Information Technology:

Issues Affecting Cost Impact of Navy Marine Corps Intranet Need to Be Resolved

GAO-03-33: Published: Oct 31, 2002. Publicly Released: Oct 31, 2002.

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Under the Navy Marine Corps Intranet (NMCI) contract, the Department of the Navy is obtaining information technology (IT) services that are to allow it to replace thousands of independent networks, applications, hardware, and software with one secure network. The National Defense Authorization Act of 2002 directed GAO to review the impact on IT costs of NMCI at Navy shipyards and air depots, which are predominantly working capital funded activities. Because this funding model requires these activities to recover all costs through charges to customers, GAO also reviewed NMCI's impact on shipyard and depot rates.

To date, NMCI has not measurably affected either IT costs at shipyards and air depots or the rates they charge customers. This is because the network, while originally planned to be in place at these activities in fiscal year 2002, is now not to be implemented at them until the latter part of fiscal year 2003. For fiscal year 2003, budget estimates show that NMCI will represent about 2 percent of total costs at shipyards and air depots. As a percentage of IT costs, NMCI costs will be more significant: about 38 percent at shipyards and 31 percent at air depots. According to shipyard and depot officials, estimated NMCI costs (which are a component of overhead costs) will not affect the rates charged to customers in fiscal year 2003 because they will be offset by cost reductions in other overhead areas, such as travel, training, and real property maintenance. Beyond fiscal year 2003, the impact of NMCI on IT costs and rates is unclear, because several issues peculiar to shipyards and air depots are unresolved, such as how the costs of some transition items will be funded and whether these costs will be included in the rates. Also uncertain is when these issues will be resolved, because no specific plans for doing so exist, and no explicit issue management process has been established. As a result, the shipyards' and depots' ability to effectively plan and budget is being impaired.

Recommendations for Executive Action

  1. Status: Closed - Implemented

    Comments: The Navy Marine Corps Intranet (NMCI) program office agreed to develop an issue management process in conjunction with the Naval Sea Systems Command (NAVSEA) and the Naval Air Systems Command (NAVAIR), to include implementation plans with strategies for resolving issues. In particular, the Navy set up the Executive Customer Forum, co-chaired by the Director, NMCI and the Commander, Navy Network Warfare Command to work collaboratively with Navy component Chief Information Officers, including those from the Naval Sea Systems Command and the Navy Air Systems Command, which represent shipyards and air depots, respectively, to adjudicate issues and review proposed solutions. Further, an issue tracking database tool was established to allow the NMCI Project Management Office and the NMCI Director's office to document, sort, report, and track resolution of issues.

    Recommendation: To ensure that existing and future issues are effectively and efficiently resolved, and thereby allow the shipyards and depots to make more informed planning and budgeting decisions, the Secretary of Defense should have the Secretary of the Navy direct the NMCI program manager, in collaboration with the Commanders of the Naval Sea Systems Command and the Naval Air Systems Command, to develop and execute an issue management process that resolves existing and future issues and includes shipyard and air depot implementation plans that include strategies for resolving these issues.

    Agency Affected: Department of Defense

  2. Status: Closed - Implemented

    Comments: The Navy set up the Executive Customer Forum, co-chaired by the Director, NMCI and the Commander, Navy Network Warfare Command to systematically review proposed solutions to problems and adjudicate issues requiring collaborative decision-making among Navy component Chief Information Officers, including those from the Naval Sea Systems Command and the Naval Air Systems Command. Further, Navy shipyard and air depot officials and their support staffs began conducting weekly teleconferences to permit continuous identification and discussion of NMCI implementation issues that affect them individually and collectively.

    Recommendation: To ensure that existing and future issues are effectively and efficiently resolved, and thereby allow the shipyards and depots to make more informed planning and budgeting decisions, the Secretary of Defense should have the Secretary of the Navy direct the NMCI program manager, in collaboration with the Commanders of the Naval Sea Systems Command and the Naval Air Systems Command, to develop and execute an issue management process that resolves existing and future issues and includes continuous identification of relevant material NMCI implementation issues.

    Agency Affected: Department of Defense

  3. Status: Closed - Implemented

    Comments: The Navy set up the Executive Customer Forum, co-chaired by the Director, Navy Marine Corps Intranet (NMCI) and the Commander, Navy Network Warfare Command to systematically review proposed solutions to problems and adjudicate issues requiring collaborative decision-making among Navy component Chief Information Officers, including those from the Naval Sea Systems Command and the Naval Air Systems Command, which represent Navy shipyards and air depots, respectively. Further, Navy shipyard and air depot officials and their support staffs now conduct weekly teleconferences to on NMCI implementation issues that affect them individually and collectively.

    Recommendation: To ensure that existing and future issues are effectively and efficiently resolved, and thereby allow the shipyards and depots to make more informed planning and budgeting decisions, the Secretary of Defense should have the Secretary of the Navy direct the NMCI program manager, in collaboration with the Commanders of the Naval Sea Systems Command and the Naval Air Systems Command, to develop and execute an issue management process that resolves existing and future issues and includes participation by Navy shipyard and air depot officials.

    Agency Affected: Department of Defense

  4. Status: Closed - Implemented

    Comments: In commenting on this recommendation, the oversight representative from the Office of the Assistant Secretary of Defense for Networks and Information Integration, Chief Information Officer, stated that the NMCI program office had agreed to develop the issue management process in conjunction with the Naval Sea Systems Command (NAVSEA) and the Naval Air Systems Command (NAVAIR). Subsequently, the Navy set up the Executive Customer Forum, co-chaired by the Director, NMCI and the Commander, Navy Network Warfare Command to systematically review proposed solutions to problems and adjudicate issues requiring collaborative decision-making among Navy component Chief Information Officers, including those from the Naval Sea Systems Command and the Naval Air Systems Command. Further, an issue tracking database tool was established to allow the NMCI Project Management Office and NMCI Director's office to document, sort, track, and report on resolution of issues impacting shipyard and air depot NMCI implementation.

    Recommendation: To ensure that existing and future issues are effectively and efficiently resolved, and thereby allow the shipyards and depots to make more informed planning and budgeting decisions, the Secretary of Defense should have the Secretary of the Navy direct the NMCI program manager, in collaboration with the Commanders of the Naval Sea Systems Command and the Naval Air Systems Command, to develop and execute an issue management process that resolves existing and future issues and includes tracking of and reporting on issue resolution.

    Agency Affected: Department of Defense

 

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