Key DoD ERPs $8 billion over budget, say auditors

Six key Defense Department enterprise resource planning systems that auditors say are key to producing auditable financial statements have gone over budget by $8 billion and are as much as 12 years behind schedule.

In a report (.pdf) dated July 13, the Defense Department office of inspector general says the delays increases the risk that the statement will not be able to produce an auditable statement of budgetary resources by fiscal 2014 or accomplish its goal of full financial statement audit readiness by fiscal 2017.

Data in the report shows the Air Force's Defense Enterprise Accounting and Management System as particularly troubled, with costs having increased by 414 percent to $2.16 billion and the number of users stuck at 1,700 out of a planned 30,000.

DEAMS is also being developed for use by Transportation Command and the Defense Finance and Accounting Service. Project management office officials told auditors that the cost increases are the result of schedule and requirements changes. The delays, they said, stem from how complex it's been to re-engineer business processes and implement the Oracle software. Testing found more than 3,400 problems.

Auditors also criticize DoD Deputy Chief Management Officer Elizabeth McGrath for not verifying that military departments had completed business process re-engineering before they released $302.7 million for the six ERPs.

Verification is a requirement under the fiscal 2010 national defense authorization act (P.L. 111-84) whenever DoD components want to spend more than $1 million on business systems. The DCMO relied of self-compliance assertions from the ERP project management offices--a reliance that auditors say allowed military departments to submit plans lacking documentation on how business processes in the new ERP system will be more streamlined and efficient.

Officials in the DCMO office "did not provide sufficient oversight," auditors say.

The DoD DCMO did not comment on the audit, something auditors say should be done by Aug. 13.

For more:
- download the report, DoDIG-2012-111 (.pdf)

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