An Army enterprise resource planning system--which, if fully implemented, would be one of the world's largest public sector ERPs--is at high risk of running even more over schedule and budget and resulting in a system that falls short of objectives, says the Defense Department inspector general.

In a report dated June 15, the DoD OIG finds that the financial management system known as the General Fund Enterprise Business System continues to lack a detailed data conversion plan and supported cost estimates.

DoD auditors first publically noted both problems in 2008, but the Army and Defense Department have not implemented seven of the 16 recommendations they made at the time, the report says.

GFEBS is an implementation of SAP software; the Army awarded an estimated $636.7 million, 10 year systems integration contract to Accenture in April 2005. The system has an estimated lifecycle cost of $2.4 billion. Army officials delayed an original planned August 2007 target date for initial operational capability to September 2010 and full operational capability to December 2011.

When fully operational, the ERP will have 79,000 potential users, according to the Army; personnel from the DoD deputy chief management officer estimate that the Army has deployed GFEBS to about 15,500 individuals, the report says.

When asked, the GFEBS program management office provided auditors with a data conversion plan, one that discussed converting master data (data that does not change regularly over a period of time) from legacy Army systems to the SAP system. In response to auditors' 2008 report, the Army comptroller said it would prepare a detailed plan--but the document presented to auditors for this audit did not address data conversion for at least 49 non-Army systems that process Army data, and did not mention the problem of historical transaction data--other than to say that historical data won't be converted. Such data matters, auditors assert, because multi-year appropriation dollars can be subject to obligation adjustment for 5 years after their expiration and because the Army also receives appropriations that have no expiration date.

Without converting historical transactional data for those types of appropriations, the Army could potentially be using GFEBS and legacy systems, concurrently, for many years after GFEBS implementation, the report adds.

Auditors also fault the program management office for not developing a complete economic analysis, noting that the Army assistant secretary for acquisition, logistics and technology agreed to update the economic analysis to include all relevant costs and system requirements.

The program management office did update the analysis in November 2009, but the analysis "was incomplete and unsupported because it did not include the cost related to data migration or for interfacing systems with GFEBS," the report states.

An inspector general recommendation that the DoD deputy chief management officer not approve GFEBS deployment to additional users until the Army completes implementing auditor recommendations was rebuffed, however.

DCMO Elizabeth McGrath "had determined that the business benefit of GFEBS is greater than reported program risks," the report says. It adds that auditors nonetheless believe that GFEBS is a program at high risk of additional schedule and budget overruns, and that close monitoring by the DCMO "may help to lessen some of this risk."

For more:
- download the report, D-2011-072 (.pdf)
- download the latest major automated information systems report for GFEBS (.pdf)

Related Articles:
DoD business systems oversight not good enough, says GAO 
DOD anticipates spending $23.58 billion this year on business systems 
Air Force in danger of missing 2017 deadline for clean audit