays in developing a new information management 
system have put achieving the overall goals of improving the quality of 
service from moving companies and streamlining the claims process at 
risk. Families First was designed so that achieving the goals of the 
program relies heavily on completion of DPS. DOD has taken steps to 
implement the electronic billing and payment systems necessary to 
support Families First and is collecting data from a customer 
satisfaction survey. However, the Air Force is behind in participating 
in this part of the program. DOD has begun developing and testing DPS 
but has continued to miss milestones, and the system is now more than 2 
years behind schedule. The DPS implementation schedule was delayed 
again in February 2007, after stakeholders from the services and the 
moving industry participated in DPS software acceptance testing and 
identified numerous problems. In total, this testing generated more 
than 1,400 problem reports, almost 200 of which were collectively 
expected to result in significant changes to the software. For example, 
DPS sent the work order for shipments awarded to one moving company to 
another moving company; thus, the moving company that was awarded the 
shipment did not know the shipment was awarded to it. Under the revised 
DPS implementation schedule introduced in March 2007, DPS program 
managers plan to use DPS in some shipping offices by fall 2007 on a 
test basis, with full participation in fall 2008. Since DPS has been 
delayed, DOD is in the process of implementing a backup plan to meet 
the mandate to provide the Families First benefit of full replacement 
value coverage for losses and damages incurred during a move, at no 
cost to servicemembers, by March 1, 2008. However, it is uncertain if 
all contracts will provide full replacement value by March 1, 2008, for 
all types of moves. The reason Surface Deployment and Distribution 
Command officials said they created a backup plan for full replacement 
value is because they were required by statute to implement it by March 
1, 2008, whether DPS was ready or not. DOD officials said that they did 
not have a requirement to produce a plan to accomplish all goals for 
Families First by March 1, 2008, and they did not invest resources to 
do so. As a result, achieving the overall goals of improving the 
quality of service and claims processing remains contingent upon 
successful implementation of DPS. 

The Families First program could increase costs to DOD by $1.4 billion 
over current program costs through fiscal year 2011 for two main 
reasons: (1) DOD estimates the program will increase costs to the 
services by 13 percent and (2) DOD has significantly increased the cost 
estimate for a new information management system since our last 
assessment. We were unable to assess the actual growth in cost because 
the Families First program has not been fully implemented. DOD has 
incorporated a cost-control mechanism into DPS in an attempt to keep 
the costs within the expected increase, but until DPS is implemented 
the impact of the use of this mechanism on the Families First program 
will not be known. In addition, system costs are growing. The DPS 
program office has recently updated its cost estimates for fully 
implementing and funding DPS through fiscal year 2011. When DOD first 
estimated the cost of a new data management system at about $4 million 
to $6 million in 2002, it planned to upgrade the legacy system rather 
than replace it entirely. In 2004, when DOD decided to develop an 
entirely new system, it initially estimated that DPS could be developed 
for about $16.5 million, with an average annual cost of about $4.6 
million after the initial investment. This estimate also proved to be 
understated as system problems increased after DPS development began. 
As of February 2007, the DPS program office estimated that the costs 
for maintaining a program office, sustaining the legacy system through 
retirement, developing and sustaining DPS, and implementing a future 
household goods program through fiscal year 2011 would be about $180 
million if all of the requirements are funded. 

DOD faces many management challenges implementing Families First, and 
it has not employed comprehensive planning that incorporates sound 
management principles and practices and integrates the plans DOD has 
for parts of Families First. Sound management practices require 
developing a comprehensive plan that includes, among other things, 
stakeholder agreement about key elements of a program, such as the 
program's business rules and its priorities; a way to manage training 
and workforce redeployment issues; and full cost information and 
funding resources. Although DOD has spent more than 11 years trying to 
reengineer the program, DOD's planning for Families First has not 
incorporated many of these sound management practices. DOD has 
developed several nonintegrated draft plans to cover individual 
portions of the Families First program, such as a draft transition plan 
for organizational changes and the DPS program office's plan for DPS 
development, but there is no comprehensive plan for the program that 
addresses the following: 

* Organizational changes and staffing issues: The DPS program office 
was established on October 1, 2006, and is still organizing. 
Additionally, the office is affected by a base realignment and closure 
move in which only 1 of 27 civilian workers plan to move with the 
program office to Scott Air Force Base in Illinois. Without adequate 
staff, DOD may be challenged to continue DPS development and 
implementation. 

* Stakeholder agreement issues: DOD does not have agreement from 
stakeholders about Families First business rules and how DPS should 
work. Until agreement is reached, changes to DPS may be necessary and 
may lead to higher program costs. 

* Costs and funding issues: All of the services have not fully budgeted 
for the costs of Families First. Additionally, the DPS program office 
has funding shortfalls that affect both staffing needs and software 
development. Further, the services vary in how they interpret the 
application of the 13 percent increase in costs to their household 
goods budgets, and they have not received clear guidance from DOD on 
how to calculate the estimated 13 percent cost increase to their 
budgets. 

Without comprehensive planning, achieving the goals of Families First 
will likely remain difficult for DOD. DOD will also likely continue to 
face DPS delays and rising costs, problems which limit its ability to 
improve servicemembers' quality of life. We are recommending that DOD 
expedite an evaluation of the program as mandated in the John Warner 
National Defense Authorization Act for Fiscal Year 2007.[Footnote 7] We 
are also recommending that DOD employ comprehensive planning for the 
Families First program and address specific steps to hire and train 
personnel for the Surface Deployment and Distribution Command personal 
property division and the DPS program office, reach agreement with 
stakeholders on the essential requirements for DPS and their priority, 
and have an investment strategy for the full cost of Families First. 

In commenting on a draft of this report, DOD concurred with both of our 
recommendations. To address our first recommendation, DOD agreed to 
expedite an evaluation of its program and stated that it plans to 
provide Congress with such an evaluation by August 2007 to respond to 
the mandate in the John Warner National Defense Authorization Act for 
Fiscal Year 2007.[Footnote 8] In concurring with our second 
recommendation, DOD listed several steps it has under way and planned 
to take. For example, DOD said that hiring actions are in progress to 
staff the DPS program office after its relocation to Scott Air Force 
Base and that other actions are being implemented to staff the Surface 
Deployment and Distribution Command. DOD also stated that it has 
implemented a process to reach agreement with stakeholders on the 
essential requirements for DPS and their priority. DOD also stated that 
the U.S. Transportation Command will provide some funds and work with 
the Office of the Secretary of Defense to obtain additional funding. We 
believe that it is important that DOD focus sustained attention on the 
program and follow through with the actions planned, especially given 
the delays the program has experienced and the challenges it still 
faces. 

Background: 

DOD's personal property program is used by personal property shipping 
office staff to manage household goods moves for all military 
servicemembers and DOD civilians when they relocate. The military 
services pay shipment and storage-related costs from their military 
personnel accounts' permanent change of station budgets and pay for 
loss and damage claims and personal property shipment office expenses 
from their operation and maintenance accounts. Servicemembers generally 
work with DOD transportation officials at personal property processing 
offices to coordinate their moves. These offices can either be service- 
specific offices or joint or consolidated property offices that assist 
servicemembers from more than one service. These offices provide 
servicemembers with local points of contact for counseling about their 
moves and processing paperwork related to shipments of their personal 
property. Prior to the reengineering efforts over the last 11 years, 
DOD's personal property program had remained virtually unchanged for 
nearly 40 years. 

DOD's personal property program involves a complex process of 
qualifying carriers, soliciting rates, distributing moves, evaluating 
moving companies' performance, paying invoices, and settling claims. 
Among the program's many challenges is ensuring that the moving 
industry provides adequate year-round capacity, especially during the 
summer peak moving season when most servicemembers, as well as the 
general public, schedule their moves. In an effort to test alternative 
approaches and address some of its challenges, DOD previously evaluated 
three pilot programs.[Footnote 9] From those three pilot programs, DOD 
submitted a report to Congress in 2002 with recommendations to improve 
the quality of household goods moves for servicemembers that were 
originally contained in a U.S. Transportation Command report. Those 
recommendations were as follows: 

* Reengineer the liability and claims process by adopting commercial 
practices of minimum valuation,[Footnote 10] simplifying the filing of 
claims, and providing the servicemember with direct settlement for 
claims with the carrier. 

* Change the acquisition process to implement performance-based service 
contracts[Footnote 11] (as opposed to the current practice of providing 
contracts to the lowest bidder). 

* Implement information technology improvements, which could integrate 
functions across such areas as personnel, transportation, financial, 
and claims. 

To respond to these recommendations, DOD developed a new program called 
Families First to improve the quality of household goods moves for 
servicemembers, DOD civilian employees, and their families. Families 
First is a U.S. Transportation Command program that is executed by the 
Military Surface Deployment and Distribution Command, an Army service 
component command.[Footnote 12] 

Since 1989, DOD's personal property system has used the Transportation 
Operational Personal Property Standard System, a legacy data management 
system known as TOPS, which includes 25 additional legacy systems that 
support it. The Surface Deployment and Distribution Command determined 
that it was not feasible to upgrade TOPS to support the goals of 
Families First for several reasons. TOPS is being phased out because 
the software is no longer fully supportable and does not meet DOD's 
technology standards, including its security requirements. TOPS also 
did not support the Business Management Modernization Program, the 
program that preceded the Business Transformation Agency in overseeing 
DOD's business transformation efforts. In addition to these technical 
considerations, TOPS also has poor reporting and data capabilities. 
However, DOD expects that TOPS will need to be functional for a large 
part of the Families First rollout, until DPS is fully operational. 

Under the current system, servicemembers are provided with basic claims 
coverage using depreciated value for losses or damages incurred during 
a move that allows liability at a rate of $1.25 times the weight of the 
goods being shipped.[Footnote 13] For example, if a shipment's weight 
is 10,000 pounds, the maximum liability for the moving company is 
$12,500. Additional coverage options are available for the 
servicemember to purchase. Under the current program, a servicemember 
has two options. Under option one, the servicemember can purchase 
depreciated value coverage above what the government currently pays, 
and under option two, the servicemember can purchase full replacement 
value coverage. Under both options, the servicemember shares the cost 
with the government. For moves within the United States and overseas or 
stored shipments, servicemembers can obtain additional coverage from a 
commercial insurance company. Some private insurance companies and 
moving companies sell insurance to cover certain items of personal 
property during moves. Additionally, some homeowner policies may cover 
some items in shipment. See table 1 for coverage and cost comparisons 
for the current DOD personal property program versus what is planned 
under Families First. 

Table 1: Coverage and Cost Comparisons for DOD's Current Personal 
Property Program versus Families First: 

Current program. 

Basic coverage; 
Coverage: Depreciated value coverage up to $1.25 x shipment weight; For 
example, for a move with 10,000 pounds, the maximum coverage would be 
$12,500.[A]; 
Servicemember costs: None; 
Government costs: Full cost of coverage.[B]. 

Option 1 of current program; 
Coverage: Above basic coverage, servicemember can place additional 
value on a shipment by purchasing depreciated value coverage; 
Servicemember costs: For example, for a move with 10,000 pounds: 
Servicemember pays $0.64/$100 of valuation above $12,500; Increasing 
the value of the shipment to $30,000 would cost servicemember $112; 
Government costs: For example, for a move with 10,000 pounds: The 
government pays $0.64/$100 on first $12,500 of valuation. 

Option 2 of current program; 
Coverage: Full replacement value coverage up to $3.50 x shipment weight 
($21,000 minimum); Charge is $0.85/$100 of the stated valuation. For 
example, the total cost to purchase this option for a 10,000 pound 
shipment is $297.50.[C]; 
Servicemember costs: Servicemember pays approximately three-quarters of 
cost, based on the weight; For example, a move with 10,000 pounds would 
cost servicemember $217.50; 
Government costs: The government pays approximately one-quarter of the 
cost, based on the weight; For example, a move with 10,000 pounds would 
cost the government $80. 

Families First. 

Coverage:
Coverage: Generally, full replacement value up to $4.00 x shipment 
weight.[D]; 
Servicemember costs: Servicemember costs: None; 
Government costs: Government costs: Full cost of the coverage.[E]. 

Source: GAO analysis of DOD data. 

[A] $1.25 x 10,000 pounds = $12,500. 

[B] According to DOD, there is a maximum allowable loss or damage 
payment for certain items. 

[C] (($3.50 x 10,000 pounds)/100) x $0.85 = $297.50. 

[D] The moving company's maximum liability on all shipments will be the 
greater of (1) $5,000 per shipment and (2) $4.00 times either the net 
weight of the household goods shipment or the gross weight of the 
unaccompanied baggage shipment, in pounds, not to exceed $50,000. On 
all other loss and damage claims asserted against the moving company, 
the company's maximum liability will be limited to $1.25 times the net 
weight of the shipment, in pounds. 

[E] Full replacement value coverage applies if a claim is filed with 
the moving company within 9 months of delivery. After 9 months, the 
moving company is liable for the depreciated value of the items only up 
to a maximum of $1.25 times the net weight of the shipment. 

[End of table] 

We have completed several assessments that evaluated DOD's pilot 
programs and plans for implementing Families First.[Footnote 14] For 
example, in 2000, we reported that the U.S. Transportation Command 
needed to complete an evaluation plan for its pilot programs and take 
necessary actions to resolve outstanding cost issues. In 2003, we 
evaluated the methodology used to estimate the costs associated with 
Families First that the services would incur. The Families First 
program was initially expected to increase the services' costs for 
DOD's personal property program by 13 percent, but we questioned part 
of the methodology used to generate this estimate. Specifically, we 
recommended that DOD quantify the risks of implementing the Families 
First program within the 13 percent estimate. As part of this 
evaluation, we also assessed a separate estimate for the cost of 
upgrading the information technology system used for managing the 
shipment of household goods. We questioned DOD's ability to implement 
the upgrades to the information technology system within its cost 
estimate. We found that the estimate to implement the information 
technology recommendation was slightly higher than the $4 million to $6 
million estimate DOD reported to Congress. In 2005, DOD reevaluated its 
estimated 13 percent cost increase and quantified the risks of 
implementing Families First within the expected cost increase. We found 
at that time that DOD used a reasonable methodology to validate the 
estimated increase and quantify the risk. 

Congress has been concerned about problems in this program, especially 
that servicemembers may receive less than what it would cost them to 
replace or repair their household goods that are lost or damaged during 
shipment. On November 24, 2003, the fiscal year 2004 National Defense 
Authorization Act[Footnote 15] amended the U.S. Code[Footnote 16] to 
allow the Secretary of Defense to include a clause for full replacement 
value in DOD's contracts with moving companies. The John Warner 
National Defense Authorization Act for Fiscal Year 2007[Footnote 17] 
mandated that DOD provide full replacement value coverage by March 1, 
2008, for servicemembers and DOD civilian employees. With full 
replacement value, a servicemember would receive enough funds to 
replace or repair a lost or damaged item at its present value.[Footnote 
18] 

Additionally, the John Warner National Defense Authorization Act for 
Fiscal Year 2007[Footnote 19] mandated that the Secretary of Defense 
shall submit to the congressional defense committees a report 
containing the certifications of the Secretary on the following matters 
with respect to the program of the Department of Defense known as 
Families First: (1) whether there is an alternative to the system under 
the program that would provide equal or greater capability at a lower 
cost; (2) whether the estimates on costs, and the anticipated schedule 
and performance parameters, for the program and system are reasonable; 
and (3) whether the management structure for the program is adequate to 
manage and control program costs. The mandate did not specify a date 
for DOD to provide this information. 

DOD Has Taken Some Initial Steps for Families First, but DPS Delays Put 
Achievement of Program Goals and Benefits at Risk: 

DOD has taken some initial steps to achieve the goals and benefits of 
the Families First program, but delays in developing a new information 
management system have put achieving the program's goals and benefits 
at risk. DOD continues to experience delays and missed milestones in 
developing and implementing DPS, and the original estimated release 
date for DPS has now been pushed back for more than 2 years. To meet 
the statutory mandate, DOD has taken steps to provide servicemembers 
with the full replacement value coverage benefit because of the delays 
in implementing DPS. However, some servicemembers may not be covered by 
March 1, 2008, and there are other risks associated with this backup 
plan. Despite these challenges, Surface Deployment and Distribution 
Command officials told us that they expect all types of moves will have 
full replacement value by March 1, 2008. DOD continues to rely on the 
implementation of DPS to achieve other program goals such as improving 
the quality of service and claims processing. 

DOD Has Taken Some Initial Steps to Achieve the Goals and Benefits of 
Families First: 

DOD has taken some initial steps to help achieve the goals and benefits 
of the Families First program. To improve the personal property 
program, DOD has established three goals for Families First: (1) 
improving the quality of service from moving companies by using a best- 
value approach that incorporates performance-based service contracts; 
(2) streamlining the claims process used for claiming losses or damages 
incurred during a move; and (3) developing an integrated information 
management system, known as DPS. DOD designed Families First so that 
achieving the first two goals of the program relies heavily on 
completion of the third goal of the program, DPS. DOD identified 
numerous benefits of the Families First program, including reduced 
storage costs and greater operational flexibility for moving companies. 
Two of the program benefits identified by DOD--full replacement value 
coverage and expanded counseling support through a Web-based 
information system--are intended to directly benefit servicemembers and 
promote quality service when moving their personal belongings. 

DOD developed a phased approach to implement Families First and has 
taken some steps to accomplish the first and second phases. The first 
phase, which began in March 2004, has two main parts: (1) electronic 
billing and payment systems and (2) a customer satisfaction survey. The 
electronic billing system, known as the Central Web Application, is a 
government Web-based system for reviewing and approving services 
online, as well as for pricing shipments. The electronic payment 
system, U.S. Bank's PowerTrack, is an online payment and transaction 
tracking system. This system is expected to reduce the payment cycle 
for DOD's personal property moves. While DOD and all services other 
than the Air Force have made some progress in implementing the 
electronic billing and payment systems, the Air Force is not processing 
its own bills and payments using these systems because it is 
reengineering its payment process and cannot currently support these 
systems. DOD is working to fully interface and integrate electronic 
billing and payment systems, respectively, with DPS but continues to 
experience operational problems, such as invoices being delayed or lost 
when being processed. 

In addition, as part of the first phase, DOD began data collection for 
a customer satisfaction survey, which is intended to support the 
Families First goal of improving moving company performance through 
evaluation of past performance. Under Families First, servicemembers 
are expected to fill out a customer satisfaction survey about their 
moves, the results of which will be combined with other data[Footnote 
20] to generate an overall moving company quality score. The moving 
companies with the best scores will be awarded more shipments. This 
process contributes to the best-value distribution of 
shipments.[Footnote 21] Under DOD's current household goods program, 
DOD awards shipments to the company that bids the lowest price for a 
move. To generate data for ranking moving companies when Families First 
is implemented, DOD has instituted an interim customer satisfaction 
survey under the current program. However, interim customer 
satisfaction survey response rates have been about 16 percent within 
the past year, which has resulted in less than one-third of moving 
companies' scores being usable. To compensate for the low response 
rate, DOD has developed a methodology upon program implementation to 
make moving companies' scores statistically valid so the scores can be 
used when allocating shipments.[Footnote 22] However, the moving 
companies are concerned about how the low survey response rate will 
affect how DOD awards business to them. In addition to developing the 
methodology to ensure that moving companies' scores are statistically 
valid, DOD has taken several steps it says will increase the customer 
satisfaction survey response rate. For example, it has released a 
commercial to increase awareness about the survey and added information 
in its It's Your Move pamphlet.[Footnote 23] It also included the 
customer satisfaction survey requirement in the Defense Transportation 
Regulation. DOD also expects that the survey response rate will improve 
once DOD implements DPS and servicemembers can file their surveys 
electronically within DPS. Both of these components--the electronic 
billing and payment systems and the customer satisfaction survey--are 
necessary to support Families First. 

The second phase of Families First includes the development and 
implementation of DPS, which DOD has been working on for more than 2 
years. DOD plans to use DPS to implement many key improvements for the 
Families First program. For example, Families First implementation 
documents state that with DPS, DOD will be able to: 

* use best-value distribution when awarding performance-based service 
contracts, 

* provide Web-based counseling to help servicemembers with their moves, 

* use a commercial-based tariff for domestic moves rather than the 
antiquated government tariff currently being used,[Footnote 24] 

* provide direct claims settlement with the transportation service 
provider, and: 

* use a "rate reasonableness"[Footnote 25] strategy that will help DOD 
manage the costs of the moving program. 

DOD also plans to use DPS to provide the electronic customer 
satisfaction survey to servicemembers and to help DOD monitor the rates 
moving companies charge it for moving services. 

The third, and final, phase of the Families First program includes 
adding functionality to DPS so that it can handle more types of moves, 
including nontemporary storage (about 16 percent of all moves) and 
direct procurement moves (about 8 percent of all moves).[Footnote 26] 

DPS Development and Implementation Has Experienced Delays: 

DOD continues to face delays and missed milestones in developing and 
implementing DPS. DPS development and implementation has been pushed 
back for more than 2 years from the original estimated release date. 
DOD began DPS development in May 2004 and DPS was originally scheduled 
to be available by October 2005. In October 2005, the Surface 
Deployment and Distribution Command initiated a review of the program. 
DOD then entered into an 11-month strategic pause for further program 
review and software testing after it encountered significant software 
validation and systems problems, which resulted in the system not 
working. DOD subsequently developed two more implementation timelines, 
the first in October 2006 and the second in March 2007. See table 2 for 
a comparison of DPS implementation timelines. 

Table 2: Comparison of Timelines to Implement DPS: 

Software acceptance testing for DPS[A]; 
Original plan as of 2004: September through October 2005; 
Plan as of October 2006: January through February 2007; 
Revised plan as of March 2007: January through summer 2007. 

Site testing of DPS[B]; 
Original plan as of 2004: No testing planned; 
Plan as of October 2006: May 2007 through November 2007; 
Revised plan as of March 2007: Starts October 2007. 

DPS operational; does not include nontemporary storage and direct 
procurement method moves; 
Original plan as of 2004: October 2005; 
Plan as of October 2006: November 2007 through January 2008; 
Revised plan as of March 2007: Spring 2008. 

DPS fully operational to include moves with nontemporary storage and 
direct procurement method; 
Original plan as of 2004: October 2006; 
Plan as of October 2006: March 2008; 
Revised plan as of March 2007: Fall 2008. 

Source: GAO analysis of DOD data. 

[A] Prior to software acceptance testing for DPS, the program underwent 
independent testing, commonly known as independent validation and 
verification testing. The original time frame for independent testing 
was for the third and fourth quarters of fiscal year 2005. The test was 
rescheduled and occurred in July through October 2005. This testing led 
to the program's strategic pause. Additional independent testing 
occurred July through September 2006. 

[B] According to DOD, DPS will be tested and operational at 21 test 
sites. 

[End of table] 

During the October 2005 internal review of DPS, DOD's review group 
recommended improvements in areas such as management, the type of 
contract used for DPS, and the DPS development process. The strategic 
pause following this review ended in September 2006, but the next 
schedule for DPS implementation was not developed until after a new DPS 
program office was created in October 2006. This schedule incorporated 
a phased rollout approach for DPS.[Footnote 27] Under this schedule, 
DPS software acceptance testing was to occur in winter 2007, followed 
by increasing use of DPS through summer and fall 2007. DOD expected DPS 
to be fully operational in spring 2008. 

DPS program managers developed what they described as an aggressive 
implementation schedule for two reasons. First, they planned to use DPS 
to meet the mandate to provide full replacement value by March 1, 2008. 
Second, DPS implementation was needed because the legacy system used 
with the current personal property system is not fully supportable and 
does not meet DOD information technology security standards. Program 
and service officials said that the legacy system has problems 
interfacing with DOD's networks. In addition, the legacy system's 
hardware has been breaking down. Surface Deployment and Distribution 
Command officials said that the number of sites not functioning at any 
one time varies. To keep the legacy system working, the Surface 
Deployment and Distribution Command provided the services with legacy 
system "survival kits." These kits included motherboards and other 
hardware components that are difficult to find and are no longer 
supported commercially. DOD estimates that these survival kits will 
keep the legacy systems viable for 4 to 5 years, but some service 
personal property officials have expressed concerns that the legacy 
systems might not last that long. 

DOD delayed the DPS implementation schedule again in February 2007, 
after stakeholders from the services and the moving industry 
participated in DPS software acceptance testing and found a significant 
number of problems with the software. This testing generated more than 
1,400 problem reports, almost 200 of which were collectively expected 
to result in significant changes to the software. For example, for a 
shipment awarded to one moving company, DPS sent the work order for the 
shipment to a different moving company. Thus, the moving company that 
was awarded the shipment did not know the shipment was awarded to 
it.[Footnote 28] In addition, according to a U.S. Transportation 
Command official, some test reports indicated that business rules still 
needed to be clarified, such as whether moving companies will have one 
or two opportunities per year to file the rates they will charge DOD to 
move servicemembers' household goods.[Footnote 29] 

In March 2007, because of the number of test problem reports and 
overall concern about DPS functionality, DPS program management 
officials significantly altered the timeline for rolling out DPS to 
address concerns expressed by military service and moving industry 
stakeholders regarding DPS functionality and its implementation 
schedule. Stakeholders were also concerned that the implementation 
schedule called for switching to DPS during the peak summer season, 
when both the services and industry would have to learn a new system 
while also moving shipments using the current system. The revised DPS 
implementation schedule calls for fixing the issues identified in the 
test problem reports, continued testing of DPS through the summer, and 
adding high-priority changes requested by the services. Program 
managers said that DPS should be available for some shipping offices to 
use by fall 2007 on a test basis, with all offices using DPS beginning 
in spring 2008 for all moves except those using nontemporary storage 
and the direct procurement method. Once DPS is functional for domestic 
and international household goods moves, program managers will begin 
developing the functionality for the third phase of Families First, 
which includes moves using nontemporary storage and the direct 
procurement method. 

DOD Has a Plan to Provide Full Replacement Value without DPS, but Does 
Not Have a Plan to Implement the Other Goals and Benefit of Families 
First without DPS: 

Because of the delays implementing DPS, DOD has developed a backup plan 
to provide servicemembers with the full replacement value coverage 
benefit, but its plan to implement the other goals and benefit of 
Families First still relies on DPS. When the backup plan was published 
in December 2006, it called for the next version of the current 
program's domestic tariff and international rate solicitation to 
include language that made it mandatory for moving companies to include 
full replacement value coverage in the rates submitted to DOD.[Footnote 
30] Using this backup plan in the current program, the majority of 
shipments will receive full replacement value protection by March 1, 
2008. The schedule for implementing the backup plan follows the current 
program's winter 2007 rate filing schedules for the domestic intra-and 
interstate programs and the international programs. The Surface 
Deployment and Distribution Command plans to begin accepting rates 
under the backup plan beginning in May 2007, and the rates will be 
effective from October 1, 2007, through April 1, 2008. 

Risk factors associated with DOD's backup plan challenge DOD's ability 
to implement the plan. First, the backup plan relies on a legacy system 
that is no longer fully supportable. For example, the system still does 
not meet security standards. DOD estimates that the survival kits it 
has sent to the services can keep the legacy system running for 4 to 5 
years. However, some service officials had concerns that the system 
would not last this long. Without the legacy system, staff at the 
personal property offices have to work manually to accomplish 
administrative tasks. Furthermore, some service officials expressed 
concern that providing full replacement value without DPS would give 
the moving industry an opportunity to increase prices with no control 
to limit the cost and may create some increase in workloads for the 
claims offices because of the lack of automation for claims filing. 
Moreover, most services expressed concern about the lack of guidance 
for implementing full replacement value under the current system 
instead of within DPS. Some service and Surface Deployment and 
Distribution Command officials expressed concerns about possible 
increases in their workload because of the magnitude of the procedural 
changes as they work to implement full replacement value without DPS. 

Another risk is that thousands of moves may not be covered before the 
March 1, 2008, deadline. DOD's contracts for moves within a theater of 
operation, those using nontemporary storage, and those using the direct 
procurement method do not include full replacement value and may expire 
after the March 2008 mandate. DOD stated that it is initiating various 
levels of action to ensure full replacement value is implemented by 
March 2008. According to DOD, as these contracts expire, the new 
contract will include full replacement value. The Surface Deployment 
and Distribution Command directed that all eligible contracts be 
modified not later than March 2008. However, it is still uncertain 
whether all contracts in place on March 1, 2008, will cover full 
replacement value. According to DOD estimates, in fiscal year 2006, 
moves that included servicemembers transferring within a theater of 
operation accounted for about 7,800 personal property moves, or about 1 
percent of the more than 680,000 shipments that occurred. DOD officials 
also stated that in fiscal year 2006 direct procurement method moves 
represented almost 8 percent of all moves. About 16 percent of moves 
included nontemporary storage. 

In a broader sense, DOD's backup plan does not address the other goals 
or counseling benefit of Families First; it is designed only to allow 
DOD to meet its mandate to provide full replacement value coverage. DOD 
officials said that they did not have a requirement to produce a backup 
plan for the other goals or counseling benefit and they did not invest 
resources to do so. Instead, DOD continues to rely on DPS to achieve 
the goals and counseling benefit of Families First. The reason Surface 
Deployment and Distribution Command officials said they created a 
backup plan for full replacement value is because they were required by 
statute to implement it by March 1, 2008, whether DPS was ready or not. 
For example, the backup plan does not address how to provide 
streamlined claims or improved quality of service from moving companies 
without DPS, nor does it include a way to provide the other 
servicemember benefit of expanded Web counseling services to help 
servicemembers with their moves without DPS. Until DPS is operational, 
some service officials have said that DOD has at least one other option 
for providing expanded counseling services because the Navy has a 
program, known as SmartWebMove, which can be used by members from other 
services. However, this program is connected to the legacy system, and 
deterioration of the legacy system may limit the feasibility of this 
option. 

Despite these challenges, Surface Deployment and Distribution Command 
officials told us that they expect all types of moves will have full 
replacement value by March 1, 2008. According to these officials, this 
will include nontemporary storage and direct procurement method moves. 
DOD continues to rely on the implementation of DPS to achieve other 
program goals such as improving the quality of service and claims 
processing. 

Families First Program Could Increase DOD Costs by About $1.4 Billion 
over Current Program Costs through Fiscal Year 2011: 

The Families First program could increase costs to DOD by about $1.4 
billion over current program costs through fiscal year 2011 for two 
main reasons: (1) DOD estimates the program will increase costs to the 
services by 13 percent and (2) DOD has significantly increased the cost 
estimate for a new information management system since our last 
assessment. DOD's Families First program has not yet been implemented, 
so we could not assess the actual growth in costs of the program, 
although DOD continues to estimate that the Families First program will 
increase the cost to the services for their household goods budgets by 
an estimated 13 percent, or as much as $1.2 billion through fiscal year 
2011. In addition, the DPS program office has significantly increased 
the estimated cost of DPS and maintaining the DPS program office, which 
it now expects to cost $180 million through fiscal year 2011. 

Actual Growth in Costs of Families First Program Cannot Be Assessed, 
Although DOD Continues to Estimate a 13 Percent Increase in Services' 
Costs to Implement Families First: 

We could not assess the actual growth in costs of Families First 
because the program has not been implemented; however, DOD continues to 
estimate that the costs to the services of the Families First program 
will be 13 percent higher than costs under the current program. In 
fiscal year 2006, the services' total household goods budget was about 
$1.8 billion, which would mean the services would have an increase of 
$240 million annually above the existing budget in order to move 
servicemembers' household goods under Families First in 2007, if the 
program were fully implemented.[Footnote 31] DOD will incorporate a 
cost-control mechanism into DPS, similar to the one employed in the 
current program, in an attempt to keep the costs within the expected 
increase. However, until DPS is implemented the impact of the use of 
this mechanism on the Families First program will not be known. Based 
on DOD's total household goods budget, Families First could cost DOD 
about $1.2 billion more than the current program over the next 5 years. 

DOD continues to inform the services that the Families First program, 
when fully implemented, will cost them an additional 13 percent over 
their existing household goods budgets, which is a subset of the 
services' permanent change of station budgets. According to U.S. 
Transportation Command and some personal property officials, this cost 
increase is in part because of an expectation by DOD that moving 
companies will increase the rates they charge as a result of their 
additional responsibilities under the Families First business rules, 
such as providing full replacement value. The actual cost of Families 
First will not be known until moving companies file the rates they will 
charge DOD to move servicemembers, which is expected to take place in 
March 2008. DOD is relying on features built into DPS to ensure that 
the costs remain at or below the expected cost increase of 13 percent. 
DPS will incorporate a cost-control mechanism known as rate 
reasonableness, which will establish an acceptable range of rates for 
each combination of pickup and destination locations.[Footnote 32] 

The program delays in implementing Families First decrease the 
certainty of the cost estimate because the methodology is based on 
certain assumptions and data that may change with time. For example, 
the cost methodology used to estimate the 13 percent increase was 
adjusted to account for fewer small businesses participating DOD-wide 
than participated in the pilot programs. However, according to DOD 
officials, the percentage of small business participation in Families 
First will be similar to the current DOD participation rate of 70 
percent, which is significantly larger than the 30 percent assumed in 
the 2002 cost estimate. DOD's evaluation of the pilot programs 
demonstrated that small businesses were 14 to 74 percent more expensive 
per shipment compared to the current program. As a result, DOD may have 
underestimated the cost of having small businesses participate in 
Families First. 

Estimated Costs for the Integrated Information Management System Have 
Significantly Increased since Our Last Assessment: 

DOD's estimated costs for an integrated information management system, 
known as DPS, have significantly increased since our last assessment in 
2003. The estimates for developing an information management system to 
support Families First have increased from $4 million to $6 million to 
$86.0 million, and the total cost is expected to be about $180 million 
through fiscal year 2011 once annual operating costs are added. 

In a 2002 report,[Footnote 33] DOD estimated that implementing the 
information technology improvements to enhance its data management 
capabilities for Families First would cost $4 million to $6 million. 
This estimate was based on expanding the use of an upgraded, Web-based 
version of the existing legacy system that was implemented on a small 
scale during one of DOD's pilot programs. In our April 2003 review of 
that estimate, we questioned whether DOD would be able to implement its 
new personal property program, including the technology improvements, 
within the estimated range.[Footnote 34] In addition, we noted that 
although DOD had developed a plan of action for designing the new 
system, the plan did not include monitoring the costs and benefits 
during its implementation or the extent to which system changes were 
being achieved within an acceptable cost range, such as the $4 million 
to $6 million estimate. 

According to DOD officials and documents, in January 2004, DOD decided 
to implement the technology improvements to support Families First by 
developing an entirely new information management system, which came to 
be known as DPS. In a January 2004 report, the Surface Deployment and 
Distribution Command said that the legacy system evaluated under the 
previous cost estimate was expensive to operate and maintain and could 
not be modified to become compliant with DOD technology standards or to 
support the objectives of the Families First program.[Footnote 35] At 
that time, DOD estimated that DPS could be developed for about $16.5 
million, with an average annual cost of about $4.6 million after the 
initial investment. This estimate assumed that DPS could be developed 
using commercial-off-the-shelf or government-off-the-shelf software to 
account for about 75 percent of the new system. The use of existing 
commercial and government software was expected to keep the cost of the 
system low, because using ready-made software reduces the need to 
develop original software. For example, the Navy developed a counseling 
program, known as SmartWebMove, which was originally planned to be 
incorporated into DPS as its counseling module so that DOD would not 
need to develop original software as part of DPS to provide this 
Families First benefit. However, the Navy's counseling module was not 
incorporated into DPS.[Footnote 36] The Navy, however, is still using 
SmartWebMove while DPS is being developed. 

Since the 2004 estimate, the cost of DPS has continued to increase. As 
of February 2007, DOD reports that it spent $51.5 million developing 
DPS, which is significantly higher than any previous DOD estimate. This 
cost includes about $8.2 million for capital hardware, $24.9 million 
for capital software, and $18.5 million in operating costs. According 
to DOD Families First officials, after the DPS contract was awarded, 
software developers determined that DPS would require a much larger 
percentage of new software development than expected because of the 
unique needs of the DOD personal property stakeholders, which has 
caused the cost to rise significantly. In addition, the costs for 
developing, testing, and making DPS available for use now include the 
cost of the Joint Program Management Office for Household Goods 
Systems, which was established on October 1, 2006. The original 
estimates did not account for a separate program office to manage the 
development and operation of DPS, sustain the legacy system, or 
evaluate future options for DOD's household goods program. Based on our 
analysis of program office budget planning documents from February 
2007, the DPS program office estimated that the costs for maintaining a 
program office, sustaining the legacy system through retirement, 
developing and sustaining DPS, and implementing a future household 
goods program through fiscal year 2011will be $180 million if all of 
the requirements are funded. Additional delays in the schedule are 
likely to further increase the costs associated with the program. 
However, when the legacy system is no longer needed, DOD expects that 
it will not have to budget for this additional cost, which is about $21 
million annually. Summary information on DPS cost estimates appears in 
table 3. 

Table 3: Summary of Information Management System Cost Estimates: 

Dollars in millions. 

What is included; 
Original estimate: Upgrades to the legacy system; 
Initial DPS estimate (2004): Incorporating available software; 
Estimate as of February 2007: A separate program office, sustaining the 
legacy system, and evaluating future options for DOD's household goods 
program. 

System development; 
Original estimate: 4 to 6; 
Initial DPS estimate (2004): 16.5; 
Estimate as of February 2007: 86.0[A]. 

Average annual operating cost (fiscal years 2007-2011)[B]; 
Original estimate: Not estimated; 
Initial DPS estimate (2004): 4.6; 
Estimate as of February 2007: 15.2. 

Total estimated costs through fiscal year 2011[B]; 
Original estimate: Not applicable; 
Initial DPS estimate (2004): 47.0; 
Estimate as of February 2007: 180.0[C]. 

Source: GAO analysis of DOD data. 

[A] The $86.0 million in system development costs for DPS includes 
actual and projected capital hardware and capital software costs from 
fiscal year 2004 through fiscal year 2011. 

[B] According to DOD, the estimates for fiscal year 2009 and beyond are 
initial estimates that have not been approved through the U.S. 
Transportation Command Chief Information Officer Program Review 
Process, and may change significantly as potential requirements for a 
future household goods program become better defined. 

[C] To calculate the total estimated costs for DPS from fiscal year 
2007 through fiscal year 2011, we added the capital software, capital 
hardware, and operating costs of DPS for those years using budget 
documents provided by the DPS program managers. These costs include DPS 
program office cost estimates for fiscal years 2008 through 2011 and 
the $51.5 million spent developing DPS from fiscal year 2004 through 
fiscal year 2007. Calculations are based on fiscal year 2007 data. 

[End of table] 

DOD Faces Management Challenges for Families First Program and Has Not 
Developed a Comprehensive Implementation Plan: 

DOD faces management challenges for the Families First program, and it 
has not employed comprehensive planning that incorporates many sound 
management principles and practices. Families First offices, including 
the DPS program office, continue to experience organizational 
challenges and staffing shortfalls. Moreover, Families First does not 
have stakeholders' agreement on some elements of the program, such as 
business rules and essential DPS functions. Additionally, the Families 
First program faces uncertain funding. 

DOD Planning for Families First Did Not Incorporate Some Sound 
Management Principles and Practices: 

Sound management practices require employing comprehensive planning to 
manage program implementation.[Footnote 37] Comprehensive planning 
should include many things, such as integrated approaches to manage 
training and workforce redeployment issues; a qualified, trained, and 
well-led team to reengineer the program; stakeholder agreement about 
key elements of a program, including the program's business rules and 
its priorities; and full cost information and funding resources. 
However, DOD's planning for Families First has not incorporated some of 
these sound management practices. Instead, DOD has developed several 
nonintegrated plans to cover individual portions of the Families First 
program. For example, DOD has a draft transition plan for 
organizational changes and the DPS program office has a plan for DPS 
development. However, DOD does not have a comprehensive plan with 
timelines for implementing Families First that manages all of its 
efforts simultaneously. Without an integrated, comprehensive plan, the 
program's implementation is at risk. 

Families First Faces Significant Organizational Changes and Staffing 
Shortfalls: 

The offices supporting Families First, including the program office now 
overseeing the development and implementation of DPS, are undergoing 
organizational changes and experiencing staffing shortfalls that affect 
DOD's ability to support Families First at a critical time in its 
implementation. When the first phase of Families First implementation 
and DPS development began in 2004, the Surface Deployment and 
Distribution Command, which is under the U.S. Transportation Command, 
managed all elements of the program. In December 2005, almost 2 years 
after DPS development started, the Surface Deployment and Distribution 
Command established a DPS program management office based on a 
recommendation made by a DOD review group. The review group suggested 
that the Surface Deployment and Distribution Command establish a clear 
management structure for DPS because there was no single point of 
authority and there was no acquisition-certified program manager. On 
October 1, 2006, the U.S. Transportation Command transferred this 
office from the Surface Deployment and Distribution Command to the U.S. 
Transportation Command. The new office, named the Joint Program 
Management Office for Household Goods Systems, is under the leadership 
of the U.S. Transportation Command's Program Executive Office for 
Distribution Services. The DPS program office and the program executive 
office are now led by officials with acquisition experience. 

The DPS program office has several tasks: 

* mature the program office structure and processes; 

* sustain the legacy system currently being used through the 
development of its replacement, DPS; 

* quickly implement DPS in phases; and: 

* evaluate alternatives for the future of DOD household goods services, 
including options for outsourcing. 

Although DOD's establishment of the DPS program office addresses some 
of the concerns about DPS program management raised in DOD's review, 
the Joint Program Management Office for Household Goods Systems was not 
established until a few months prior to a critical phase of DPS 
development and continues to organize while also facing staffing 
challenges. The DPS program office had a draft organization chart as of 
March 2007, but filling staff positions has been complicated by a base 
realignment and closure move to Scott Air Force Base in Illinois from 
the office's current location in Alexandria, Virginia. This move is 
scheduled to take place in the fourth quarter of fiscal year 2007. The 
program office's draft transition plan transfers several positions from 
the Surface Deployment and Distribution Command to the DPS program 
office. However, this has created human capital challenges, as many of 
the staff are choosing to retire or leave rather than move. These 
workforce planning issues are significantly affecting the DPS program 
office. According to DPS program management officials, as of April 
2007, only 1 of 27 civilians in the program office planned to transfer 
to Scott Air Force Base. Thus, while Families First and DPS are at a 
critical stage of development, both the Surface Deployment and 
Distribution Command and the DPS program office are losing many of 
their senior leaders who possess technical and program knowledge. 

The DPS program office is working to mitigate these human capital 
planning challenges by seeking authority to hire over current staffing 
limits, seeking temporary functional support from other Surface 
Deployment and Distribution Command and U.S. Transportation Command 
offices, and continuing to seek support from the services and industry 
as software testers. As of April 2007, hiring actions had been 
accelerated and some job announcements had been made. The program 
office is also using contractor support but is facing challenges with 
this as well. For example, in March 2007 several contractors were not 
able to complete tasks for the program office because of paperwork 
processing issues. In addition, in March 2007, the DPS program office 
asked each of the services to provide two or three full-time 
servicemembers to continue conducting DPS software testing at the 
Surface Deployment and Distribution Command headquarters in Alexandria, 
Virginia. While the services plan to provide some human capital 
support, current service plans indicate that they cannot provide the 
servicemember support DPS management officials originally sought 
because each service will need its staff during the busy, peak moving 
season that coincides with DPS testing. For example, the Navy is 
planning to provide five part-time testers at Navy bases. The Army is 
planning to provide five part-time testers at Army bases. The Marine 
Corps plans to provide one full-time person to test at program 
headquarters as well as one support staff member at its testing site at 
Camp Lejeune in North Carolina. The Air Force is also providing full- 
time support from its joint personal property shipping office in 
Colorado Springs, Colorado. Overall, it is not clear how successful 
these temporary mitigation efforts will be in providing staff with the 
skills these offices need to implement both DPS and Families First. 
However, DOD stated that its joint stakeholder advisory team of testers 
will be sufficient to fulfill the mission required by the DPS program 
office. 

Surface Deployment and Distribution Command officials, who will manage 
and provide oversight of the current DOD personal property program and 
implementation of the Families First program, said that they are also 
facing additional workload and workforce challenges as they administer 
the electronic billing and payment systems as well as the customer 
satisfaction survey. These officials are administering these processes 
without the automation they expect DPS will provide while also 
experiencing staff reductions and changes as a result of a base 
realignment and closure move. 

As of April 2007, the U.S. Transportation Command has made some 
progress to staff the DPS program office, but it is not clear how 
successful its measures will be. Until the U.S. Transportation Command 
is able to ensure that the DPS program office has adequate and capable 
human capital resources, it may be unable to successfully implement 
DPS. 

The John Warner National Defense Authorization Act for Fiscal Year 
2007[Footnote 38] mandated that the Secretary of Defense submit to the 
congressional defense committees a report containing the certifications 
of the Secretary on the following matters with respect to the program 
of the Department of Defense known as Families First: (1) whether there 
is an alternative to the system under the program that would provide 
equal or greater capability at a lower cost; (2) whether the estimates 
on costs, and the anticipated schedule and performance parameters, for 
the program and system are reasonable; and (3) whether the management 
structure for the program is adequate to manage and control program 
costs. When the U.S. Transportation Command established the DPS program 
office, it included an evaluation of materiel alternatives for the 
future of household goods services as part of the office's mission. The 
mandate did not specify a date for DOD to provide this information to 
the congressional defense committees. The U.S. Transportation Command 
is responsible for leading, with the assistance of the DPS program 
office, the evaluation of alternatives. The DPS program office is 
responsible for evaluating how to implement the chosen alternative. It 
is unclear when the DPS program office will be able to evaluate 
materiel alternatives for the program because (1) U.S. Transportation 
Command officials told us they were focusing on developing and 
implementing DPS and (2) the DPS program office has not yet been 
resourced to evaluate the materiel alternatives. 

DOD Does Not Have Stakeholders' Agreement on Key Elements of Families 
First: 

DOD does not have stakeholders' agreement on some elements of Families 
First, which puts the implementation of the program at risk. DOD does 
not have stakeholders' agreement in two interrelated areas: (1) 
business rules issues, including whether existing and proposed rules 
will actually enable accomplishment of a key program goal, and (2) the 
essential functions needed for DPS. 

Uncertainties Surround Families First Business Rules: 

Stakeholders, including the military services, have not all agreed to 
some elements of Families First business rules and have not taken 
action to implement all of the business rules because it is unclear to 
them if the rules are final. At the end of our audit work, the U.S. 
Transportation Command was still evaluating whether the business rules 
would have to be published again for comment by stakeholders. However, 
in commenting on a draft of this report in May 2007, DOD stated that 
the business rules are now considered final.[Footnote 39] Business 
rules help define how policies are to be implemented. DPS requirements 
and functions are derived from these business rules. For example, in 
late March 2007, several months into DPS testing, DOD was still 
evaluating a business rule as to whether moving companies should have 
the opportunity to file the rates they charge DOD to move 
servicemembers' household goods once or twice per year. In the current 
program, rates are filed twice per year. Under Families First business 
rules, moving companies would file rates only once per year. In April 
2007, DOD decided to continue with its Families First business rule 
where moving companies only file rates once per year.[Footnote 40] 

Within DOD, debate continues about whether Families First business 
rules will allow DOD to accomplish its goal of improving the quality of 
service from moving companies by using a best-value approach that 
incorporates performance-based service contracts. Some DOD officials 
(and industry representatives) question DOD's proposed practice of 
allocating business to moving companies using a system where companies 
that receive less than the best performance score are still allocated 
business. For example, under Families First rules, moving companies 
will be ranked into four groups based on their performance scores. 
Those companies with the best scores will be placed into the first 
group and receive the most DOD business. However, DOD officials said 
that even those companies that are in the fourth group, with the lowest 
performance scores, are expected to receive some business from DOD. 
According to DOD officials and industry representatives, one reason DOD 
will do this is to keep providing business to those companies that may 
not otherwise be able to stay open during the nonpeak moving season. 
These stakeholders said that this helps ensure that there will be 
enough capacity during peak moving season. However, some 
servicemembers' household goods may be moved by companies that did not 
receive high performance scores, and therefore they may not receive 
quality moves.[Footnote 41] If this is not resolved, DOD may be 
challenged to meet the program's goal of improving the quality of 
service from moving companies. 

Additionally, during the course of our work, stakeholders indicated 
that they did not consider the business rules final. However, DOD, in 
commenting on a draft of this report, stated that the business rules 
are now considered final. Stakeholders indicated that they do not yet 
know what will be expected of them under Families First or what DPS 
must include to fully support the program. Stakeholders said that the 
business rules are not considered final until they have been published 
in the Defense Transportation Regulation. The U.S. Transportation 
Command published business rules for phase one of the program in the 
Defense Transportation Regulation on February 20, 2007. However, it has 
not published business rules for the second and third phases of 
Families First in the Defense Transportation Regulation. The business 
rules have only been published on the Surface Deployment and 
Distribution Command's Web site and once in the Federal Register so 
that stakeholders could comment on them. During our review, U.S. 
Transportation Command officials indicated that DOD planned to publish 
the business rules again in the Federal Register in June 2007 so that 
stakeholders could comment on them again and said that DOD would 
finalize the business rules in July 2007. It is unclear whether DOD 
still plans to publish the rules again in the Federal Register. Along 
with the uncertainty surrounding the business rules, stakeholders do 
not have procedural guidance and do not yet know what is expected of 
them under Families First. For example, an Air Force personal property 
official told us the Air Force needs the finalized Families First 
business rules so that it can train its staff on these new rules, which 
the personal property official described as being vastly different from 
the current program's business rules. However, the Air Force personal 
property official said the Air Force is hesitant to develop a training 
curriculum on business rules that are not finalized. Additionally, 
without final business rules, the services cannot set up internal 
regulations to support the business rules. Moreover, representatives 
from the services and the moving industry are concerned that without a 
formal set of business rules on which to develop DPS, they cannot 
evaluate whether the computer system fully supports the Families First 
business rules. Service officials and industry representatives continue 
to have questions about Families First business rules and DPS 
implementation. 

Finally, the moving companies have concerns about the Families First 
business rules that define how DOD generates the performance scores 
used to rank them in the first, second, third, or fourth groups. The 
majority of a moving company's performance score comes from a customer 
satisfaction survey. However, servicemember response rates for the 
survey have been low (about 16 percent within the past year) and, 
because of this, most moving companies' scores are not statistically 
valid for generating a performance score. Although DOD has, as part of 
its business rules, devised a methodology to make moving company 
performance scores valid until survey response rates improve,[Footnote 
42] industry representatives are still concerned that moving companies 
will be negatively affected by low response rates. In commenting on a 
draft of this report, DOD stated that while it values the opinion of 
the moving industry, its personal property program does not require 
consensus by industry. DOD stated that the main focus of the department 
is to provide a quality personal property program for servicemembers 
while being good stewards of taxpayer dollars. 

Stakeholders Have Not Agreed to All Essential Functions for DPS: 

Another fundamental challenge facing DOD in implementing DPS is that 
stakeholders, such as the military services and the moving industry, 
have not agreed to all of the essential functions of DPS and how they 
should operate when DPS is made available to servicemembers to use. 
Service officials told us that prior to the development of the DPS 
program office, the Surface Deployment and Distribution Command held 
many meetings to understand what the services wanted DPS to provide 
servicemembers and personal property officials. However, service 
officials said that officials overseeing DPS development at that time 
did not include all of those requirements when first developing DPS. A 
Surface Deployment and Distribution Command official said that the 
contract for DPS was written from a requirements list generated by 
military service and moving industry stakeholder participation. For 
example, there was a General Officer Steering Committee, Council of 
Colonels and Captains, and moving industry stakeholder groups, which 
met to discuss DPS requirements. In early 2007, after the U.S. 
Transportation Command took over DPS, stakeholders had their first 
opportunity to test DPS. During these tests, stakeholders identified 
functions that they expected within DPS but that did not work the way 
they expected. This resulted in DPS not providing the functionality 
service officials expected, and this, in turn, could affect the 
services' workloads. A U.S. Transportation Command official said that 
it is possible that there was miscommunication during earlier meetings 
to define requirements and that it was not until stakeholders were able 
to test DPS functionality that these issues were identified. For 
example, DPS users wanted to obtain the status of a moved shipment. 
When DPS was programmed, it only displayed whether the shipment was in 
the system. However, users wanted more detail in terms of where the 
shipment was at a certain point in time. DPS program management is 
still in the process of identifying and prioritizing the requirements 
for DPS, but currently lacks stakeholders' agreement about all of those 
requirements and their priority. For example, some stakeholders 
disagree with the categories assigned to some of the test problem 
reports, because none of the reports were placed in categories 1 or 2, 
which are used for the most severe types of problems. Further, the 
moving industry expected that DPS would interface with their computer 
systems, but this is not yet part of DPS. 

DPS program officials said that earlier phases of DPS development 
lacked a mechanism for systematically reviewing DPS problems and 
requirements and identifying how to fix them. The U.S. Transportation 
Command and the Surface Deployment and Distribution Command formed a 
Functional Requirements Board to review and prioritize the problems 
identified during testing that must be fixed and to address other 
proposed changes to DPS. The Functional Requirements Board is composed 
of representatives from the services, the Surface Deployment and 
Distribution Command, and the U.S. Transportation Command and meets 
monthly to discuss which testing problems should be the highest 
priority for correcting. The prioritized list of test problems is then 
reviewed by a Configuration Control Board, which is composed of DPS 
program managers, service representatives, DPS development contractors, 
and software engineers who decide which of the DPS problems can be 
corrected after considering the resources available. As of March 2007, 
according to DOD, the Functional Requirements Board had developed 
initial DPS functional requirements, reviewed many proposed system 
enhancements, and prioritized the services' top five needs in each DPS 
module. In addition to stakeholders' requirements, additional 
priorities for DPS may also come from the business rules. This, too, 
could affect the DPS implementation timeline, as well as implementation 
of Families First. 

Another challenge is that without stakeholders' agreement, DPS 
requirements continue to change. DPS development is being administered 
using a firm-fixed-price contract.[Footnote 43] With a firm-fixed-price 
contract all major modifications to DPS require negotiation with the 
contractor, which may lead to additional administrative costs. 

Families First Is Not Fully Funded: 

Even though Families First is projected to cost the services about $1.2 
billion over the next 5 years, and DPS is expected to cost about $180 
million through fiscal year 2011, the department has not set aside 
funding to fully cover these costs. The services have taken different 
approaches in budgeting for the increased costs expected to implement 
the Families First program, ranging from the Army requesting the entire 
estimated 13 percent increase to the Navy not requesting any increase 
at all, in part because they have not received clear guidance from DOD 
about how to calculate the estimated increase to their budgets. 
Moreover, the growing cost of DPS has led to funding shortfalls in the 
DPS program office that are affecting both staffing needs and software 
development. 

Services Vary in the Extent to Which They Have Budgeted for Families 
First: 

The services vary in the extent to which they have budgeted for the 
increased costs expected to implement the Families First program. As 
previously discussed, DOD estimates that the Families First program 
will increase the services' moving budgets by 13 percent above the 
current budgets needed to move household goods, and DOD has informed 
the services to budget based on this estimate. However, some personal 
property officials expressed concerns about DOD's ability to implement 
the Families First program within the expected increase of 13 percent; 
these officials expect that the cost increase will be significantly 
more. As a result, the services vary in the degree to which they have 
budgeted for Families First. According to service officials, the 
services have taken the following actions to budget for Families First: 

* The Army has submitted a budget request for the entire 13 percent 
increase to the household goods portion of its budget in fiscal years 
2008 and 2009. 

* The Coast Guard requested the 13 percent increase based on its entire 
permanent change of station budget, of which household goods is just a 
portion. 

* The Air Force submitted a budget that included the 13 percent cost 
increase for Families First in fiscal year 2008, but the Office of the 
Secretary of Defense did not agree with the Air Force's budget 
submission and reduced its funding for permanent change of station 
moves. 

* The Marine Corps has requested funding in fiscal years 2007, 2008, 
and 2009 only for its estimated full replacement value cost. 

* The Navy has not requested any of the expected 13 percent cost 
increase. 

In addition, some personal property officials stated that they are 
having difficulty budgeting because they have not received clear 
guidance about how to calculate the increase. As a result, the services 
also vary in how they interpret the effect of the 13 percent cost 
estimate on their household goods budgets. For example, the Air Force 
estimated its typical annual expected increase in the current household 
goods program and then added 13 percent. Army officials told us they 
were unclear whether the household goods program would be increasing by 
13 percent every year or just the first year of Families First. A Coast 
Guard budget official interpreted the 13 percent increase as an 
increase to just those portions of the budget that apply to the rates 
charged by moving companies. Neither the Surface Deployment and 
Distribution Command nor the Office of the Secretary of Defense 
Comptroller have provided clear guidance on how the services are 
supposed to apply the 13 percent estimate to their household goods 
budgets. As a result, the services may continue to apply the 13 percent 
in different ways, which could result in the program not being fully 
funded. 

According to some service officials, if the expected increase in 
Families First cost is not included in their budgets and program costs 
begin to rise as Families First is implemented, then the services may 
have to consider measures to reduce their household goods budgets. This 
could affect the number of moves the services can make and could 
ultimately impact the services' flexibility in meeting force management 
needs. Surface Deployment and Distribution Command officials said they 
plan to monitor the cost of Families First in two ways. First, these 
officials will use the rate reasonableness methodology to keep the cost 
at the estimated 13 percent increase. Further, they plan to use 
reporting functions in DPS to monitor program costs. However, it is 
unclear how officials will monitor the costs of the program without a 
fully functioning DPS. Additionally, although the services plan to 
monitor the actual cost of the program as part of their normal budget 
processes, there is no plan to provide updated estimates to the 
services about the cost of the program prior to the services actually 
incurring the cost. Further, without clear guidance to the services 
about how to apply the 13 percent cost increase to their permanent 
change of station budgets, it is unclear whether the services will 
budget appropriately for the projected Families First cost increase. 
Without updated information about whether the estimated increase 
remains accurate as Families First is implemented, the services may not 
budget for Families First or may budget inaccurately for the program. 

Growing DPS Costs Are Creating Funding Shortfalls: 

As a result of the growing costs of DPS, the DPS program office is 
experiencing funding shortfalls that are affecting both staffing needs 
and software development. As of April 2007, the U.S. Transportation 
Command had not identified how it would fully fund its projected costs 
of DPS, which it estimated in February 2007 to be about $180 million 
through fiscal year 2011.[Footnote 44] Without these funds, the U.S. 
Transportation Command will be challenged to staff the DPS program 
office and complete DPS software development. The U.S. Transportation 
Command has been trying to fund DPS and the DPS program office from its 
transportation working capital fund. 

In fiscal year 2007, the U.S. Transportation Command reallocated about 
$7.5 million from its transportation working capital fund to support 
DPS. According to a U.S. Transportation Command budget planning 
document, this resulted in other U.S. Transportation Command 
information technology program delays or affected their ability to 
provide some services. Even with the reallocation, the U.S. 
Transportation Command had to defer about $9.7 million needed for high- 
priority software changes and development essential for DPS to fiscal 
year 2008. The DPS program office has an anticipated shortfall for 
fiscal year 2008 of $21 million, which includes staff training, 
contractor support, and funds for staff travel. Travel funds are 
important since the DPS contractor will be in Virginia and the program 
staff will be located at Scott Air Force Base in Illinois. 

However, the U.S. Transportation Command has not yet developed a 
detailed budget plan to resource DPS or the DPS program office. The 
information technology portion of the U.S. Transportation Command's 
transportation working capital fund has an annual budget of about $400 
million. The DPS program office estimates that it will cost from $28 
million to $43 million annually to support DPS and the program office 
for fiscal years 2008 through 2012. This is from 7 to about 11 percent 
of the U.S. Transportation Command's information technology portion of 
the transportation working capital budget. The U.S. Transportation 
Command has asked the Office of the Secretary of Defense for $5 million 
during fiscal year 2008, but the request has not yet been approved. 
Additionally, U.S. Transportation Command officials said that they have 
informed the services that they expect them to provide funds for some 
additional DPS requirements. 

DPS program office officials based their current cost estimates for DPS 
and the program office on the aggressive timeline for implementing DPS 
before it changed in February 2007. Additional delays in the schedule 
because of problems developing the software will likely increase the 
costs associated with the program. At the time of our review, it was 
too early in the DPS implementation process to determine if the 
oversight provided by the program office will be effective in keeping 
DPS costs under control given the ongoing changes to the DPS 
implementation schedule and the significant number of software changes 
identified during software testing. 

Conclusions: 

Despite DOD's recent focus on its personal property program, long- 
standing problems persist. The department has invested millions of 
dollars trying to improve the program since the mid-1990s with little 
real progress. DOD's Families First program is intended to address many 
of these long-standing problems but has faced a myriad of management 
problems and is now at a critical juncture in its implementation. The 
underlying problem is that DOD has not developed a comprehensive plan 
to organize, staff, and fund Families First. Until DOD develops a 
detailed plan to adequately recruit and retain qualified personnel, 
gain stakeholder agreement about essential requirements for DPS, and 
set aside resources such as funding and staff, it will be unable to 
effectively address the challenges to the program. Relying on DPS to 
achieve program goals--without analyzing alternatives as required by 
Congress--puts Families First at risk. Moreover, at a time when our 
nation faces increasing financial constraints and it is increasingly 
important for DOD to maximize the return on its investment in new 
systems, DPS costs are continuing to increase while DOD has little to 
show for its 11 years of reengineering efforts and millions of dollars 
of investment. Without a reexamination of the program as required by 
the mandate and urgent attention commensurate with the program's 
importance to millions of servicemembers and their families, these 
problems are likely to continue to negatively affect servicemembers' 
quality of life when they are required to move. 

Recommendations for Executive Action: 

We are making the following two recommendations to the Secretary of 
Defense. To address long-standing problems in DOD's personal property 
program we recommend that the Secretary of Defense direct the 
Commander, U.S. Transportation Command, to expedite the evaluation of 
the Families First program the John Warner National Defense 
Authorization Act for Fiscal Year 2007 mandated the department 
conduct.[Footnote 45] This act mandates that the report contain the 
certifications of the Secretary of Defense on the following matters 
with respect to the Families First program: (1) whether there is an 
alternative to the system under the program that would provide equal or 
greater capability at a lower cost; (2) whether the estimates on costs, 
and the anticipated schedule and performance parameters, for the 
program and system are reasonable; and (3) whether the management 
structure for the program is adequate to manage and control program 
costs. 

We also recommend that DOD employ comprehensive planning to implement 
the Families First program and its associated system. At a minimum, 
this planning should address specific steps to: 

* hire and train personnel so that the Surface Deployment and 
Distribution Command personal property division and the DPS program 
office have the human capital needed to develop and implement DPS and: 

* reach agreement with stakeholders on the essential requirements for 
DPS and their priority to facilitate the development of DPS. 

In addition, this comprehensive plan should include an investment 
strategy that reflects the full cost of accomplishing the goals of 
Families First and milestones for implementation. 

Agency Comments and Our Evaluation: 

In written comments on a draft of this report, DOD concurred with both 
of our recommendations and cited specific actions it has taken and will 
take for each recommendation. We believe DOD's planned actions, if 
implemented, have the potential to improve the outcome of the Families 
First program. However, we also believe it is critical that DOD sustain 
focus on the program, especially given the delays the program has 
experienced and the challenges it still faces. 

DOD concurred with our recommendation to expedite the evaluation of the 
Families First program that the John Warner National Defense 
Authorization Act for Fiscal Year 2007[Footnote 46] mandated the 
department conduct. In its comments, DOD said that it plans to provide 
this evaluation of its household goods program to Congress in August 
2007. We modified our recommendation to include the details of what the 
act requires. 

DOD also concurred with our recommendation that it should employ 
comprehensive planning to implement the Families First program. In 
addition, DOD provided technical comments suggesting that we include 
the Surface Deployment and Distribution Command personal property 
division as part of this recommendation. We agree, and have modified 
this recommendation accordingly. Our recommendation now indicates that 
at a minimum, this planning should include specific steps to hire and 
train personnel for the Surface Deployment and Distribution Command 
personal property division and the DPS program office, address specific 
steps to reach agreement with stakeholders on the essential 
requirements for DPS and their priority, and include an investment 
strategy that reflects the full cost of accomplishing the goals of 
Families First and milestones for implementation. 

DOD cited specific actions it has taken or will take to implement this 
recommendation. For example, DOD said that hiring actions are in 
progress to staff the DPS program office after its relocation to Scott 
Air Force Base and that other actions are being implemented to staff 
the Surface Deployment and Distribution Command. In addition, DOD 
stated that it has implemented a process to reach agreement with 
stakeholders on the essential requirements for DPS and their priority 
by establishing the Functional Requirements Board[Footnote 47] and the 
Configuration Control Board. DOD stated that this structure has helped 
to stabilize the functional requirements for DPS. Finally, DOD stated 
that the U.S. Transportation Command will provide almost $91 million 
for DPS development, testing, fielding, and maintenance and that there 
is a DPS line item in the U.S. Transportation Command's transportation 
working capital fund budget. The U.S. Transportation Command is also 
working with the Office of the Secretary of Defense to provide almost 
$2.8 million of operating/maintenance dollars from transformation 
funding. DOD's comments also state that the U.S. Transportation Command 
will provide funds internally, if required, to fund DPS and the DPS 
program office. However, DOD's comments did not address how the 
department intends to develop an investment strategy to cover the over 
$1 billion in increased costs associated with implementing Families 
First. Developing such a plan for Families First will be critical for 
the program's future success. 

DOD also provided technical and editorial comments, which we have 
incorporated as appropriate. DOD's comments are reprinted in appendix 
II. 

We are sending copies of this report to interested congressional 
committees; the Secretary of Defense; the Secretaries of the Army, 
Navy, and Air Force; the Commander, U.S. Transportation Command; the 
Office of the Assistant Deputy Under Secretary of Defense 
(Transportation Policy); and the Director, Office of Management and 
Budget. We will make copies available to others upon request. In 
addition, the report will be available at no charge on the GAO Web site 
at http://www.gao.gov. 

If you or your staff have any questions about this report, please 
contact me at (404) 679-1816 or pendletonj@gao.gov. Contact points for 
our Offices of Congressional Relations and Public Affairs may be found 
on the last page of this report. GAO staff who made major contributions 
to this report are listed in appendix III. 

Signed by: 

John Pendleton: 
Acting Director, Defense Capabilities and Management: 

[End of section] 

Appendix I: Scope and Methodology: 

To evaluate the Department of Defense's (DOD) Families First program, 
we obtained documentation from and met with DOD officials and 
stakeholders in the Washington, D.C., area from: 

* the Military Surface Deployment and Distribution Command; 

* the Joint Program Management Office for Household Goods Systems; 

* Transportation and personal property offices of the Army, Navy, Air 
Force, Marine Corps, and Coast Guard; 

* three moving industry associations, including the American Moving and 
Storage Association, the Household Goods Forwarders Association of 
America, and the Military Mobility Coalition; and: 

* the Offices of the Secretary of Defense, including Transportation 
Policy and the Comptroller. 

We also met with DOD officials at Scott Air Force Base, Illinois, from 
the: 

* U.S. Transportation Command's Program Executive Office for 
Distribution Services; 

* U.S. Transportation Command's Strategy, Policy, Programs and 
Logistics Directorate; and: 

* U.S. Transportation Command's Program Analysis and Financial 
Management Directorate. 

To assess the steps DOD has taken to achieve the goals and benefits of 
the Families First program with or without a new information management 
system, we identified the goals and benefits of the Families First 
program by analyzing Families First planning documents and related 
studies, such as briefings to the U.S. Transportation Command, and 
verified these goals with personal property officials from the Surface 
Deployment and Distribution Command. We compared the status of the 
Families First program to its stated goals by examining Families First 
implementation timelines provided by program officials and by 
interviewing officials and stakeholders from the offices listed. We 
limited our evaluation of the benefits of the Families First program to 
those benefits that pertain to the servicemembers, specifically full 
replacement value coverage and expanded counseling services. 

We determined DOD's ability to achieve the goals and benefits of 
Families First with or without a new information management system by 
monitoring the status of the Defense Personal Property System (DPS) 
throughout the course of our review. This included observing 
demonstrations of DPS as it was presented to representatives from the 
services and moving industry, reviewing test problem reports generated 
during DPS software acceptance testing, and examining briefings in 
which DPS program management and stakeholders reevaluated the DPS 
implementation schedule. We also reviewed a Federal Register notice 
provided by Surface Deployment and Distribution Command officials, 
which described its plans for implementing the full replacement value 
benefit of Families First without DPS. We analyzed the current program 
business rules and requirements and compared them to the goals and 
benefits of Families First to determine if alternatives existed in the 
current program to implement them without DPS. We also interviewed the 
officials and stakeholders listed. We asked these officials and 
stakeholders to provide alternatives for achieving the Families First 
goals and benefits without DPS. When an alternative was identified, we 
questioned officials and stakeholders about the feasibility and 
possible challenges of implementing Families First goals and benefits 
without DPS. 

To evaluate the growth in the cost of the program since our previous 
assessment, we determined that we could not evaluate the actual growth 
in costs because data were unavailable as the program has not yet been 
implemented. However, we determined that DOD was still advising the 
services to budget for the previously estimated 13 percent cost 
increase for Families First. To understand this estimated increase, we 
reviewed the estimated cost of the Families First program from our two 
previous reports related to the cost of the Families First 
program.[Footnote 48] We analyzed the size of the services' current 
permanent change of station budgets and assessed how the cost of the 
Families First program would increase those budgets using information 
provided by the Office of the Secretary of Defense Comptroller. 
Families First program management officials stated that DOD would use a 
cost-control mechanism known as rate reasonableness to ensure that 
program costs do not exceed the estimated increase. We analyzed 
Families First business rules and planning documents, such as its 
concept of operations, to determine the feasibility and limitations of 
the rate reasonableness approach. We interviewed officials from the 
Military Surface Deployment and Distribution Command and the U.S. 
Transportation Command Office for Transportation Policy to determine 
whether their estimate of the cost of Families First has changed since 
our previous assessment and what their plans were to keep the cost of 
the Families First program within the estimate. We also asked officials 
from the Military Surface Deployment and Distribution Command if they 
had plans to monitor the costs during implementation of the program. 
Although we did not independently test the reliability of data DOD 
extracted from its data system to develop costs or independently verify 
the analysis used to generate cost estimates, we determined the data 
were sufficiently reliable for the purposes of our report because they 
are the same data DOD decision makers use to manage the program. 

To assess the growth in the estimated cost of DPS, we reviewed our 
previous report, which contained DOD's estimate of the cost of 
improving its information technology system.[Footnote 49] We compared 
this estimate to estimates contained in the U.S. Transportation Command 
budget planning documents and the DPS economic analysis completed in 
2003,[Footnote 50] which also documented how DOD's concept for 
information technology system improvements changed since our last 
review. To obtain updated information about the current costs of 
developing and fielding DPS, we analyzed budget documents provided by 
the Joint Program Management Office for Household Goods Systems as of 
February 2007. To understand the U.S. Transportation Command's 
transportation working capital fund Chief Information Officer Program 
Review Process, we reviewed related documents, such as the Chief 
Information Office Program Review Process business flow and interviewed 
budget officials at the U.S. Transportation Command's Program Analysis 
and Financial Management directorate. Although we did not independently 
test the reliability of data DOD extracted from its data system to 
develop costs or the analysis used to generate cost estimates, we 
determined that the data were sufficiently reliable for the purposes of 
our report because they are the same data DOD decision makers use to 
manage the program. 

To assess the extent to which DOD faces management challenges in 
implementing the Families First program, we analyzed documents, such as 
Families First program meeting minutes and management briefings to the 
General Officer Steering Committee, the Council of Colonels and 
Captains, and the U.S. Transportation Command, which identified 
difficulties in implementing the Families First program. We also 
identified best practices for business reengineering and 
transformation, which we used to compare the process by which DOD is 
implementing the Families First program. These best practices were 
found in prior GAO reports.[Footnote 51] We also reviewed documents 
pertaining to the Joint Program Management Office for Household Goods 
Systems, including the draft organization chart, the draft transition 
plan for the office's move to Scott Air Force Base as part of a base 
realignment and closure move, and draft budget documents for developing 
and implementing DPS. We also interviewed officials and stakeholders. 
We did not evaluate DOD's decision to implement the Families First 
program or develop DPS, nor did we evaluate the solicitation process 
for awarding the DPS contract. 

We conducted this performance audit from September 2006 through May 
2007 in accordance with generally accepted government auditing 
standards. Those standards require that we plan and perform the audit 
to obtain sufficient, appropriate evidence to provide a reasonable 
basis for our findings and conclusions based on our audit objectives. 
We believe that the evidence obtained provides a reasonable basis for 
our findings and conclusions based on our audit objectives. 

[End of section] 

Appendix II: Comments from the Department of Defense: 

Deputy Under Secretary Of Defense For Logistics And Materiel Readiness: 
3500 Defense Pentagon: 
Washington, DC 20301-3500: 

May 18, 2007: 

Mr. John H. Pendleton: 
Acting Director, Defense Capabilities and Management: 
U.S. Government Accountability Office: 
441 G Street, N.W. 
Washington, DC 20548: 

Dear Mr. Pendleton: 

This is the Department of Defense (DoD) response to the GAO draft 
report, GAO-07-671, "Defense Transportation: DoD Needs a Comprehensive 
Approach to Planning for Implementing Its New Personal Property 
Program," dated April 19, 2007 (GAO Code 350929). 

The Department concurs with the GAO recommendations and provides the 
enclosed comments. 

Sincerely, 

Signed by: 

Jack Bell: 

Enclosure: 
As stated: 

GAO Draft Report - Dated April 19, 2007 GAO Code 350929/GAO-07-671: 

"Defense Transportation: DoD Needs a Comprehensive Approach to Planning 
for Implementing Its New Personal Property Program" 

Department Of Defense Comments To The Recommendations: 

Recommendation 1: The GAO recommended that the Secretary of Defense 
direct the Commander, U.S. Transportation Command, to expedite the 
evaluation of the program that the John Warner National Defense 
Authorization Act for FY 2007 mandated the Department to conduct. 

DoD Response: The Department concurs with this recommendation. We are 
currently staffing the Congressional report that requires DoD to 
evaluate its household goods program. We plan to provide the report to 
Congress in August 2007. 

Recommendation 2: The GAO recommended that the Department of Defense 
employ comprehensive planning to implement the Families First Program 
and its associated system. At a minimum, this planning should: 

* address specific steps to hire and train personnel so that the 
Defense Personal Property System (DPS) Program Office has the human 
capital needed to develop and implement the DPS; 

* address specific steps to reach agreement with stakeholders on the 
essential requirements for the DPS and their priority to facilitate the 
development of the DPS; and: 

* include an investment strategy that reflects the full cost of 
accomplishing the goals of the Families First Program and milestones 
for implementation. 

DoD Response: The Department concurs with this recommendation. 
USTRANSCOM is currently either developing or has already employed plans 
to implement this recommendation: 

The Defense Personal Property System (DPS) Program Office, (Joint 
Program Management Office (JPMO) for Household Goods (HHGS)), in 
Alexandria, VA, is staffed with an acquisition certified program 
manager and a multi-functional support staff with expertise in 
information technology, functional transportation system analysis, 
acquisition and business management, engineering and testing. Hiring 
actions are in progress to staff the JPMO after relocation in FY 2007 
to Scott Air Force Base (SAFB), IL, due to Base Realignment and Closure 
(BRAC). As of April, 2007, 22 of 27 government civilian hiring actions 
have been initiated, seven job announcements have been posted, and 
three candidate lists have been received for review. The new hires will 
join the JPMO in the next few months, and be provided "on-the-job" 
training. In order to support the implementation of the Families First 
Program, the Surface Deployment and Distribution Command (SDDC), in 
Alexandria, VA, is currently re- competing the Families First Program 
support contract which expires July 31, 2007. 

USTRANSCOM implemented a process to "address specific steps to reach 
agreement with stakeholders on the essential requirements for the DPS 
and their priority to facilitate the development of DPS." This includes 
establishing a Functional Review Board (FRB) and a Configuration 
Control Board (CCB). This structure has helped stabilize the DPS 
baseline functional requirements. The FRB and the CCB provide an 
orderly, controlled method for introducing new user requirements into 
the system configuration. 

* The FRB is co-chaired by USTRANSCOM and the SDDC, and is composed of 
representatives from the military Services and the Coast Guard. FRB 
members have the following responsibilities: 

- Draft new functional requirements using a system change request form: 

- Coordinate requirements with Service or Combatant Command user 
community prior to FRB: 

- Advocate organizational issues/recommendations at the FRB: 

- Prioritize functional requirements: 

- Chair/participate in FRB working groups as required: 

* The DPS FRB process provides specific steps to reach agreement with 
stakeholders on essential requirements of DPS and their priority. In 
January 2007, USTRANSCOM created the FRB to review and prioritize 
proposed system enhancements identified by functional stakeholders. The 
FRB began with 618 initial system enhancement requirements from 2006. 
In addition, approximately 200 valid change requests were identified 
during Systems Acceptance Testing (SAT). 

* The DPS Program Office (JPMO HHGS) maintains the DPS requirements 
database. This includes all requirements identified by the military 
Services and Transportation Service Providers (TSPs), previous FRB 
prioritizations, developmental cost, funding status, and status of 
requirements development in DPS. The DPS Program Office serves as FRB 
advisor on funding, technical, and software issues. 

* The prioritized list of system enhancements developed by the FRB is 
reviewed by the DPS CCB, which is chaired by the DPS program manager 
with representatives from the military Services, Coast Guard, 
USTRANSCOM, and SDDC. The CCB evaluates the change requests against 
programmatic constraints, and is responsible for costing, funding, and 
implementation. Industry representatives are invited in an advisory 
capacity to the CCB/FRB as required. 

* USTRANSCOM will source $90.766M for DPS continued development, 
testing, fielding and maintenance. There is a DPS line item in the 
USTRANSCOM Transportation Working Capital Fund budget. In addition, 
USTRANSCOM is working with OSD to source an additional $2.755M of 
Operating/ Maintenance dollars from transformation funding. USTRANSCOM 
will source funds internally, if required. 

[End of section] 

Appendix III: GAO Contact and Staff Acknowledgments: 

GAO Contact: 

John Pendleton (404) 679-1816 or pendletonj@gao.gov: 

Acknowledgments: 

In addition to the contact named above, Lawson Gist, Jr., Assistant 
Director; Krislin Bolling; Renee S. Brown; Michelle Cooper; Arthur L. 
James, Jr; Tina M. Kirschbaum; Lonnie McAllister; Maewanda Michael- 
Jackson; Charles W. Perdue; and Bethann Ritter made key contributions 
to this report. 

[End of section] 

Related GAO Products: 

Defense Transportation: DOD Has Adequately Addressed Congressional 
Concerns Regarding the Cost of Implementing the New Personal Property 
Program Initiatives. GAO-05-715R. Washington, D.C.: June 9, 2005. 

Defense Transportation: Monitoring Costs and Benefits Needed While 
Implementing a New Program for Moving Household Goods. GAO-03-367. 
Washington, D.C.: April 18, 2003. 

Defense Transportation: Final Evaluation Plan Is Needed to Assess 
Alternatives to the Current Personal Property Program. GAO/NSIAD-00- 
217R. Washington, D.C.: September 27, 2000. 

Defense Transportation: The Army's Hunter Pilot Project Is Inconclusive 
but Provides Lessons Learned. GAO/NSIAD-99-129. Washington, D.C.: June 
23, 1999. 

Defense Transportation: Plan Needed for Evaluating the Navy Personal 
Property Pilot. GAO/NSIAD-99-138. Washington, D.C.: June 23, 1999. 

Defense Transportation: Efforts to Improve DOD's Personal Property 
Program. GAO/T-NSIAD-99-106. Washington, D.C.: March 18, 1999. 

Defense Transportation: The Army's Hunter Pilot Project to Outsource 
Relocation Services. GAO/NSIAD-98-149. Washington, D.C.: June 10, 1998. 

Defense Transportation: Reengineering the DOD Personal Property 
Program. GAO/NSIAD-97-49. Washington, D.C.: November 27, 1996. 

FOOTNOTES 

[1] Household goods transportation includes moving privately owned 
vehicles. 

[2] Moving companies include household transportation and service 
providers commonly referred to as transportation service providers. 

[3] Pub. L. No. 109-364, § 363 (2006). 

[4] GAO, Defense Transportation: Preliminary Personal Property Pilot 
Results Are Inconclusive, GAO/NSIAD-00-52R (Washington, D.C.: Dec. 21, 
1999); Defense Transportation: Final Evaluation Plan Is Needed to 
Assess Alternatives to the Current Personal Property Program, GAO/ 
NSIAD-00-217R (Washington, D.C.: Sept. 27, 2000); Defense 
Transportation: Monitoring Costs and Benefits Needed While Implementing 
a New Program for Moving Household Goods, GAO-03-367 (Washington, D.C.: 
Apr. 18, 2003); and Defense Transportation: DOD Has Adequately 
Addressed Congressional Concerns Regarding the Cost of Implementing the 
New Personal Property Program Initiatives, GAO-05-715R (Washington, 
D.C.: June 9, 2005). 

[5] GAO, High-Risk Series: An Update, GAO-05-207 (Washington, D.C.: 
January 2005). 

[6] Pub. L. No. 109-364, § 363 (2006). 

[7] Pub. L. No. 109-364, § 363 (2006). 

[8] Pub. L. No. 109-364, § 363 (2006). 

[9] The Army Hunter Pilot Program became part of the Full Service Move 
Project pilot program. The other pilot programs were the Military 
Traffic Management Command's Reengineered Personal Property Program and 
the Navy's Servicemember Arranged Move Pilot. 

[10] Minimum valuation means the minimum degree of "worth" of the 
shipment. 

[11] Performance-based contracting means structuring all aspects of an 
acquisition around the purpose of the work to be performed as opposed 
to either the manner by which the work is to be performed or broad and 
imprecise statements of work. 48 C.F.R. § 37.101 (2007) (Hereinafter 
FAR). 

[12] This command is commonly referred to as the Surface Deployment and 
Distribution Command. 

[13] The government statutory maximum amount for a claim is $40,000 and 
$100,000 under extraordinary circumstances. 31 U.S.C. § 3721(b)(1) 
(2007). 

[14] GAO/NSIAD-00-52R, GAO/NSIAD-00-217R, GAO-03-367, and GAO-05-715R. 

[15] Pub. L. No. 108-136, § 634 (2003). 

[16] 10 U.S.C. § 2636a. 

[17] Pub. L. No. 109-364, § 363 (2006). 

[18] According to DOD, when a claim is filed directly with the moving 
company or contractor within 9 months of delivery, their maximum 
liability on all shipments will be the greater of (1) $5,000 per 
shipment and (2) $4.00 times either the net weight of the household 
goods shipment or the gross weight of the unaccompanied baggage 
shipment, in pounds, not to exceed $50,000. On all other loss and 
damage claims asserted against the moving company, the company's 
maximum liability will be limited to $1.25 times the net weight of the 
shipment, in pounds. 

[19] Pub. L. No. 109-364, § 363 (2006). 

[20] The moving company's overall score is generated from three things: 
performance, claims, and rates. 

[21] Best-value distribution is the method that will be used to award 
shipments to moving companies in Families First. This new traffic 
distribution program will award shipments based on best value, not 
lowest cost as in the current program. The best-value methodology 
combines performance, claims settlement, and rates to identify quality 
moving companies. 

[22] We did not evaluate this methodology. 

[23] Department of Defense, Military Surface Deployment and 
Distribution Command, It's Your Move (Alexandria, Va.: Oct. 1, 2006). 

[24] According to DOD, the new tariff marks a departure from previous 
tariffs and changes the way that transportation rates apply for 
interstate and intrastate movers. This tariff incorporates many of the 
commonly applied individual additional service charges into a single 
origin/destination service fee that applies along with the 
transportation charges in order to simplify the application of the 
tariff. The other major change is the use of zip codes to rate 
shipments. The former point-to-point distance application has been 
replaced with a zip code-to-zip code rating system for determining the 
transportation charges and additional services. 

[25] The Surface Deployment and Distribution Command has developed a 
rate reasonableness methodology that will limit the growth in cost of 
Families First. According to DOD, this methodology will apply 
limitations on rates filed by moving companies in the Families First 
program to achieve the goal of keeping cost increases under Families 
First at 13 percent or less. Rate reasonableness will be implemented 
for both the domestic and international programs. Rates for each 
combination of pickup and destination location will have an acceptable 
high and low rate per combination. 

[26] Nontemporary storage is used when a servicemember needs to store 
goods for long periods of time. Nontemporary storage includes necessary 
packing, crate unpacking, uncrating, transportation to and from place 
of storage, storage, and other directly related necessary services. 
Under the direct procurement method, the government manages the 
shipment throughout. Packing, containerization, delivery, unpacking, 
storage, and related services are obtained from commercial firms under 
a contractual arrangement or by the use of government facilities and 
employees. 

[27] DOD decided to implement DPS using a phased approach to manage 
risks given the difficulties during development. 

[28] In commenting on a draft of this report, DOD stated that this 
software problem has been fixed. 

[29] According to U.S. Transportation Command officials, this issue was 
later resolved, and moving companies will have one opportunity per year 
to file the rates they charge DOD to move servicemembers. 

[30] The international rate solicitation was released in April 2007. 

[31] The 2006 household goods portion of the permanent change of 
station budget is about $1.8 billion, which, when adjusted for 
inflation in 2007 using the Gross Domestic Product Price Index 
inflation rate of 2.0 percent, is about $1.84 billion. Thirteen percent 
of $1.84 billion is $2.07 billion, which is about $240 million more 
than the current program would have cost for 2007. Over 5 years, this 
results in a $1.2 billion increase over the current program's costs. 

[32] Moving companies submit rates for each combination, and DPS will 
automatically reject rates that are outside the established ranges. 
Moving companies then have one opportunity to resubmit new rates to 
replace the rejected rates. If resubmitted rates are still outside the 
rate reasonableness range, the moving companies will be prevented from 
being awarded shipments for that combination of pickup and drop-off 
destinations for 1 year. 

[33] Department of Defense, U.S. Transportation Command Personal 
Property Pilot Programs Evaluation Report, June 2002. 

[34] GAO-03-367. 

[35] Department of Defense, U.S. Transportation Command, Defense 
Personal Property System: Economic Analysis, January 8, 2004. 

[36] We asked current program officials if they knew why previous 
program officials had not used SmartWebMove, and they said they did not 
know why it was not used. In commenting on a draft of this report, DOD 
stated that it sought various software options and did not prescribe a 
specific software solution such as SmartWebMove in order to contract 
for a best-value solution. 

[37] The Business Process Reengineering Assessment Guide found in GAO, 
Defense Systems Modernization: Management of Integrated Military Human 
Capital Program Needs Additional Improvements, GAO-05-189 (Washington, 
D.C.: Feb. 11, 2005); Best Practices Relevant to Any IT Business 
Systems Acquisition and Complementary Best Practices Relevant to 
Commercial Component-Based IT Business Systems Acquisitions found in 
Information Technology: DOD's Acquisition Policies and Guidance Need to 
Incorporate Additional Best Practices and Controls, GAO-04-722 
(Washington, D.C.: July 30, 2004); and Results-Oriented Cultures: 
Implementation Steps to Assist Mergers and Organizational 
Transformations, GAO-03-669 (Washington, D.C.: July 2, 2003). 

[38] Pub. L. No. 109-364, § 363 (2006). 

[39] In commenting on a draft of our report, DOD stated that it had 
representatives from the military services, the household goods 
industry and experts from the Surface Deployment and Distribution 
Command teamed together to create the Families First business rules. It 
also stated that these rules were provided to the services and industry 
for their comment and that the services have not indicated that they 
could not use the business rules developed by the Surface Deployment 
and Distribution Command. While we understand that several years ago 
when DPS was first being developed, these groups came together to 
discuss DPS requirements, our evidence indicates that (1) DOD may not 
have had the level of agreement with stakeholders it originally thought 
when it compiled the requirements for DPS and (2) DPS testing in 
January and February 2007 illustrated that some requirements were 
either ill-defined when requirements were generated or that it was not 
until stakeholders were able to test the functionality of the 
requirements that it was discovered there was a disconnect in how the 
requirement was defined and the functionality that was actually needed. 

[40] According to DOD, although moving companies file rates once per 
year, the annual filing includes two sets of rates, one set covering 
the summer cycle and one covering the winter cycle. 

[41] Although DOD plans to have a minimum performance score, DOD 
personal property officials called the current minimum score generous 
and noted that it could change over time. In responding to a draft of 
this report, DOD said that it believes that the mandatory requirement 
for moving companies to provide full replacement value coverage on all 
DOD household goods moves will drive companies to reduce the occurrence 
of damages and therefore improve the quality of moves. 

[42] The Surface Deployment and Distribution Command plans to use a 
hybrid performance score that will give moving companies credit for all 
surveys earned and supplement each moving company with just enough 
neutral surveys to achieve statistical validity, when applicable. The 
neutral surveys are each equal to the median performance score in each 
market. 

[43] A firm-fixed-price contract provides for a price that is not 
subject to any adjustment on the basis of the contractor's cost 
experience in performing the contract. FAR section 16.202-1. 

[44] As of February 2007, the DPS program office estimated that the 
costs for maintaining a program office, sustaining the legacy system 
through retirement, developing and sustaining DPS, and implementing a 
future household goods program through fiscal year 2011 would be about 
$180 million if all of the requirements are funded. 

[45] Pub. L. No. 109-364, § 363 (2006). 

[46] Pub. L. No. 109-364, § 363 (2006). 

[47] In DOD's comments, it refers to this board as the Functional 
Review Board. 

[48] GAO, Defense Transportation: Monitoring Costs and Benefits Needed 
While Implementing a New Program for Moving Household Goods, GAO-03-367 
(Washington, D.C.: Apr. 18, 2003), and Defense Transportation: DOD Has 
Adequately Addressed Congressional Concerns Regarding the Cost of 
Implementing the New Personal Property Program Initiatives, GAO-05-715R 
(Washington, D.C.: June 9, 2005). 

[49] GAO-03-367. 

[50] Department of Defense, U.S. Transportation Command, Economic 
Analysis: Defense Personal Property System, January 8, 2004. 

[51] The Business Process Reengineering Assessment Guide found in GAO, 
Defense Systems Modernization: Management of Integrated Military Human 
Capital Program Needs Additional Improvements, GAO-05-189 (Washington, 
D.C.: Feb. 11, 2005); Best Practices Relevant to Any IT Business 
Systems Acquisition and Complementary Best Practices Relevant to 
Commercial Component-Based IT Business Systems Acquisitions found in 
Information Technology: DOD's Acquisition Policies and Guidance Need to 
Incorporate Additional Best Practices and Controls, GAO-04-722 
(Washington, D.C.: July 30, 2004); Results-Oriented Cultures: 
Implementation Steps to Assist Mergers and Organizational 
Transformations, GAO-03-669 (Washington, D.C.: July 2, 2003); and 
Agencies' Annual Performance Plans Under the Results Act: An Assessment 
Guide to Facilitate Congressional Decisionmaking, GAO/GGD/AIMD-10.1.18 
(Washington, D.C.: February 1998). 

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