Defense Transportation: Migration Systems Selected Without Adequate
Analysis (Letter Report, 08/29/96, GAO/AIMD-96-81).
A migration system is an automated information system that replaces
several systems that performed similar functions. Defense transportation
systems support common-user transportation needs in the armed forces. As
part of its Corporate Information Management initiative, the Defense
Department (DOD) plans to migrate from an inventory of about 130 defense
transportation systems. DOD has little assurance, however, that its
transportation migration system choices are cost-effective. In April
1994, DOD developed a structured approach to identify, select, and
implement these systems. In its haste to meet a March 1997 deadline,
however, DOD selected transportation migration systems without fully
analyzing the alternatives, such as acquiring new systems or contracting
for services. In making a quarter of its transportation migration system
selections, DOD relied on incomplete and unverified data. Moreover, DOD
did not assess how making significant changes to transportation
operations--through reengineering and outsourcing--would affect its
migration systems. The upshot is that DOD has no guarantee that it will
reap the savings anticipated from migration.
--------------------------- Indexing Terms -----------------------------
REPORTNUM: AIMD-96-81
TITLE: Defense Transportation: Migration Systems Selected Without
Adequate Analysis
DATE: 08/29/96
SUBJECT: Cost effectiveness analysis
Transportation operations
Defense cost control
Systems conversions
Defense contingency planning
Information resources management
Defense economic analysis
Logistics
Commercial products
Information systems
IDENTIFIER: DOD Corporate Information Management Initiative
Air Force Cargo Movements Operations System
DOD Global Transportation Network
Desert Storm
CIM
DOD Air Loading Module
DOD Integrated Computerized Deployment System
DOD Consolidated Aerial Port System II
Navy Material Transportation Office Operations and
Management Information System
Joint Flow Analysis System for Transportation
Marine Corps Automated Information Management System and
Air Ground Task Force Deployment Support System
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Cover
================================================================ COVER
Report to the Chairman, Subcommittee on Military Readiness, Committee
on National Security, House of Representatives
August 1996
DEFENSE TRANSPORTATION - MIGRATION
SYSTEMS SELECTED WITHOUT ADEQUATE
ANALYSIS
GAO/AIMD-96-81
Defense Transportation Migration Systems
(511320)
Abbreviations
=============================================================== ABBREV
ADANS - Airlift Deployment Analysis System
AF/LGT - Air Force Transportation
ALM - Air Loading Module
AMC - Air Mobility Command
AMP - Analysis of Mobility Platform
AMS - Asset Management System
CanTRACS - Canadian Transportation Automated Control System
CAPSII - Consolidated Aerial Port System II
CFM - CONUS Freight Management System
CFM(HOST) - CONUS Freight Management (freight and cargo
transportation services support)
CFM(FM) - CONUS Freight Management (field module)
CIM - Corporate Information Management
CINC - Commander-in-Chief
C2IPS - Command and Control Information Processing System
CMOS - Cargo Movement Operations System
CONUS - Continental United States
COTS - commercial off-the-shelf
DAMMS-R - Department of the Army Movement Management
System-Redesign
DLA - Defense Logistics Agency
DLMS - Defense Logistics Management System
DOD - Department of Defense
DTS - Defense Transportation System
DTTS - Defense Transportation Tracking System
ELIST - Enhanced Logistics Intra-Theater Support Tool
FEA - functional economic analysis
GDSS - Global Decision Support System
GOPAX - Groups Operational Passenger System
GSA - General Service Administration
GTN - Global Transportation Network
IBS - Integrated Booking System
ICODES - Integrated Computerized Deployment System
IC3 - Integrated Command, Control, and Communications
IDP - Integration Decision Papers
ITO - Installation Transportation Office
ITV-MOD - In-Transit Visibility Modernization
ITV-MODHOST - ITV-MOD Headquarters On-Line System for
Transportation
JALIS - Joint Air Logistics Information System
JFAST - Joint Flow and Analysis System for Transportation
JTCC - Joint Transportation CIM Center
MOBCON - Mobilization Movement Control
NAOMIS - Navy Material Transportation Office Operations and
Management System
OMB - Office of Management and Budget
PRAMS - Passenger Reservation and Manifest System
TC-AIMS - Transportation Coordinator's Automated Information
Management System
TC-AIMSII - Transportation Coordinator's Automated Information
Management System II
TC-AIMS(MC)/MDSSII - Marine Corps Transportation Coordinator's
Automated Information Management Systems and Air-Ground Task
Force Deployment Support System
TC-ACCIS - Transportation Coordinator Automated Command and Control
Information System
TMO - Traffic Management Office
TOPS - Transportation Operational Personal Property System
TRAC2ES - TRANSCOM Regulating and Command and Control Evacuation
System
USTRANSCOM - U.S. Transportation Command
WPS - Worldwide Port System
Letter
=============================================================== LETTER
B-271782
August 29, 1996
The Honorable Herbert H. Bateman
Chairman, Subcommittee on Military Readiness
Committee on National Security
House of Representatives
Dear Mr. Chairman:
In response to your request, we are reporting the results of our
review of the Department of Defense's (DOD) selection of
transportation migration systems.\1 Specifically, we evaluated
whether Defense made proper and cost-effective transportation
migration system selections. The selection of migration systems is
part of Defense's Corporate Information Management (CIM)
initiative--a departmentwide effort to improve operations and reduce
costs by streamlining business processes, consolidating information
systems, and standardizing and integrating data. For transportation,
Defense plans to migrate from an inventory of about 130 systems. To
date, 28 major migration systems have been selected, with additional
minor selections still to be made.
--------------------
\1 A migration system is an automated information system which
replaces several systems that perform similar functions. The systems
replaced are called legacy systems.
RESULTS IN BRIEF
------------------------------------------------------------ Letter :1
Defense has little assurance that its transportation migration system
selections are cost-effective. In April 1994, Defense developed a
structured approach to identify, select, and implement these systems.
However, in its haste to meet a March 1997 deadline, Defense selected
transportation migration systems without fully analyzing
alternatives, such as acquiring new systems or contracting for
services. Further, in making a quarter of its transportation
migration system selections, Defense relied on incomplete and
unverified cost data. Finally, Defense did not assess how making
significant changes to transportation operations--through
reengineering and outsourcing--will affect its migration systems. As
a result, Defense is not assured that it will garner the savings
expected from migration.
SCOPE AND METHODOLOGY
------------------------------------------------------------ Letter :2
To address our objectives, we reviewed ongoing efforts within Defense
to reduce Defense Transportation System (DTS)\2 costs by eliminating
redundancy in automated information systems and in the business
processes they support. We examined governing regulations and
directives, evaluated plans and actions to select transportation
migration systems and improve transportation processes, and
interviewed key Defense officials.
We performed our audit from June 1995 through May 1996 in accordance
with generally accepted government auditing standards. We worked
principally at the offices of the Deputy Under Secretary of Defense
for Logistics (Transportation Policy) in Washington, D.C.; the U.S.
Transportation Command's (USTRANSCOM) Joint Transportation CIM Center
(JTCC) at Scott Air Force Base, Illinois; and at development sites
for selected migration systems. Appendix I details our scope and
methodology.
Defense provided written comments on a draft of this report. These
comments are reprinted in appendix II and are discussed in the agency
comments and evaluation section of the report.
--------------------
\2 DTS is that part of the U.S. transportation infrastructure which
supports Defense common-user transportation needs. DTS consists of
common-user Defense transportation assets, service, and automated
information systems which are owned and operated by Defense or by
commercial businesses.
BACKGROUND
------------------------------------------------------------ Letter :3
Defense relies on transportation services and information systems to
help ensure that cargo, supplies, and people are conveyed to
designated locations as quickly as possible during peace and war.
Information is needed to perform functions like deploying troops for
wartime, packing and shipping cargo for transport, and drawing plans
for ship loading. Because today's defense strategies use fewer
forward deployed troops and equipment, the transportation function
and the information systems supporting it have become increasingly
important. During fiscal year 1995, the total cost of common-user
Defense transportation amounted to about $6 billion. For the same
period, USTRANSCOM spent approximately $164.5 million on information
technology to support transportation services.
While transportation is crucial to achieving U.S. military
objectives, Defense transportation business operations are very
similar or identical, in some cases, to those of the commercial
transportation industry. This commonality enables Defense to rely on
the commercial transportation industry to meet about 85 percent of
its peacetime and wartime transportation needs. Moreover, commercial
transportation providers and port management authorities have
developed or purchased their own automated information systems to
perform many of the same functions as defense transportation
performs, such as those for moving passengers, documenting and
reporting on cargo, and operating sea and aerial ports. Defense
itself recognizes the similarities between itself and the commercial
transportation sector in its policies and procedures, which call for
using commercial automated information systems when feasible.
WIDELY RECOGNIZED DEFENSE
TRANSPORTATION DEFICIENCIES
PERSIST
---------------------------------------------------------- Letter :3.1
Over the years, various studies, commissions, and internal DOD
reports have noted that military transportation processes are
fragmented, outdated, inefficient, and costly. In addition, Defense
has long recognized that timely, accurate, and comprehensive
information on transportation activities would greatly increase its
effectiveness. For example:
-- In 1992,\3 GAO reported serious problems with the services'
deployment data bases during Operation Desert Shield/Storm.
Inaccurate and incomplete database information resulted in
erroneous lift requirements, inefficient use of lift, and
revisions to movement routing and scheduling. Defense was
forced to rely on informal, personal communication and manual
methods to obtain the correct amount of lift and to determine
which units were ready to move.
-- According to a Defense report on Operation Desert Shield/Storm
logistics, military airport facilities became so overloaded with
high-priority sustainment cargo that other cargo was hastily
repacked into shipping containers with partial documentation or
without any documentation and reshipped by surface transport.
Because little or no documentation accompanied the cargo, over
half of the 40,000 containers sent to Saudi Arabia had to be
reopened to determine their contents.
-- In 1993,\4 GAO reported that Defense's ability to effectively
manage its transportation operations was limited, in part,
because of redundancy and the lack of standardization among its
automated information systems. Specifically, we noted, and
Defense agreed, that the Continental United States Freight
Management System (CFM) would duplicate functions which are
similar or identical to transportation systems concurrently
under development by the Air Force, Marine Corps, Army, and the
Defense Logistics Agency (DLA).
-- In a 1994 report, Reengineering the Defense Transportation
System: The "Ought To Be" Defense Transportation System for the
Year 2010, Defense recognized that change to transportation
business processes is key to realizing large cost savings and
performance improvements. Defense further maintained that
nothing less than fundamental change would be required to
achieve such gains in savings and productivity.
-- In 1995,\5 Defense reported that the lack of visibility over
shipments and units entering a theater of operations has been a
chronic problem experienced in every major U.S. deployment
during the 20th century. The report asserted that acquisition
of transportation automated information systems providing more
timely, accurate, and complete information would help resolve
the problem.
-- In early 1996,\6 GAO reported that Defense common-user
transportation costs were two to three times higher than
comparable commercial carrier costs. Higher costs were
attributed, in part, to fragmented business processes and an
inefficient organizational structure.
The Congress also is concerned about continuing problems in defense
transportation and has taken legislative action to reduce its costs.
The House Committee on National Security, in its report on the
Defense Authorization Act for Fiscal Year 1996, estimated that
approximately $100 million could be saved each year if commissaries
and exchanges are allowed to contract directly, using the most
cost-effective carriers to transport products overseas.
Subsequently, the Congress approved a provision in the Defense
Authorization Act for Fiscal Year 1996 authorizing the commissaries
and military exchanges to negotiate directly with private carriers
for the most cost-effective transportation of commissary and exchange
supplies by sea without relying on the Military Sealift Command or
the Military Traffic Management Command.
Although Defense has repeatedly attempted to correct its
transportation problems over the years, many of its actions have been
directed toward the acquisition of information technology to address
problems rather than through a complete analysis of its business
processes. Such an analysis would identify the root causes of
Defense's transportation problems. Identification of the root causes
helps an organization focus on appropriate means for addressing the
problem and serves to direct resources where needed to achieve
quality improvements in operations. These process improvements, in
turn, provide the basis for the acquisition of technology to support
the newly improved processes. Defense's CIM program was intended to
institutionalize this type of approach to information systems
management.
--------------------
\3 Desert Shield/Storm: U.S. Transportation Command's Support of
Operation (GAO/NSIAD-92-54, January 9, 1992).
\4 Defense Transportation: Commercial Practices Offer Improvement
Opportunities (GAO/NSIAD-94-26, November 26, 1993).
\5 Defense Intransit Visibility Integration Plan, U.S.
Transportation Command, February 1995.
\6 Defense Transportation: Streamlining of the U.S. Transportation
Command Is Needed (GAO/NSIAD-96-60, February 26, 1996).
JTCC ESTABLISHED TO
IMPLEMENT CIM FOR
TRANSPORTATION
---------------------------------------------------------- Letter :3.2
In 1989, the Deputy Secretary of Defense established the CIM program
to reduce the cost and improve the efficiency of operations. Defense
anticipated that it would reduce costs significantly by streamlining
its business practices, consolidating information systems into a core
set of migration systems, and standardizing data.
To carry out the CIM initiatives for Defense transportation, the
Deputy Under Secretary of Defense for Logistics chartered JTCC, in
August 1993, under the command authority of USTRANSCOM. JTCC's
primary objective is to improve the efficiency and effectiveness of
the DTS by using business process reengineering techniques,
designating and implementing migration systems selections, and
leading data standardization efforts. By migrating to 28
transportation systems, Defense estimated in February 1996 that it
would save $240 million over a 6-year period, primarily through
elimination of duplicate legacy systems. A description of Defense's
transportation business processes and the migration systems
selections that support them are provided in appendix III.
In an October 1993 CIM memorandum, after becoming dissatisfied with
the pace of improvements, the Deputy Secretary of Defense directed
all functional business areas to accelerate efforts to select and
implement migration systems by March 1997. In response, JTCC
initiated a structured approach, in April 1994, to identify, select,
and implement transportation migration systems by March 1997. The
approach was systematic, communicated in a written plan, and agreed
to by departmentwide transportation process owners and stakeholders.
Further, the approach called for consideration of alternatives,
including a review of commercial products, and required that
cost-benefit analyses be prepared in support of migration systems
selections.
LITTLE ASSURANCE THAT DEFENSE
MADE PROPER SYSTEM SELECTION
DECISIONS
------------------------------------------------------------ Letter :4
Defense has little assurance that its transportation system
selections are cost-effective. To meet a March 1997 deadline imposed
by the Deputy Secretary of Defense, JTCC hurriedly implemented its
migration system selection approach without
-- adequately evaluating government and/or commercial sector
alternatives in selecting 17 of the 28 migration systems,
-- using complete and verified cost information in choosing 7
systems\7 from among numerous legacy systems which could provide
the same basic functionality, and
-- assessing the impact that significant changes to transportation
operations--made through reengineering and outsourcing--will
have on its migration system selections.
In some cases, Defense selected migration systems that will lose
money if implemented as migration systems.
--------------------
\7 These seven systems are: (1) Cargo Movement Operations System
(CMOS), (2) Air Loading Module (ALM), (3) Integrated Computerized
Deployment System (ICODES), (4) Consolidated Aerial Port System II
(CAPS II), (5) Navy Material Transportation Office Operations and
Management Information System (NAOMIS), (6) Joint Flow and Analysis
System for Transportation (JFAST), and (7) Marine Corps
Transportation Coordinator's Automated Information Management System
and Air-Ground Task Force Deployment Support System (TC-AIMS(MC)/MDSS
II).
DEFENSE DID NOT FULLY
CONSIDER OTHER ALTERNATIVES
TO SHARING IN-HOUSE SYSTEMS
---------------------------------------------------------- Letter :4.1
Governmentwide and DOD regulations require that a range of feasible
alternatives be considered before significant changes to business
processes or information systems are made. These regulations call
for aggressive examination of alternatives to ensure that innovative
and improved ways of doing business are considered. The Office of
Management and Budget (OMB) Circular A-94, General Services
Administration's (GSA) Federal Information Management Regulations,
and DOD Instruction 7041.3 cite acquisition of new systems, sharing
existing systems, contracting for services, using commercial
off-the-shelf software, and maintaining the status quo as examples of
alternatives that should be considered. In addition, in November
1993, the Assistant Secretary of Defense for Command, Control,
Communications, and Intelligence issued criteria requiring that
migration systems selection consider a reasonable range of
alternatives.
However, in selecting systems for migration, Defense did not
adequately consider alternatives available in other parts of the
government and/or the commercial sector. As a result, it has little
assurance that the systems it chose are the most cost-effective and
appropriate. The degree to which Defense considered alternatives to
the systems chosen varies from system to system. However, in all
cases, alternatives were not considered to the extent that Defense's
own guidance calls for. Specifically:
-- For all system selections, Defense did not consider developing
new systems or contracting for services as required by Office of
Management and Budget, General Services Administration, and
Defense directives. According to the Chair of Defense's
Transportation CIM Advisory Group, the March 1997 deadline
provided insufficient time to fully evaluate alternatives.
-- For 17 of the 28 transportation systems selected, Defense made
its decisions based on the judgment of transportation experts
who determined that these 17 systems support a transportation
business function so unique that nothing else could be
considered as a feasible alternative. However, JTCC officials
could provide no documented analysis to support this conclusion.
-- Seven migration systems were selected after considering a narrow
range of alternatives.
-- The remaining four systems\8 were designated "interim" systems
because Defense believes alternative solutions exist for these
systems. According to JTCC officials, alternatives will be
considered at a later, unspecified date.
To its credit, Defense reviewed commercial off-the-shelf
transportation software products for some transportation business
areas while making its migration system selections. However, this
review was inadequate because it did not
-- analyze the degree to which unmodified software could meet
unique Defense requirements,
-- identify the expected cost to make necessary software
modifications,
-- determine the time required to make modifications, and
-- provide for a hands-on view of the software in operation.
While the study determined that about 700 commercially available
software packages provided some degree of transportation
functionality, 24 were selected for a final detailed review. Out of
the 24 finalists, JTCC concluded that (1) none would fully support
Defense's transportation requirements without modified software and
(2) required modifications could not be made before March 1997 at an
acceptable cost. Although Defense asserts that required
modifications would be costly, it could not provide documented
analysis to support this conclusion. Further, Defense plans to make
$13 million worth of software modifications to just five of its
in-house selections.
Also, despite Defense's conclusion regarding the inability of
commercially available software to fully support transportation
requirements, a government contractor is making extensive use of one
of the rejected products in its development of the Global
Transportation Network.
--------------------
\8 The four interim systems are: (1) Passenger Reservation and
Manifest System (PRAMS), (2) Department of Army Movement Management
System - Redesign (DAMMS-R), (3) Groups Operational Passenger System
(GOPAX), and (4) Mobilization Movement Control (MOBCON).
COST-EFFECTIVENESS OF
SELECTED MIGRATION SYSTEMS
IS QUESTIONABLE
---------------------------------------------------------- Letter :4.2
To meet the March 1997 deadline mandated in the Deputy Secretary's
October 1993 memorandum, Defense selected transportation migration
systems based on incomplete, unverified cost data without comparing
all the benefits of each system. Consequently, there is little
assurance that these selected systems will help contain the cost of
performing Defense's transportation mission to any great extent or
bring about the benefits envisioned by the migration strategy.
Defense regulations stress the importance of considering system costs
and benefits to ensure that correct, well-informed decisions are made
about information systems. DOD Directive 8120.1 and DOD Instruction
7041.3 require preparation of a functional economic analysis to
document all costs (both direct and indirect), all quantifiable
benefits, and all significant nonquantifiable benefits. Also, the
Assistant Deputy Under Secretary of Defense for Transportation Policy
identifies conducting objective analyses that show favorable
investment returns as the best way to ensure funding for migration
systems. To be useful in making fully informed business decisions,
such cost information should be complete and verified.
Instead of preparing the required functional economic analyses and
documenting investment returns, Defense selected its transportation
migration systems based primarily on a system's ability to meet
current functional requirements. After the selections were made,
JTCC continued to analyze savings projections associated with
migration systems. This later analysis culminated in a January 1996
study discussed at the end of this section.
JTCC'S MIGRATION SYSTEMS
SELECTION ANALYSIS
-------------------------------------------------------- Letter :4.2.1
Had Defense followed its own regulations and calculated investment
returns, it would have found--based on data available when the
migration systems were selected--that two of the selected systems
would lose money if implemented as migration systems. The Air
Loading Module (ALM) would lose $0.67 out of every dollar invested
and the Cargo Movement Operations Systems (CMOS) would lose $0.04 out
of every dollar invested.
JTCC's analyses also did not include all costs associated with its
evaluation of in-house systems. At least $18 million in costs were
excluded: $16 million for JTCC's analysis of candidate migration
systems and $2 million for maintaining migration system hardware.\9
The magnitude of other exclusions remains unknown. For example, JTCC
estimates that, collectively, training on migration systems will be
required at nearly 300 sites. However, its analyses did not include
estimates of the number of persons to be trained at each site or the
cost of productivity losses associated with that training. JTCC also
estimates that hardware and off-the-shelf software totaling $10
million will be purchased between fiscal year 1996 and fiscal year
1999. However, JTCC's estimates do not include the cost of labor
necessary to purchase these items.
If JTCC had included these costs in its systems selection analyses,
it would have found that the overall return on investment would have
decreased. For example, as stated above, $16 million in costs
related to JTCC's own work on migration systems was excluded from
analysis. JTCC was unable to attribute a specific percentage of
these costs to its work on selecting the seven systems for which
in-house alternatives competed against one another. However, if just
6.3 percent of this $16 million were factored into the analysis,
Defense would barely break even on its investment in those systems.
Moreover, as figure 1 shows, Defense would actually lose money on its
investment if more than 6.3 percent were included.\10
Figure 1: Migration System
Cost When JTCC's Migration
Related Costs Are Included
(See figure in printed
edition.)
Still, even if recommending migration systems were accomplished for
free--the estimated reduced cost associated with the selected
alternatives ($1.02 million) would be suspect since JTCC did not
verify the system costs used in selecting the migration systems.
Unlike the information obtained on each system's functional and
technical capabilities--which JTCC meticulously verified--system cost
information was taken at face value. JTCC officials concede that the
costs used for its analyses were very rough and resulted in
inaccurate, low estimates of migration system costs.
Further, since JTCC's migration systems selection methodology
emphasized the importance of meeting current functional requirements,
JTCC's analyses of in-house systems excluded the required
quantification and comparison of new benefits. Although JTCC
officials stated that the benefits of migration systems go beyond
meeting current functional requirements, benefits such as operating
more easily in remote locations and improving military readiness were
not addressed in the migration system decision documents and remain
unquantified. These decision documents instead focus on quantifying
each system's current functional and technical merits to the
exclusion of new benefits a system may offer.
--------------------
\9 All costs representing the understated investment have been
discounted according to Department of Defense Instruction (DODI)
7041.3.
\10 JTCC reviewed GAO's analysis of competing system costs and
savings, concluding that the GAO analysis is mathematically sound but
does not address cost savings and avoidances documented in the
January 1996 A Business Case Study for Transportation Systems
Migration.
JTCC'S BUSINESS CASE
JUSTIFICATION
-------------------------------------------------------- Letter :4.2.2
Although the transportation migration systems were selected and
approved prior to April 1995, Defense continued to prepare
justification for its migration systems selections--culminating in a
January 1996 study entitled A Business Case Study for Transportation
Systems Migration. This case study documents additional projected
cost savings and avoidances that were not considered during the
migration systems selection process. However, these estimates of
cost savings and avoidances are not reliable for a number of reasons.
In its business case study, JTCC estimates that the transportation
migration strategy will produce cost avoidances and savings of $4
billion. However, the validity of this figure is questionable.
First, JTCC relied on cost estimates from 13 different sources using
a variety of forecasting horizons (from 4 to 17 years) without
consistently accounting for the timing of estimated costs and
benefits. OMB Circular A-94 and DOD Instruction 7041.3 identify the
timing of costs and benefits as an important consideration in
deciding whether a government program can be justified on economic
principles. These regulations further require that estimated gains
and losses occurring in different time periods be converted to a
standard unit of measurement that accounts for the time-value of
money.
Second, JTCC did not report estimated savings and avoidances in a
constant base-year's dollars. By mixing base-years, JTCC has failed
to show the expected benefits and costs associated with the
transportation migration systems in terms of meaningful, actual
purchasing power.
Third, Defense would be expected to realize $3.75 billion (93
percent) of the reported $4 billion in savings and avoidances whether
or not the migration strategy was implemented. For example, JTCC
estimates that Defense will avoid and/or save $92 million by
implementing and operating the TC-AIMS II migration system over a
13-year period. However, the Air Force's CMOS system, which is now a
component of the TC-AIMS II migration system, predates the migration
effort and was expected to save $57 million--without being
implemented in any service but the Air Force.
The remaining savings and avoidances that can be attributed directly
to migration are comprised of estimates that rely on questionable
assumptions. For example, JTCC assumed that each legacy system, if
not terminated, would attempt to acquire all the functionality that a
fielded migration system would have. Based on this assumption, JTCC
calculated that Defense will avoid $101 million in costs for the
legacy systems that competed as in-house alternatives. For example,
JTCC estimated that by migrating to the TC-AIMS II system, Defense
will avoid spending $17.4 million between fiscal year 1998 and fiscal
year 2001 to upgrade the unit movement function of the CMOS system.
CMOS program officials maintain that this estimate is grossly
high--more than double the Air Force approved budget for the entire
CMOS program during the same period. Similarly, JTCC estimated that
Defense will avoid spending $18 million over the same period to
upgrade the Transportation Coordinator - Automated Command and
Control Information System (TC-ACCIS) unit movement functionality.
This estimate increases by nearly 28 percent prior estimates for the
entire TC-ACCIS program that already include system enhancements.
Another $96 million in migration-related cost avoidances are
associated with Defense's data standardization, functional process
improvement, electronic data interchange, and Defense Logistics
Management System (DLMS) efforts. This estimate may overstate
software maintenance costs by as much as $61.7 million, since it does
not consider maintenance costs that legacy systems already planned to
incur over the next 5 years. JTCC officials stated that preparing a
cost analysis that takes into account what each program already
planned to spend for software maintenance would require a level of
visibility into each system that JTCC does not have.
SYSTEM SELECTIONS DID NOT
CONSIDER POTENTIAL IMPACT OF
CHANGES TO TRANSPORTATION
OPERATIONS
------------------------------------------------------------ Letter :5
In May 1995, Defense launched an effort to reengineer the
Department's transportation processes, focusing first on
transportation acquisition and financial payment/billing processes.
According to the Assistant Deputy Under Secretary of Defense for
Transportation Policy, this effort will examine transportation issues
from a top-down perspective and will change Defense policies to
affect the way work is done in the transportation acquisition and
finance areas. Defense expects the reengineering of its remaining
transportation processes to be completed within the next 6 years.
In making its migration system selections, however, Defense did not
assess the impact that these changes and other potential significant
changes to transportation operations--such as outsourcing--would have
on its system selections. Consequently, Defense may end up investing
in systems that do not provide positive investment returns before
such changes to transportation operations are made.
For example, Defense plans to spend $63 million from fiscal year 1996
through fiscal year 2001 to implement a migration system that will
automate and standardize the moving, storing, and managing of
personal property for Defense personnel. At the same time, the
Department is considering the outsourcing of major components of the
personal property function. If outsourced, contractors will perform
the management, administrative, and operational duties that Defense
now performs for personal property movement and storage. As a
result, further spending on the migration system may be questionable
since the system may no longer be needed.
Also, in following its migration strategy, Defense believes that the
implementation of migration systems will resolve some of its process
problems that may be more appropriately addressed through
reengineering. For example, to alleviate water port loading dock
congestion during full-scale deployment, Defense has selected a
migration system to more quickly develop plans for loading ships.
This system, the Integrated Computerized Deployment System (ICODES),
is capable of dramatically reducing the time required to plan the
load. However, without performing a thorough analysis of the nature
of dock congestion, Defense cannot expect its load planning migration
system to alleviate the congestion. In fact, according to an ICODES
program official, port congestion is not caused by lengthy planning
times. Rather, unit commanders load more equipment than necessary
since they do not believe that all of it will arrive at the right
location when needed. According to the official, this problem was so
severe during Operation Desert Storm that unit commanders were
typically bringing division-size loads to port.
CONCLUSIONS
------------------------------------------------------------ Letter :6
Defense's initial approach to selecting and implementing
transportation migration systems was systematic, communicated in a
written plan, and agreed to by departmentwide transportation process
owners and stakeholders. It was geared to ensuring that the
Department chose systems that would meet its needs in the most
cost-effective fashion. However, faced with the March 1997 deadline,
Defense deviated from this approach and selected systems that may not
provide much new savings or, in some cases, will actually lose money.
We believe Defense's management approach to implementing its
transportation system migration strategy was shortsighted. By not
considering alternatives, not relying on complete cost estimates, and
by not assessing the potential impact of outsourcing and
reengineering on its migration systems, Defense essentially gambled
that systems migration would achieve anticipated savings and resolve
problems with transportation business processes. As a result, these
selections may turn out to be poor investments and preclude the use
of better commercial alternatives.
RECOMMENDATIONS
------------------------------------------------------------ Letter :7
We recommend that the Secretary of Defense direct the Deputy Under
Secretary of Defense for Logistics to complete the following actions.
-- To ensure that positive investment returns are achieved before
reengineered or outsourced processes are implemented,
immediately establish current cost, benefit, investment return,
and schedule baselines for the seven migration systems\11 that
were selected from among in-house legacy systems.
-- For these systems, terminate the migration of transportation
systems for which migration is shown to be a poor investment.
--------------------
\11 These seven systems are: (1) Cargo Movement Operations System
(CMOS), (2) Air Loading Module (ALM), (3) Integrated Computerized
Deployment System (ICODES), (4) Consolidated Aerial Port System II
(CAPS II), (5) Navy Material Transportation Office Operations and
Management Information System (NAOMIS), (6) Joint Flow and Analysis
System for Transportation (JFAST), and (7) Marine Corps
Transportation Coordinator's Automated Information Management System
and Air-Ground Task Force Deployment Support System (TC-AIMS(MC)/MDSS
II).
AGENCY COMMENTS AND OUR
EVALUATION
------------------------------------------------------------ Letter :8
The Department of Defense provided written comments on a draft of
this report. The Deputy Under Secretary of Defense for Logistics
partially concurred with the report's recommendations and stated that
Defense would terminate systems that are shown to be poor
investments. Defense's response to this report is summarized below,
along with our evaluation, and is presented in appendix II.
In its response, Defense stated that its selection of migration
systems was driven by the Deputy Secretary of Defense's October 1993
memorandum which directed expedited selection and implementation of
migration systems. Further, Defense stated that in accordance with
DOD 8020.1, it selected transportation migration systems based
primarily on their ability to improve support to the warfighter and
enhance readiness. Defense added that cost effectiveness and
economic factors were also considered when selecting migration
systems.
We recognize that the October 1993 memorandum was the primary basis
for migration system selections. However, we believe that Defense
erred in implementing the memorandum, because it did not follow its
own regulations on systems development life cycle management. These
regulations are designed to ensure that all essential ingredients to
making sound business decisions are incorporated into all major
technology investment decisions. In particular, DOD 8120.1-M directs
that migration system selections be based on functional economic
analyses (FEA) and that migration systems follow DOD life cycle
management policies and procedures, to include making maximum use of
commercial off-the-shelf (COTS) products. However, despite these
requirements, Defense had just one up-to-date FEA available at the
time it made its transportation migration selection decisions.
Further, the analyses that Defense conducted in lieu of preparing the
required FEAs did not (1) adequately consider alternatives (such as
the use of COTS products), (2) rely on complete, verified cost and
benefit data, and (3) consider the potential impact of change to
transportation operations that reengineering would have on its system
selections.
---------------------------------------------------------- Letter :8.1
We are sending copies of this report to the Ranking Minority Member
of the Subcommittee on Military Readiness, House Committee on
National Security; the Chairmen and Ranking Minority Members of the
Senate and House Committees on Appropriations, the Senate Committee
on Armed Services, the Senate Committee on Governmental Affairs, and
the House Committee on Government Reform and Oversight; the
Secretaries of Defense, the Army, the Navy, and the Air Force; the
Director of the Office of Management and Budget; the
Commander-in-Chief, U.S. Transportation Command; and other
interested parties. Copies will be made available to others on
request.
If you have any questions about this report, please call me at
(202)512-6240 or Franklin W. Deffer, Assistant Director, at
(202)512-6226. Major contributors to this report are listed in
appendix V.
Sincerely yours,
Jack L. Brock, Jr.
Director, Defense Information
and Financial Management Systems
SCOPE AND METHODOLOGY
=========================================================== Appendix I
In addressing our objectives, we reviewed ongoing efforts within
Defense to contain DTS costs by eliminating redundancy in automated
information systems and in the business processes they support. We
examined a number of governing criteria including GSA's information
resources management regulations; OMB policies and procedures for
managing federal information resources; and Defense directives and
instructions pertaining to acquisition of automated systems, defense
information management, and life cycle management of automated
information systems. We evaluated plans and actions to select
migration systems and improve key transportation processes including
USTRANSCOM's Defense Transportation System 2010 Action Plan and 2015
Strategic Plan; the DOD Transportation Process Improvement, Systems
Migration, and Data Standardization Plan; and 21 Integration Decision
Papers justifying migration selection decisions. We analyzed
Defense's cost containment strategy including comparing investment
costs among competing systems and identifying costs associated with
systems not selected for retention. In performing our investment
analysis, we used cost data published in the Integration Decision
Papers, which the JTCC had not validated but considered the best data
available.
We worked primarily with officials at USTRANSCOM's JTCC, Scott Air
Force Base, Illinois, to determine the regulating criteria,
methodology, and status of Defense's cost containment and
streamlining efforts. We also interviewed the Deputy Director for
Command, Control, Communications, and Computers at the Military
Sealift Command, Washington Navy Yard, Washington, D.C.; the Program
Manager for the Global Transportation Network; the Assistant for
Travel and Transportation Management to the Assistant Deputy Under
Secretary for Transportation Policy-Logistics; staff at Air Force
Transportation (AF/LGT), Deputy Chief of Staff (Logistics); and the
former Transportation Management Division Chief, Directorate of
Transportation Energy and Troop Support, Office of the Deputy Chief
of Staff for Logistics, Department of the Army. To see migration
projects firsthand, we interviewed representative officials and
received demonstrations of CMOS at Gunter Air Force Base, Montgomery,
Alabama; Navy Material Transportation Office Operations and
Management Information System under development at Norfolk Naval
Base, Norfolk, Virginia; Consolidated Aerial Port System II and
Passenger Reservation and Manifest System systems at Charleston Air
Force Base in Charleston, South Carolina; and Worldwide Port System
in operation at the Military Traffic Management Command's Major Port
Command in Charleston, South Carolina. To better understand overall
transportation issues, we interviewed the Chairman, Information
Technology Committee, American Association of Port Authorities; and
the manager of the Systems and Programming Information Services,
South Carolina State Ports Authority. We interviewed the Vice
President for Technology at Boeing Information Services regarding
private industry system migration efforts. We also provided status
briefings to the Assistant Deputy Under Secretary of Logistics
(Transportation Policy) at the Pentagon in Arlington, Virginia.
Our audit was performed from June 1995 through May 1996 in accordance
with generally accepted government auditing standards.
(See figure in printed edition.)Appendix II
COMMENTS FROM THE DEPARTMENT OF
DEFENSE
=========================================================== Appendix I
(See figure in printed edition.)
(See figure in printed edition.)
(See figure in printed edition.)
Now on p. 8.
The following are GAO's comments on the Department of Defense's
letter dated August 7, 1996.
GAO COMMENTS
1. We have clarified our recommendation to specify the systems
requiring cost, benefit, investment return, and schedule baselines.
2. According to Defense, the total number of migration systems is
23, while the report states the number as 28. The 28 figure cited in
our report is based upon the signed July 1995 memorandum from the
Assistant Secretary of Defense for Command, Control, Communications,
and Intelligence which identifies 26 of the 28 migration systems
listed in appendixes III and IV. The additional systems not listed
in the memo, the Analysis of Mobility Platform (AMP) and Joint Flow
and Analysis System for Transportation (JFAST) are identified in
JTCC's Integration Decision Papers (IDP) as the two systems
supporting the future operations component of the Global
Transportation Network (GTN). The IDP for the transportation
planning and execution functional area specifically recommends that
Defense select AMP and JFAST as the migration system for the future
operations subfunctional area. Further, while Defense does not
identify in its response which one of the four interim migration
selections is incorrect, our report identifies the four systems as
interim migration selections based upon information in the January
1996 A Business Case Study for Transportation Systems Migration.
3. According to a February 1995 Air Force paper, CMOS provides cost
and operational benefits and a positive return on investment.
However, these benefits and returns are relevant to the CMOS system
only when it is deployed within the Air Force--but not to any other
military service as a migration system. The figures cited in the
February 1995 paper are based on a CMOS Functional Economic Analysis
that is nearly 4 years old and that predated the migration effort.
And although the February 1995 paper included some cost avoidances
that were not considered in the CMOS FEA, it did not include an
analysis of costs and benefits associated with migrating CMOS to the
other military services. We modified our report to reflect that
implementing CMOS as a migration system is a losing proposition.
TRANSPORTATION BUSINESS FUNCTIONS
AND SUPPORTING MIGRATION SYSTEMS
========================================================= Appendix III
Transportation Business Process Supporting Migration Systems
--------------------------------------- ---------------------------------------
Unit Movement -creation and maintenance --Transportation Coordinator's
of a unit deployment database, movement Automated Information Management System
of units to marshaling and staging II (TC-AIMS II)
areas, identification of deployment and
redeployment needs
Installation Transportation Office/ --Cargo Movement Operations System
Traffic Management Office (ITO/TMO) - (CMOS)
receive movement requirements; plan, --CONUS Freight Management (CFM)
monitor, and conclude movements; screen --Canadian Transportation Automated
potential carriers; order conveyances; Control System (CanTRACS)
reserve space on scheduled carriers; --Passenger Reservation and Manifest
and produce documentation for billing System (PRAMS)
and statistical purposes --Groups Operational Passenger System
(GOPAX)
--Transportation Operational Personal
Property System (TOPS)
Load Planning -planning to fit cargo, --Air Loading Module (ALM)
vehicles, and equipment onto specific --Integrated Computerized Deployment
aircraft, ships, and rail cars System (ICODES)
Port Management -planning for arriving --In-transit Visibility-Modernization
passengers and cargo; preparing (ITV-MOD) Consolidated Aerial Port
shipments for transport; supervising System II (CAPS II)
terminal operations --Worldwide Port System (WPS)
Mode Clearance -actions taken to hand --Navy Material Transportation Office
off cargo, passengers, and equipment Operations and Management Information
from one transportation mode to another System (NAOMIS)
--Integrated Booking System(IBS)
--Mobilization Movement Control
(MOBCON)
Theater Transportation Operations - --Command and Control Information
includes all business processes Processing System (C2IPS)
described above with the primary --Department of the Army Movement
difference being a more extensive use Management System-Redesign (DAMMS-R)
of service and host country
organizations
High-Level Transportation Planning and --Airlift Deployment Analysis System
Execution -actions performed at the (ADANS)
Commander-in-Chief (CINC) and CINC --Global Decision Support System
Component levels to plan and perform (GDSS)
deployment, operational level movement, --ITV-MOD Headquarters On-Line System
sustainment, and redeployment for Transportation (ITV-MOD HOST)
--Global Transportation Network (GTN)
--Analysis of Mobility Platform (AMP)
--Joint Flow and Analysis System for
Transportation (JFAST)
--TRANSCOM Regulating and Command and
Control Evacuation System (TRAC2ES)
--Enhanced Logistics Intra-Theater
Support Tool (ELIST)
--Asset Management System (AMS)
--Integrated Command, Control, and
Communications (IC3) Project
--Joint Air Logistics Information
System (JALIS)
--Defense Transportation Tracking
System (DTTS)
--------------------------------------------------------------------------------
Note: Two migration systems support more than one transportation
function: TC-AIMS II supports the unit move and ITO/TMO functions
and C2IPS supports the theater operations and theater planning and
execution functions.
DESCRIPTION OF TRANSPORTATION
MIGRATION SYSTEMS
========================================================== Appendix IV
AIRLIFT DEPLOYMENT ANALYSIS
SYSTEM (ADANS)
------------------------------------------------------ Appendix IV:0.1
Plans and schedules transportation airlift missions for commercial
aircraft and for the C-17, C-5, and C-141. The system also plans and
schedules aerial refueling for the KC-10 and KC-135.
AIR LOADING MODULE (ALM)
------------------------------------------------------ Appendix IV:0.2
Performs military and civilian aircraft load planning.
ANALYSIS OF MOBILITY
PLATFORM (AMP)
------------------------------------------------------ Appendix IV:0.3
Performs rapid time-phased force deployment data modeling for all
transportation modes and deployment phases.
ASSET MANAGEMENT SYSTEM
(AMS)
------------------------------------------------------ Appendix IV:0.4
Manages movement tracking, repair, modification, compliance with
industry and regulatory requirements, receipt and disposal of
equipment, and auditing of revenues and expenses for the Defense
Freight Railway Interchange Fleet and the Army's railroad container
fleet.
CANADIAN TRANSPORTATION
AUTOMATED CONTROL SYSTEM
(CANTRACS)
------------------------------------------------------ Appendix IV:0.5
Routes and ranks cargo shipments originating in Canada and maintains
all Canadian commercial transportation tenders and contracts.
COMMAND AND CONTROL
INFORMATION PROCESSING
SYSTEM (C2IPS)
------------------------------------------------------ Appendix IV:0.6
Accepts aircraft mission schedule information from GDSS and then
distributes the schedule data to wing activities involved in aircraft
launch, loading, and recovery.
CONUS FREIGHT MANAGEMENT
(CFM)
------------------------------------------------------ Appendix IV:0.7
CFM(HOST) supports procurement of commercial freight and cargo
transportation services. CFM(FM) is a field module which allows
transportation officers to obtain routing and rating information via
the Defense Information System Network or a commercial telephone
line. CFM(HOST) and CFM(FM) together constitute CFM.
CARGO MOVEMENT OPERATIONS
SYSTEM (CMOS)
------------------------------------------------------ Appendix IV:0.8
Supports the collection, processing, and transmission of information
concerning the movement of cargo entering aerial ports located
outside the continental United States. CMOS supports both peacetime
and contingency operations.
DEPARTMENT OF THE ARMY
MOVEMENT MANAGEMENT SYSTEM -
REDESIGN (DAMMS-R)
------------------------------------------------------ Appendix IV:0.9
Supports the management of joint-use theater land transportation.
DEFENSE TRANSPORTATION
TRACKING SYSTEM (DTTS)
----------------------------------------------------- Appendix IV:0.10
Provides near real-time satellite tracking of any sensitive cargo
transported by commercial carriers and of classified arms,
ammunition, and explosives.
ENHANCED LOGISTICS
INTRA-THEATER SUPPORT TOOL
(ELIST)
----------------------------------------------------- Appendix IV:0.11
Compares the planned theater arrival schedule against a theater's
transportation assets, cargo handling equipment, facilities, and
routes in order to produce a detailed plan of the daily flow of
theater transportation including delays and constrictions.
GLOBAL DECISION SUPPORT
SYSTEM (GDSS)
----------------------------------------------------- Appendix IV:0.12
Worldwide command control system for strategic airlift and air
refueling.
GROUPS OPERATIONAL PASSENGER
SYSTEM (GOPAX)
----------------------------------------------------- Appendix IV:0.13
Performs functions associated with arranging commercial
transportation for groups of 21 or more passengers by air or surface
transport.
GLOBAL TRANSPORTATION
NETWORK (GTN)
----------------------------------------------------- Appendix IV:0.14
Transportation command and control system providing intransit
visibility of units, passengers, and cargo during both peace and war.
It also tracks patient movement and performs planning activities.
GTN is the transportation command and control module of the Global
Command and Control System.
INTEGRATED BOOKING SYSTEM
(IBS)
----------------------------------------------------- Appendix IV:0.15
Standardizes booking procedures for unit and nonunit ocean-eligible
cargo.
INTEGRATED COMMAND, CONTROL,
AND COMMUNICATIONS PROJECT
(IC3)
----------------------------------------------------- Appendix IV:0.16
This project consolidates four sealift transportation planning and
execution systems onto one hardware platform.
INTEGRATED COMPUTERIZED
DEPLOYMENT SYSTEM (ICODES)
----------------------------------------------------- Appendix IV:0.17
Facilitates ship loading by integrating digitized ship drawings and
cargo data from multiple information sources.
IN-TRANSIT VISIBILITY
MODERNIZATION CONSOLIDATED
AERIAL PORT SYSTEM (ITV-MOD
(CAPS II))
----------------------------------------------------- Appendix IV:0.18
Performs command and control operations, passenger operations, and
cargo movement operations at Air Mobility Command (AMC) aerial ports.
IN-TRANSIT VISIBILITY
MODERNIZATION HEADQUARTERS
ON-LINE SYSTEM FOR
TRANSPORTATION (ITV-MOD
(HOST))
----------------------------------------------------- Appendix IV:0.19
Provides for a centrally located record of on-hand cargo and cargo
movements to AMC aerial ports and operating sites around the world.
Maintains airlift cargo data, manifest data, and air shipment
information.
JOINT AIR LOGISTICS
INFORMATION SYSTEM (JALIS)
----------------------------------------------------- Appendix IV:0.20
Schedules all the Services' fixed-wing and rotary-wing support
airlift for nontactical passengers and cargo.
JOINT FLOW AND ANALYSIS
SYSTEM FOR TRANSPORTATION
(JFAST)
----------------------------------------------------- Appendix IV:0.21
Provides strategic transportation feasibility estimates.
MARINE CORPS TRANSPORTATION
COORDINATOR'S AUTOMATED
INFORMATION MANAGEMENT
SYSTEM AND AIR-GROUND TASK
FORCE DEPLOYMENT SUPPORT
SYSTEM (TC-AIMS (MC)/MDSS
II)
----------------------------------------------------- Appendix IV:0.22
Plans and supports unit deployments. Also builds and maintains a
database of force and equipment data on support assets and
requirements.
MOBILIZATION MOVEMENT
CONTROL (MOBCON)
----------------------------------------------------- Appendix IV:0.23
Plans the routes and obtains permission to use state highways for
truck convoys.
NAVY MATERIAL TRANSPORTATION
OFFICE OPERATIONS AND
MANAGEMENT SYSTEM (NAOMIS)
----------------------------------------------------- Appendix IV:0.24
Provides shipment information on clearing or challenging air-eligible
cargo, supports asset visibility, and performs cargo manifesting and
transportation billing processes.
PASSENGER RESERVATION AND
MANIFEST SYSTEM (PRAMS)
----------------------------------------------------- Appendix IV:0.25
Performs passenger reservation services for AMC, including flight and
reservation processing and passenger processing.
TRANSPORTATION OPERATIONAL
PERSONAL PROPERTY SYSTEM
(TOPS)
----------------------------------------------------- Appendix IV:0.26
Manages DOD personal property movement and storage information.
TRANSCOM REGULATING AND
COMMAND AND CONTROL
EVACUATION SYSTEM (TRAC2ES)
----------------------------------------------------- Appendix IV:0.27
Provides in-transit visibility of patients, monitors patient medical
equipment pools, and plans transportation for patients.
WORLDWIDE PORT SYSTEM (WPS)
----------------------------------------------------- Appendix IV:0.28
Performs water port terminal management functions.
MAJOR CONTRIBUTORS TO THIS REPORT
=========================================================== Appendix V
ACCOUNTING AND INFORMATION
MANAGEMENT DIVISION, WASHINGTON,
D.C.
Franklin W. Deffer, Assistant Director
Ronald L. Hess, Senior Information Systems Analyst
Cristina T. Chaplain, Communications Analyst
KANSAS CITY FIELD OFFICE
Denice M. Millett, Evaluator-In-Charge
Michael W. Buell, Staff Evaluator
David R. Solenberger, Senior Evaluator
*** End of document. ***