Calling oversight of the Department of Navy's efforts to implement a next generation ashore network "not effective," the Government Accountability Office is calling on the Defense Department to limit spending on the effort, pending a review of alternatives--a recommendation the Defense Department rejects.

The Navy plans to replace its current network infrastructure and operations contract--Navy/Marine Corps Intranet, awarded in 2000 to the company known today as Hewlett Packard Enterprise Services--with a set of five Next Generation Enterprise Network contracts all fully operational by March 2014.

The Navy projects NGEN will cost about $50 billion through 2025.

Current plans call for the Marine Corps to start transitioning to NGEN in January 2012, finishing in February 2013 and for the Navy to start transition in December 2012 with completion set for March 2014. The program is experiencing schedule delays, the GAO says in a March 11 report, and the Navy already rebaselined in August 2010 the NGEN master schedule it established in December 2009.

A GAO analysis of October 2010 Navy data finds the program has "significant issues" with resourcing and faces possible failure with test and evaluation.

Also, the Navy never subjected its chosen acquisition approach to an analysis of alternatives, the GAO says. "The current approach has more contracts, a different segmentation scheme, and a different transition timeline than the analyzed alternatives," the report states.

Defense Department officials from the office of cost assessment and program evaluation told GAO auditors that the difference between the current approach and similar alternatives considered under the AoA are not significant.

But GAO auditors say the AoA itself was wanting in several key ways, including lacking credible cost estimates and not measuring the operational effectiveness of the alternatives, although the AoA did include qualitative determination of whether an alternative met or partially met a capability.

In the case of cost estimates, the AoA did draw on historical NMCI data, but the assumptions for NGEN costs extrapolated from that data were based on proprietary information provided by support contractor Deloitte Consulting--information that the Navy never had access to, auditors say.

Members of an independent team that reviewed the NGEN cost model said they voiced concerns about the model, but that the majority of their comments went unaddressed, including the worry that industry-based assumptions might not be applicable to NGEN.

The GAO also faults the AoA for limiting cost estimates to a 5-year period ending in fiscal 2015. Navy and Pentagon officials say that was done because additional NGEN capabilities could be introduced after that period.

GAO auditors say the Defense Department should limit further NGEN spending until it conducts a "meaningful analysis of all viable alternative acquisition approaches," a recommendation that the DOD in its official response to the GAO says it rejects.

"Limitation of NGEN investments, at this time, will significantly impact future DON business operations and ultimately, Naval warfighting capabilities," says Ronald Jost, deputy assistant secretary of defense for C3, space and spectrum, in the official response.

For more:
- download the report, GAO-11-150 (.pdf)

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