Defense Management:

Selection of Depot Maintenance Standard System Not Based on Sufficient Analyses

AIMD-95-110: Published: Jul 13, 1995. Publicly Released: Jul 13, 1995.

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Pursuant to a congressional request, GAO reviewed the Department of Defense's (DOD) justification for developing and deploying its Depot Maintenance Standard System (DMSS), focusing on whether DOD has: (1) based its DMSS selection on costs and benefit analyses as well as economic and technical risks; and (2) selected a strategy that would dramatically improve depot maintenance operations.

GAO found that: (1) DOD has not based its DMSS decisions on sufficient cost and benefit analyses or detailed assessments of economic and technical risks; (2) DOD may not achieve the marginal improvements envisioned, since it has failed to obtain project milestone reviews or approvals for DMSS that would ensure that system development and implementation decisions are consistent with sound business practices; (3) DMSS will not dramatically improve DOD depot maintenance or produce significant cost savings, since DOD has not reengineered its business practices; and (4) DOD may have made future reengineering efforts more difficult by entrenching inefficient and ineffective work processes.

Recommendations for Executive Action

  1. Status: Closed - Implemented

    Comments: Although the agency disagreed with the recommendation and indicated in official comments that it intended to proceed with the project as originally planned, substantial changes were made to the DMSS strategy that are partially consistent with GAO's recommendations. The Deputy Undersecretary of Defense for Logistics abandoned the strategy of a standard suite of systems for DMSS for every maintenance depot and replaced it with a modified DMSS strategy that called for each service to pick the systems it wanted from the DMSS suite of systems and integrate them with their remaining legacy systems operating at their depots. The Defense Logistics Agency was then tasked to coordinate implementation of the new electronic data interchange-based MIL's transaction sets to accomplish interoperability among the service's unique Depot Maintenance systems architectures.

    Recommendation: To achieve the dramatic improvements in effectiveness and efficiency of its depot maintenance operations that DOD has stated are critical to meet the challenges of the 1990s and beyond, the Secretary of Defense should direct the Deputy Under Secretary of Defense for Logistics to prepare a full set of project documentation that describes the project and validates that it is the best alternative for improving depot operations. At a minimum, this documentation should include: (1) a final functional economic analysis containing a comprehensive evaluation of information system alternatives that formulates and compares estimates of the total costs and benefits of each alternative; (2) identification of economic and technical risks associated with success of each project alternative and development of a plan to avoid or mitigate these risks; and (3) a comprehensive implementation plan that identifies actions to be taken, schedules, and milestones for these actions, and performance measures to be used to manage the system deployment.

    Agency Affected: Department of Defense

  2. Status: Closed - Implemented

    Comments: The agency disagreed with the recommendation, and maintained that it provided adequate oversight. While a MAISRC was not held on the new Depot Maintenance strategy, DUSD (L) representatives indicated that GAO's recommendations contributed to the decisions to curtail some systems development and abandon others. These revisions should result in estimated savings of over $68 million through fiscal year 1999.

    Recommendation: To achieve the dramatic improvements in effectiveness and efficiency of its depot maintenance operations that DOD has stated are critical to meet the challenges of the 1990s and beyond, the Secretary of Defense should direct the Deputy Under Secretary of Defense for Logistics to obtain the Major Automated Information Systems Review Council (MAISRC) review and Milestone Decision Authority (MDA) approval of the project documentation prior to spending any fiscal year 1996 funds on DMSS development and deployment.

    Agency Affected: Department of Defense

  3. Status: Closed - Implemented

    Comments: The agency disagreed with the recommendation, and maintained that it provided adequate oversight. While a MAISRC was not held on the new Depot Maintenance strategy, DUSD (L) representatives indicated that GAO's recommendations contributed to the decisions to curtail some systems development and abandon others. These revisions should result in estimated savings of over $68 million through fiscal year 1999.

    Recommendation: To achieve the dramatic improvements in effectiveness and efficiency of its depot maintenance operations that DOD has stated are critical to meet the challenges of the 1990s and beyond, the Secretary of Defense should direct the Deputy Under Secretary of Defense for Logistics to conduct a thorough study of opportunities to reengineer the depot maintenance business processes. Reengineering alternatives identified by this study should be analyzed as part of the final functional economic analysis and submitted for MAISRC review and MDA approval.

    Agency Affected: Department of Defense

 

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