Data Processing Costs Can Be Reduced at Army and Air Force Exchange Service

AFMD-83-17: Published: Dec 21, 1982. Publicly Released: Dec 21, 1982.

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As part of a continuing effort to assess the effectiveness of data processing management in agencies that rely heavily on computer resources to accomplish their missions, GAO suggested ways to improve data processing management at the Army and Air Force Exchange Service and to avoid excessive computer support costs.

GAO found that the Exchange Service could have saved up to $4.5 million on two recent computer purchases and that the Exchange Service has not followed Department of Defense (DOD) policies calling for maximum practical competition and adequately defined needs in computer acquisition. Moreover, project management problems have caused substantial cost and schedule overruns and costly delays in providing needed computer software support to data processing users. Exchange Service procedures for acquiring automatic data processing (ADP) equipment encourage sole-source procurements, which have been the rule at the Exchange Service for years. The four major purchases of computers since 1978 were made noncompetitively, and in its review GAO found that the two largest sole-source procurements were not adequately justified. Exchange Service personnel did not prepare adequate studies to document their computer needs which resulted in the purchase of excess computer capacity. Exchange Service software development projects were consistently late and over budget because the projects were not adequately planned and managed. Similar procurement and management control weaknesses have delayed a multimillion-dollar effort to install a nationwide point-of-sale system.

Recommendations for Executive Action

  1. Status: Closed - Implemented

    Comments: DOD cited improved procedures relating to control over system development, a project milestone reporting system, and improved accuracy and substantiation for project costing and benefits.

    Recommendation: The Secretary of Defense should direct the Commander of the Exchange Service to revise Exchange Service planning guidelines to comply with Federal Information Processing Standards and accepted practices in private industry.

    Agency Affected: Department of Defense

  2. Status: Closed - Not Implemented

    Comments: The agency plans no action because it does not concur in this recommendation. DOD stated that operation divisions are not separate entities and have no control over systems it must use and that a chargeback to the user for system development appears inappropriate.

    Recommendation: The Secretary of Defense should direct the Commander of the Exchange Service to establish a system for accounting and charging the costs of system development and operations to major users.

    Agency Affected: Department of Defense

  3. Status: Closed - Implemented

    Comments: Procedures have been implemented that require resubmission of projects that exceed the original estimate by the lesser of: (1) 20 percent of the original estimate, or (2) $75,000.

    Recommendation: The Secretary of Defense should direct the Commander of the Exchange Service to assume an active role in project management to ensure that projects either proceed according to cost and time estimates and meet objectives or are resubmitted to the Master Planning Board for revalidation.

    Agency Affected: Department of Defense

  4. Status: Closed - Not Implemented

    Comments: The agency plans no action because it does not concur in this recommendation. DOD stated that all new or expanded missions and services requiring new software development are approved and tracked by the Board of Directors.

    Recommendation: The Secretary of Defense should direct the Exchange Service Board of Directors to approve and monitor all software development projects or major modifications that are essential to the Exchange Service mission or involve significant costs.

    Agency Affected: Department of Defense

  5. Status: Closed - Not Implemented

    Comments: The agency plans no action because it does not concur in this recommendation. DOD believes that the Exchange Service is already in compliance with defense policies.

    Recommendation: The Secretary of Defense should direct the Exchange Service and its Board of Directors to comply with DOD policies governing the management of data processing resources.

    Agency Affected: Department of Defense

  6. Status: Closed - Not Implemented

    Comments: The agency plans no action because it does not concur in this recommendation. DOD stated that the Exchange Service is currently in compliance with the governing policies on competitive procurements.

    Recommendation: The Secretary of Defense should direct the Exchange Service Board of Directors to review and approve, as necessary, all major ADP procurements to ensure that DOD procurement policies are followed.

    Agency Affected: Department of Defense

  7. Status: Closed - Not Implemented

    Comments: The agency plans no action because it does not concur in this recommendation. DOD stated that the Exchange Service was in full compliance with the policies governing competitive acquistion.

    Recommendation: The Secretary of Defense should direct the Exchange Service and its Board of Directors to comply with DOD policies governing competitive acquisition and proper definition of computer requirements.

    Agency Affected: Department of Defense

  8. Status: Closed - Implemented

    Comments: Based on an Exchange Service study, expansion of the in-store system was approved and an option exercised to expand the system to 20 states before June 1983.

    Recommendation: The Secretary of Defense should direct the Exchange Service and its Board of Directors to defer pending procurement efforts for the point-of-sale project and validate the point-of-sale concept by thoroughly documenting the costs and benefits of the Exchange Service's present point-of-sale system. If such a study supports proceeding further with the point-of-sale project, the Exchange Service should first consider using existing equipment and excess computer capacity for the life of that equipment before developing more sophisticated and costly follow-on systems.

    Agency Affected: Department of Defense

 

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