DOD Business Systems Modernization: Further Actions Needed to Address Challenges and Improve Accountability

Highlights

What GAO Found

The Department of Defense (DOD) continues efforts to establish a business enterprise architecture (a modernization blueprint) and transition plan and modernize its business systems and processes, in compliance with key provisions of the Ronald W. Reagan National Defense Authorization Act for Fiscal Year 2005 and amendments. Nonetheless, long-standing challenges remain. The following reflects the status of DOD’s actions to fulfill selected requirements of the act.

Develop a business enterprise architecture
DOD continues to develop content for its business enterprise architecture, such as business rules, and is proceeding with efforts to extend the architecture to its components. However, even though DOD has spent more than 10 years and at least $379 million on its business enterprise architecture, its ability to use the architecture to guide and constrain investments has been limited by, among other things, the lack of a detailed plan.

Develop an enterprise transition plan
The department’s latest version of its transition plan included data on more than 1,200 covered defense business systems; however, important content, such as time-phased milestones and performance measures, is still needed to address the act’s requirements.

Establish an investment approval and accountability structure along with an investment review process
DOD has taken steps to establish a portfolio-based approach to certifying defense business systems, including the establishment of a corporate-level board to oversee the approach and guidance for selecting, controlling, and evaluating the investment portfolio. However, it has yet to fully establish the foundation for its new portfolio-level investment management process or the criteria and procedures for making portfolio-based investment decisions.

Certify any business system program costing in excess of $1 million as compliant with the business enterprise architecture and as having undertaken appropriate business process reengineering
DOD’s portfolio-based investment approach included reviewing and certifying more than 1,200 business systems for fiscal year 2013, totaling about $6.8 billion in funding. However, while DOD continues to perform compliance assertions, it has not ensured the accuracy of business enterprise architecture alignment through validation of individual investments. Further, appropriate business process reengineering assertions were not completed and the associated results and outcomes have yet to be reported.

In addition, the Office of the Deputy Chief Management Officer has yet to determine and follow a strategic approach to managing its human capital needs, thus limiting its ability to, among other things, effectively address the act’s requirements. Collectively, these limitations put the billions of dollars spent annually on approximately 2,100 business system investments that support DOD functions at risk. GAO’s previous recommendations to the department have been aimed at accomplishing these and other activities related to the business systems modernization. However, to date, the department has not implemented 29 of the 63 recommendations that GAO has made in these areas.

According to DOD officials, recent turnover, changes to the act’s requirements significantly expanding the number of systems subject to certification, and the short time frame for implementing the new investment review process contributed to the aforementioned weaknesses. Until DOD implements GAO recommendations and addresses the weaknesses described in this report, it will be challenged in its ability to manage the billions of dollars invested annually in modernizing its business system investments.

Why GAO Did This Study

GAO designated DOD’s multibillion dollar business systems modernization program as high risk in 1995, and, since then, has provided a series of recommendations aimed at strengthening DOD’s institutional approach to modernization and reducing the risk associated with key investments. The act requires the department to report on actions taken relative to its business systems modernization efforts and GAO to assess DOD’s actions to comply with the act. In evaluating DOD’s compliance, GAO analyzed, for example, the latest version of the business enterprise architecture and enterprise transition plan, investment management policies and procedures, and certification actions for its business system investments.

Recommendations

GAO is making recommendations to help ensure that the departments modernization program is fully compliant with provisions of the act and to improve the departments architecture, transition plan, and business system investment management and human capital management within the Office of the Deputy Chief Management Officer. DOD concurred with two recommendations, partially concurred with three, and did not concur with three. GAO continues to believe its recommendations are warranted given the departments need to more effectively manage its billions of dollars of business system investments and minimize or eliminate system overlap and duplication as appropriate.

Recommendations for Executive Action

Agency Affected Sort descending	Recommendation	Status
Department of Defense	To effectively implement key components of DOD's business systems modernization program, the Secretary of Defense should direct the Deputy Chief Management Officer to ensure that the functional strategies include all of the critical elements identified in DOD investment management guidance, including performance measures to determine progress toward achieving the goals that incorporate all of the attributes called for in the department's guidance.	Open As of September 2023, the Department of Defense (DOD) has not addressed this recommendation. Specifically, in September 2023, DOD stated that it plans to issue revised investment management guidance that will require defense business systems to align to DOD requirements and associated performance measures. The department added that its revised investment management guidance may not include a requirement for functional strategies. Further, the department stated that it plans to publish its business systems investment management guidance in June 2024. We will continue to monitor the department's efforts to fully implement this recommendation.
Department of Defense	To effectively implement key components of DOD's business systems modernization program, the Secretary of Defense should direct the Deputy Chief Management Officer to select and control its mix of investments in a manner that best supports mission needs by (a) documenting a process for evaluating portfolio performance that includes the use of actual versus expected performance data and predetermined thresholds; (b) ensuring that portfolio assessments are conducted in key areas identified in our IT investment management framework: benefits attained; current schedule; accuracy of project reporting; and risks that have been mitigated, eliminated, or accepted to date; and (c) ensuring that the documents provided to the Defense Business Council as part of the investment management process include critical information for conducting all assessments.	Open As of September 2023, the Department of Defense (DOD) has not addressed the recommendation. Specifically, in September 2023, the department stated that it plans to issue revised investment management guidance that will contain requirements, procedures, and criteria to enable the DOD Chief Information Officer to more effectively manage the department's portfolio of defense business systems. Further, the department stated that it plans to publish its business systems investment management guidance in June 2024. We will continue to monitor the department's efforts to fully implement this recommendation.
Department of Defense	To effectively implement key components of DOD's business systems modernization program, the Secretary of Defense should direct the Deputy Chief Management Officer to implement and use the BEA and business process reengineering compliance assessments more effectively to support organizational transformation efforts by (a) disclosing relevant information about known weaknesses, such as BEA and business process reengineering compliance weaknesses for systems that were not certified or certified with qualifications in annual reports to Congress; (b) establishing milestones by which selected validations of BEA compliance assertions are to be completed; and (c) ensuring that appropriate business process reengineering assertions have been completed on all investments submitted for the fiscal year 2014 certification reviews prior to the certification of funds.	Closed – Implemented DOD demonstrated that it has addressed the intent of the recommendation. In 2015, the department demonstrated that it had disclosed relevant information about known weaknesses in annual reports to Congress. Specifically, the 2015 Congressional Report on Defense Business Operations included some information consistent with our recommendation. For example, it contained information about weaknesses for systems that were certified with qualifications. In particular, the report stated that the department conditionally approved 29 military department and 30 defense agency requests pending DBC approval of their problem statements. The report also cited the specific systems that were conditionally approved pending approval of their problem statements. In September 2019, the department demonstrated that it had validated business enterprise architecture (BEA) and business process reengineering (BPR) assertions. Specifically, the Office of the Chief Management Officer demonstrated that it had reviewed BEA and BPR compliance assertions, and identified in investment decision memorandums which systems had BEA and/or BPR assertions that required action. According to the list of systems, programs were required to address the actions (i.e., addressing the missing and invalid data), within 90 days in order for the systems to be certified for funding.
Department of Defense	To effectively implement key components of DOD's business systems modernization program, the Secretary of Defense should direct the Deputy Chief Management Officer to develop a skills inventory, needs assessment, gap analysis, and plan to address identified gaps as part of a strategic approach to human capital planning for the Office of the Deputy Chief Management Officer.	Closed – Implemented In January 2020, the DOD Chief Management Officer submitted a Defense Business System Human Capital Analysis report to congress, which demonstrated that the department has addressed the recommendation. This report demonstrated that the Office of the CMO developed a skills inventory, needs assessment, gap analysis, and plans to address identified gaps, to support the office's responsibilities.
Department of Defense	The Secretary of Defense should direct the appropriate authority to ensure that complete documentation, such as root cause analyses, assessments of existing interfaces for reuse opportunities, and performance metrics related to the reengineering efforts, is provided as part of the fiscal year 2014 certification and approval process for the Integrated Personnel and Pay System - Army (IPPS-A), Integrated Personnel and Pay System - Navy (IPPS-N), Air Force Integrated Personnel and Pay System (AF-IPPS), and Integrated Electronic Health Record (iEHR) investments.	Closed – Implemented As of July 2018, the Department of Defense (DOD) has addressed the intent of this recommendation, and other aspects of the recommendation have been overcome by events. In July 2015, we reported that the department demonstrated that it had completed documentation, such as root cause analyses, assessments of existing interfaces for reuse opportunities, and performance metrics related to the reengineering efforts, and that the documentation was provided as part of the certification and approval process for the Air Force Integrated Personnel and Pay System investment. However, since we made the recommendation, the department has changed its approach to evaluating business process reengineering for its defense business systems. As a result of this change, the department requires different documentation than the documentation required by the process we examined in our report. The department requires business process reengineering to be documented in a problem statement. The department's December 2014 problem statement guidance requires a description of and validation that a thorough review of the business process reengineering was conducted, and no longer specifically requires root cause analyses, assessments of existing interfaces for re-use opportunities, or performance metrics related to reengineering efforts. Regarding the Integrated Personnel and Pay System - Army, in September 2017, the department demonstrated that it had completed a March 2016 description of its business process reengineering efforts and supporting documentation as part of its review and certification process. Further, in July 2018, the department demonstrated that complete documentation related to business process reengineering efforts for the Integrated Personnel and Pay System - Navy (IPPS-N) investment had been approved in February 2018 as part of its certification and approval process . Specifically, the IPPS-N problem statement contains a description of and validation that a review of business process reengineering was conducted. Regarding the Integrated Electronic Health Record investment, the Office of the Deputy Chief Management Officer stated that the department does not plan to conduct business process reengineering because the investment is in sustainment, and the department does not require business process reengineering for systems in sustainment.
Department of Defense	The Secretary of Defense should direct the appropriate authority to determine whether funds were properly obligated under 10 U.S.C. 2222(a)-(b) for systems for which appropriate business process reengineering assertions were not completed.	Closed – Implemented As we reported in July 2015, officials from the Office of the Deputy Chief Management Officer demonstrated that the department has addressed the intent of this recommendation. Specifically, while the department did not concur with the recommendation and did not make the recommended determination, it has taken mitigating steps to help ensure compliance with business process reengineering requirements. For example, officials stated that, as part of the fiscal year 2013 certification and approval process, conditions were imposed by the investment review board requiring all components to submit a plan on how core defense business systems would become compliant with the act's business process reengineering requirement. These officials also provided documentation showing that the department tracked these conditions. In addition, the department has reported much higher levels of compliance with the act's business process reengineering requirements in subsequent annual review cycles. For example, in May 2013, we reported that, according to DOD, appropriate business process reengineering had been undertaken on only about 41 percent of the approximately 1,200 systems for the fiscal year 2013 certification reviews. In contrast, officials from the Office of the Deputy Chief Management Officer stated that only 2 systems were certified and approved during the fiscal year 2014 certification and approval cycle and 6 systems were certified and approved during the fiscal year 2015 certification and approval cycle that did not have complete business process reengineering assertions. Moreover, these officials provided justifications for why each of these systems did not have complete business process reengineering assertions.
Department of Defense	To effectively implement key components of DOD's business systems modernization program, the Secretary of Defense should direct the Deputy Chief Management Officer to define by when and how the department plans to develop an architecture that would extend to all defense components and include, among other things, (a) information about the specific business systems that support business enterprise architecture (BEA) business activities and related system functions; (b) business capabilities for the Hire-to-Retire and Procure-to-Pay business processes; and (c) sufficient information about business activities to allow for more effective identification of potential overlap and duplication.	Open As of September 2023, the Department of Defense (DOD) has not addressed this recommendation. In September 2023, DOD stated that DOD's Chief Information Officer is creating a federated, questions-based, data-centric DOD business enterprise architecture (BEA) to address CIO rationalization priorities and functional areas business questions. According to the department, it plans to publish a DOD BEA framework and guidebook to describe its BEA modernization approach by June 2024. We will continue to monitor the department's efforts to fully implement this recommendation.
Department of Defense	To effectively implement key components of DOD's business systems modernization program, the Secretary of Defense should direct the Deputy Chief Management Officer to define by when and how the enterprise transition plan will include, among other things, (a) milestones, performance measures, and funding plans for all business systems expected to be part of the target architecture and each system's risks or challenges to integration; (b) time-phased end dates associated with terminating legacy systems in phases; (c) a listing of all other defense business systems (including systems that are considered to be core systems) that will be a part of the target defense business systems computing environment and a strategy for making modifications to those systems that will be needed to ensure that they comply with the defense BEA, including time-phased milestones, performance measures, and financial resource needs; and (d) information about how systems are to be sequenced according to, among other things, dependencies among investments.	Closed – Implemented As of August 2017, the Department of Defense (DOD) had met the intent of this recommendation. According to the department, its transition plan is comprised of information from functional strategies, component organizational execution plans, and data in the DOD Information Technology Portfolio Repository (DITPR), Select and Native Programming Data Input System for Information Technology (SNAP-IT), Integrated Business Framework Data Alignment Portal (IBF-DAP), and the DOD Information Technology Investment Portal (DITIP). In August 2017, the department provided current examples of enterprise transition plan information that met the intent of our recommendation. For example, the department documented that system milestones are maintained in its DITPR system. The department also provided documentation that its system-specific problem statements identify performance measures and that funding information is contained in its SNAP-IT system. In addition, DOD provided examples of risks and challenges to integration associated with a specific system and documented in its IBF-DAP system. Moreover, the department provided examples of time-phased end dates for terminating legacy systems and documentation of business systems that will be part of the target environment from its DITPR system and an example functional strategy. In addition, DOD documented that is maintains information about how systems are to be sequenced in its functional strategies and its business intelligence tool.

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Topics

Human Capital

Business systems modernizationInvestment portfolioMilitary forcesHuman capital managementPerformance measurementEnterprise architectureInformation technologyBusiness process reengineeringBudget submissionsStrategic management