DOD Business Systems Modernization: Navy Implementing a Number of Key Management Controls on Enterprise Resource Planning System, but Improvements Still Needed
Highlights
The Department of Defense (DOD) has long been challenged in effectively implementing key acquisition management controls on its thousands of business system investments. For this and other reasons, GAO has designated DOD's business systems modernization efforts as high-risk since 1995. One major business system investment is the Navy's Enterprise Resource Planning (ERP) system. Initiated in 2003, it is to standardize the Navy's business processes, such as acquisition and financial management. It is being delivered in increments, the first of which is to cost about $2.4 billion over its 20-year useful life and be fully deployed by fiscal year 2013. To date, the program has experienced about $570 million in cost overruns and a 2-year schedule delay. GAO was asked to determine whether (1) system testing is being effectively managed, (2) system changes are being effectively controlled, and (3) independent verification and validation (IV&V) activities are being effectively managed. To do this, GAO analyzed relevant program documentation, traced random samples of test defects and change requests, and interviewed cognizant officials.
Recommendations
Recommendations for Executive Action
| Agency Affected | Recommendation | Status |
|---|---|---|
| Department of Defense | To strengthen the management of NAVY ERP's change control process, the Secretary of Defense should direct the Secretary of the Navy, through the appropriate chain of command, to (1) revise the Navy ERP procedures for controlling system changes to explicitly require that a proposed change's life-cycle cost impact be estimated and considered in making change request decisions and (2) capture the cost and schedule impacts of each proposed change in the Navy ERP automated change control tracking tool. |
Closed – Implemented
Since our report, Navy Enterprise Resource Planning (ERP) has updated its Enterprise Change Request Process and Procedures to explicitly require that life cycle cost impact is estimated and considered as part of the system change control process. In addition, the change control tracking tool has been updated to capture "dollarized" cost and schedule impact, and to store supporting life-cycle cost and schedule impact information.
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| Department of Defense | To increase the value of Navy ERP IV&V, the Secretary of Defense should direct the Secretary of the Navy, through the appropriate chain of command, to (1) stop performance of the IV&V function under the existing contract and (2) engage the services of a new IV&V agent that is independent of all Navy ERP management, development, testing, and deployment activities that it may review. |
Closed – Implemented
The Navy Enterprise Resource Planning (ERP) program office stopped the independent verification and validation (IV&V) work under the existing contract on September 30, 2009, and it awarded a new IV&V contract in September, 2010. According to the contract, the contractor must be independent of the development, testing, deployment and sustainment of the Navy ERP solution.
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