Information Technology:

Improvements Needed in the Reliability of Defense Budget Submissions

GAO-04-115: Published: Dec 19, 2003. Publicly Released: Dec 19, 2003.

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The Department of Defense (DOD) spends more on information technology (IT) annually than any other department or agency, accounting for about half of the $59 billion governmentwide IT budget in fiscal year 2004. It is thus important that consistent, accurate, and complete DOD IT budget information is available to the Congress and the Office of Management and Budget (OMB) so that they can make informed decisions among competing demands for funds. Accordingly, GAO reviewed the department's fiscal year 2004 IT budget submission to determine whether it was reliable, including identifying opportunities for future improvement.

DOD's IT budget submission for fiscal year 2004 contains material inconsistencies, inaccuracies, or omissions that limit its reliability. Two primary parts of the submission--the IT budget summary report and the detailed Capital Investment Reports on each IT initiative--are inconsistent. In particular, 15 initiatives that appear in the budget summary do not appear in the Capital Investment Reports, and discrepancies exist between the two types of reports in the amounts requested for 73 major initiatives. These discrepancies total about $1.6 billion. Major initiatives do not consistently use the same type of appropriations to fund the same activities. That is, to fund the same types of activities, some DOD organizations used the Research, Development, Test, and Evaluation appropriations and others used the Operation and Maintenance appropriations. The IT budget summary does not include all the costs of the IT initiatives, which is contrary to federal guidance. For example, the IT budget reports do not always include the costs of military personnel working on the initiatives. These problems are largely attributable to insufficient management attention and limitations in departmental policies and procedures, such as guidance in DOD's Financial Management Regulation, and to shortcomings in systems that support budget-related activities. The result is that OMB and the Congress are constrained in their ability to make informed IT funding decisions and conduct effective oversight and control, which could cause decision makers to approve or deny funding for programs that they might otherwise have treated differently, as well as increasing the chances of funds in an appropriation not being sufficient to cover obligations.

Status Legend:

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  • Review Pending-GAO has not yet assessed implementation status.
  • Open-Actions to satisfy the intent of the recommendation have not been taken or are being planned, or actions that partially satisfy the intent of the recommendation have been taken.
  • Closed-implemented-Actions that satisfy the intent of the recommendation have been taken.
  • Closed-not implemented-While the intent of the recommendation has not been satisfied, time or circumstances have rendered the recommendation invalid.
    • Review Pending
    • Open
    • Closed - implemented
    • Closed - not implemented

    Recommendations for Executive Action

    Recommendation: The OSD and component CIO offices, in consultation with the OSD and component Comptroller offices, should assess approaches to reduce or eliminate requirements for duplicative manual entry of information by program offices and components into systems supporting the preparation of the IT budget reports.

    Agency Affected: Department of Defense

    Status: Closed - Implemented

    Comments: The Office of the Assistant Secretary of Defense Networks & Information Integration/DOD Chief Information Officer implemented an automated system called the Select & Native Programming Data Input System --Information Technology (SNaP-IT) as the single data source for the IT budget exhibit(s).

    Recommendation: The OSD and component CIO offices, in consultation with the OSD and component Comptroller offices, should assess the costs and benefits of alternative approaches for establishing cost accounting systems or cost estimating processes to determine the amount of indirect costs attributable to each IT initiative and the amounts that should be categorized as development/modernization and current services, and implement the more cost-effective approach.

    Agency Affected: Department of Defense

    Status: Closed - Not Implemented

    Comments: As of September 2008, DoD had not provided any evidence indicating that it had considered any alternative approaches for establishing cost accounting systems or cost estimating processes to determine the amount of direct costs attributable to information technology (IT) initiatives and the amounts to be categorized as development/modernization and current services. According to DOD, costs associated with IT initiatives are reported though the appropriate Service/Agency, and allocating indirect costs to IT initiatives would have the potential for vast inconsistencies within DoD that would be difficult to reconcile within the accounting systems and could adversely impact the budget process.

    Recommendation: To improve the consistency, accuracy, and completeness of future DOD IT budget submissions, the Secretary of Defense should direct the OSD and component CIOs, in consultation with the OSD and component Comptrollers, to increase management attention and establish the appropriate management controls and supporting systems to avoid the weaknesses described in this report, including revising the FMR and other guidance for preparing the DOD IT budget to clearly reflect these policies and procedures. At a minimum, revisions to policies, procedures, and supporting systems should ensure that budget submissions fully account for all relevant costs, including military personnel costs and indirect costs, to the extent that these costs can be identified and properly allocated to each initiative, so that OMB and congressional decision makers are provided with complete budget information for each initiative.

    Agency Affected: Department of Defense

    Status: Closed - Implemented

    Comments: In June 2006, DOD revised the Financial Management Regulation to require that components report all appropriations supporting the initiative. Additionally, Office of the Secretary of Defense guidance requires initiatives to report one of the key aspects of this recommendation -- civilian and military full-time equivalent costs. Therefore, we consider this recommendation largely implemented.

    Recommendation: To improve the consistency, accuracy, and completeness of future DOD IT budget submissions, the Secretary of Defense should direct the OSD and component CIOs, in consultation with the OSD and component Comptrollers, to increase management attention and establish the appropriate management controls and supporting systems to avoid the weaknesses described in this report, including revising the FMR and other guidance for preparing the DOD IT budget to clearly reflect these policies and procedures. At a minimum, revisions to policies, procedures, and supporting systems should ensure that budget submissions are consistent in the costs that are funded with the RDT&E appropriation and those that are funded with the O&M appropriation.

    Agency Affected: Department of Defense

    Status: Closed - Not Implemented

    Comments: DOD revised its Financial Management Regulation, dated October 2006, to define costs that are to be included in the RDT&E appropriation. However, there is no evidence that the definitions have been changed to clarify the consistent use of the appropriations.

    Recommendation: To improve the consistency, accuracy, and completeness of future DOD IT budget submissions, the Secretary of Defense should direct the OSD and component CIOs, in consultation with the OSD and component Comptrollers, to increase management attention and establish the appropriate management controls and supporting systems to avoid the weaknesses described in this report, including revising the FMR and other guidance for preparing the DOD IT budget to clearly reflect these policies and procedures. At a minimum, revisions to policies, procedures, and supporting systems should ensure that amounts are properly categorized as development/modernization or current services in the IT budget submission, so that OMB and congressional decision makers are provided with accurate information on the funding required to (1) develop new systems or significantly improve existing systems and (2) operate and maintain existing systems.

    Agency Affected: Department of Defense

    Status: Closed - Not Implemented

    Comments: In June 2006, DOD revised its Financial Management Regulation (FMR). However, there is no evidence that the definitions of both development/modernization and current services have changed from the previous version.

    Recommendation: To improve the consistency, accuracy, and completeness of future DOD IT budget submissions, the Secretary of Defense should direct the OSD and component CIOs, in consultation with the OSD and component Comptrollers, to increase management attention and establish the appropriate management controls and supporting systems to avoid the weaknesses described in this report, including revising the FMR and other guidance for preparing the DOD IT budget to clearly reflect these policies and procedures. At a minimum, revisions to policies, procedures, and supporting systems should ensure that Exhibit 300s are complete, accurate, and internally consistent, in that (1) funding information is provided for each life cycle phase for each initiative; (2) total amounts reported for each initiative equal the sum of the individual line items for the initiative; and (3) the format used to display the funding information clearly shows the total funding amount for each initiative.

    Agency Affected: Department of Defense

    Status: Closed - Implemented

    Comments: DOD revised the Financial Management Regulation to emphasize the importance of submitting complete, accurate Exhibit 300s; began using a data element to identify resources by life-cycle category, as required by OMB A-11, Section 300; and implemented an automated system called the Select & Native Programming Data Input System -- Information Technology (SNaP-IT) that automatically calculates the funding totals for initiatives based upon line item amounts entered by DOD components.

    Recommendation: To improve the consistency, accuracy, and completeness of future DOD IT budget submissions, the Secretary of Defense should direct the Office of the Secretary of Defense (OSD) and component Chief Iinformation Officers (CIOs), in consultation with the OSD and component Comptrollers, to increase management attention and establish the appropriate management controls and supporting systems to avoid the weaknesses described in this report, including revising the FMR and other guidance for preparing the DOD IT budget to clearly reflect these policies and procedures. At a minimum, revisions to policies, procedures, and supporting systems should ensure that Exhibit 300s and IT-1 spreadsheets are consistent in terms of (1) the major initiatives that are included in each report (unless otherwise explained) and (2) the funding reported for each of these initiatives.

    Agency Affected: Department of Defense

    Status: Closed - Implemented

    Comments: In June 2006, DOD revised its Financial Management Regulation (FMR) to require that an Exhibit 300 be prepared for all major initiatives and that each major initiative be reported in the IT-1 budget exhibit. In addition, DOD recently implemented the Select & Native Programming Data Input System -- Information Technology (SNap-IT) as the single data repository for collecting and reporting IT budget information (e.g, Exhibit 300s and IT-1 budget exhibits) to both the Congress and the Office of Management and Budget.

    Recommendation: The OSD and component CIO offices, in consultation with the OSD and component Comptroller offices, should review the IT budget submission for fiscal year 2004 and the IT budget submission for fiscal year 2005 from the O&M and RDT&E appropriations and transfer, as necessary, the amounts for civilian personnel and other costs associated with IT planning or acquisition activities to the proper appropriation account, to ensure consistent use of these accounts, provide for congressional and departmental oversight of DOD's use of appropriations accounts, and reduce the risk of violations of the Anti-deficiency Act.

    Agency Affected: Department of Defense

    Status: Closed - Implemented

    Comments: The Office of the Assistant Secretary of Defense (OASD), Networks & Information Integration and DOD/Chief Information Office OASD NII/DOD CIO reviewed civilian personnel and other costs associated with IT planning or acquisition activities in the IT budget submission for fiscal years 2004 and 2005 from the O&M and RDT&E appropriations and reported that no transfers were identified. Additionally, to ensure consistent use of these accounts prospectively and thus provide for congressional and departmental oversight of DOD's use of appropriations accounts and reduce the risk of violations of the Anti-deficiency Act, in June 2006 the Office of the Secretary of Defense modified IT budget submission guidance to require a Statement of Compliance (SOC) from submitting components jointly signed by the Chief Information Officer (CIO) and the Chief Financial Officer (CFO) to help manage costs associated with civilian personnel and IT planning or acquisition activities related to initiatives submitted in the IT budget. The SOC requirement has been incorporated into the DOD Financial Management Regulation.

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