Fast Facts

The VA is replacing its aging financial and acquisition systems with an integrated system. Two previous attempts to replace the systems cost hundreds of millions of dollars and took years to develop.

In November 2020, VA deployed the new system at the National Cemetery Administration. VA followed some IT best practices, e.g., in system testing. But VA's cost and schedule estimates only minimally or partially met many of the best practices that help ensure reliable estimates.

We recommended following practices in our cost estimating and schedule assessment guides to minimize risks of cost overruns and schedule delays in future deployments.

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Highlights

What GAO Found

The Department of Veterans Affairs (VA) Financial Management Business Transformation (FMBT) program has begun implementing the Integrated Financial and Acquisition Management System (iFAMS), with the first deployment of certain capabilities at the National Cemetery Administration (NCA) on November 9, 2020. FMBT program officials identified various challenges, such as FMBT program funding shortfalls, which represent the difference between VA's original requirement and the President's budget request, and coordination with other major initiatives. VA has taken various steps to address its challenges. For example, because of the COVID-19 pandemic, VA postponed the initial NCA deployment 4 months and converted planning, training, and testing activities to virtual events. In addition, the FMBT program and Veterans Health Administration (VHA) worked together to address the FMBT program funding shortfall by postponing iFAMS implementation at VHA for at least 2 years to coordinate with the implementation of a new logistics system.

Following information technology (IT) management best practices on major transformation efforts, such as the FMBT program, can help build a foundation for ensuring responsibility, accountability, and transparency. VA has generally met such practices for program governance, Agile project management, and testing and defect management. However, it has not fully met certain best practices for developing and managing cost and schedule estimates. As a result, its estimates were not reliable. Specifically, VA's estimates substantially met one, and partially or minimally met three of the four characteristics associated with reliable cost and schedule estimates, respectively. For example, VA minimally met the “credible” characteristic associated with reliable cost estimates, in part, because it did not compare its cost estimate to an independently developed estimate.

GAO Assessment of VA Cost and Schedule Estimates against Best Practice Characteristics

Cost estimate characteristic

Assessment of cost estimate

Schedule estimate characteristic

Assessment of schedule estimate

Comprehensive

Partially met

Comprehensive

Partially met

Well-documented

Substantially met

Well-constructed

Partially met

Accurate

Partially met

Credible

Partially met

Credible

Minimally met

Controlled

Substantially met

Legend: substantially met = VA provided evidence that satisfies a large portion of the criterion; partially met = VA provided evidence that satisfies about one-half of the criterion; minimally met = VA provided evidence that satisfies a small portion of the criterion

Source: GAO assessment of the Department of Veterans Affairs Financial Management Business Transformation program documentation. | GAO-21-227

Reliable cost and schedule estimates provide a road map for project execution and are critical elements to delivering large-scale IT systems. Without reliable estimates, VA management may not have the information necessary for informed decision-making. Further, following cost and schedule best practices helps minimize the risk of cost overruns and schedule delays and would better position the FMBT program for effective and successful implementation on future deployments.

Why GAO Did This Study

VA's core financial system is approximately 30 years old and is not integrated with other relevant IT systems, resulting in inefficient operations and complex work-arounds. The FMBT program is VA's current effort and third attempt to replace its aging financial and acquisition systems with one integrated system. The first two attempts were unsuccessful after years of development and hundreds of millions of dollars in cost.

GAO was asked to review the progress of the FMBT program. This report (1) describes the status of the FMBT program, including steps VA has taken to address challenges it has identified, and (2) examines the extent to which VA has followed certain IT management best practices. GAO summarized FMBT program risks and challenges that VA identified, reviewed FMBT program documentation and compared it with relevant guidance and best practices, and interviewed cognizant VA officials.

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Recommendations

GAO is making two recommendations to VA that it help ensure that the FMBT program's cost and schedule estimates are consistent with GAO-identified best practices. VA concurred with the recommendations and described actions the department has taken and plans to take to address them.

Recommendations for Executive Action

Agency Affected Recommendation Status
Department of Veterans Affairs The FMBT Deputy Assistant Secretary should take steps to help ensure that the FMBT program develops a reliable cost estimate using best practices described in GAO's Cost Estimating and Assessment Guide, in particular, by addressing those cost characteristics that were partially or minimally met. (Recommendation 1)
Open
In commenting on our draft report, VA concurred with this recommendation and described some actions already taken. VA stated that regarding the credibility of the Life Cycle Cost Estimate (LCCE), VA identified the inflation index per guidance in GAO's Cost Estimating Guide to bring the estimate to constant year dollars. Further, regarding accuracy of the LCCE, VA stated that modeling corrections were made and sensitivity analysis was used to determine the impact of key cost drivers have on the total cost of the program. Finally, in terms of comprehensiveness of the LCCE, VA stated that per the guidance in GAO's Cost Estimating Guide, it identified previously unknown costs and added these costs to the fiscal year 2020 LCCE. We will follow-up with VA to verify the actions taken to address this recommendation.
Department of Veterans Affairs The FMBT Deputy Assistant Secretary should take steps to help ensure that the FMBT program develops a reliable schedule using best practices described in GAO's Schedule Assessment Guide, in particular, by addressing those schedule characteristics that were partially or minimally met. (Recommendation 2)
Open
In commenting on our draft report, VA concurred with this recommendation and described some action already taken. Specifically, in terms of comprehensiveness of the schedule, VA stated that it is conducting resource loading and has added some custom data fields within the schedule. In regard to well-constructed characteristics of the schedule, VA described processes used to better manage and report on project float or slack within the program. Regarding the credibility of the schedule, VA described processes used to manage risk within the program. VA also stated that the FMBT program assigned a new Governance Lead who coordinates across project teams and workstreams to ensure processes and methodologies adopted by the FMBT program are consistently applied. We will follow-up with VA to verify the actions taken to address this recommendation.

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