GAO recommends oversight for DOD business systems upgrade

The Defense Department's business systems modernization is in serious trouble and needs hands-on management, a General Accounting Office auditor told House lawmakers last week.

Gregory D. Kutz, GAO's director of financial management and assurance, said at a hearing that Congress should consider establishing an investment review panel as it has done with other problematic modernization programs, such as those at the Federal Aviation Administration and the IRS.

To that end, GAO recommended Congress create a centralized fund for the nearly $18 billion DOD has requested for business systems modernization in fiscal 2004.

DOD is suffering from 'an uncontrolled proliferation of systems and is slowly moving to a controlled proliferation of systems,' Kutz said.

Kutz unveiled GAO's findings at a joint hearing of the House Government Reform subcommittees on National Security, Emerging Threats and International Relations and on Technology, Information Policy, Intergovernmental Relations and the Census.

'This is obviously on our radar screens,' said Rep. Adam Putnam (R-Fla.), chairman of the technology subcommittee. 'It is very unsettling how much money DOD has spent.'

The problems are on Defense's radar screen, too, department executives told the subcommittees.

DOD managers are aware of the systems challenges they face and are working on a business systems enterprise architecture, said JoAnn Boutelle, DOD's deputy chief financial officer.

Thomas Bloom, director of the Defense Finance and Accounting Service, added, 'The architecture is the foundation or rock we need to start with.'

The architecture will be finished in the next 45 days, Boutelle said. DOD in April of last year hired IBM Corp. under a $100 million blanket purchasing agreement to develop and merge more than 2,000 business systems.

The hearing came as GAO released its third report in three years that found waste, risk and pervasive weaknesses in Defense business systems.

Cut the charge cards

GAO analyzed four business systems projects, one of which DOD terminated after spending $126 million. The congressional agency recommended that Defense do nothing more than maintain the remaining systems at the lowest cost possible while it puts in place its enterprise architecture, sets an effective investment management plan and defines an internal oversight process.

'We told DFAS that it needs to look at all its other projects to make sure they are getting value,' Kutz said. 'There are not a lot of success stories at DOD when it comes to IT management.'

GAO also repeated a suggestion to lawmakers that Defense create a chief management officer post with responsibility for overseeing IT projects. The current oversight structure is too complicated, with the comptroller, DFAS and the CIO sharing supervision, according to the report, DOD Business Systems Modernization: Continued Investment in Key Accounting Systems Needs to be Justified.

To view the full GAO report, go to and enter 104 in the box.


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