DOD Systems Modernization: Uncertain Joint Use and Marginal
Expected Value of Military Asset Deployment System Warrant
Reassessment of Planned Investment (15-DEC-05, GAO-06-171).
Because of the importance of the Department of Defense's (DOD)
adherence to disciplined information technology (IT) acquisition
processes in successfully modernizing its business systems, GAO
was asked to determine whether the Transportation Coordinators'
Automated Information for Movements System II (TC-AIMS II)
program is being managed according to important aspects of DOD's
acquisition policies and guidance, as well as other relevant
acquisition management best practices. TC-AIMS II was initiated
in 1995 as a joint services system to help manage force and
equipment movements within the United States and abroad. The U.S.
Department of the Army has the lead responsibility for managing
the system's acquisition and estimates its life-cycle cost to be
$1.7 billion over 25 years.
-------------------------Indexing Terms-------------------------
REPORTNUM: GAO-06-171
ACCNO: A43297
TITLE: DOD Systems Modernization: Uncertain Joint Use and
Marginal Expected Value of Military Asset Deployment System
Warrant Reassessment of Planned Investment
DATE: 12/15/2005
SUBJECT: Cost effectiveness analysis
Defense procurement
Enterprise architecture
Information technology
IT acquisitions
Military systems analysis
Performance measures
Procurement policy
Procurement practices
Program management
Systems conversions
Cost estimates
Army Transportation Coordinator
Automated Information for Movement
System II
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GAO-06-171
* Report to the Subcommittee on Readiness and Management Support,
Committee on Armed Services, U.S. Senate
* December 2005
* DOD SYSTEMS MODERNIZATION
* Uncertain Joint Use and Marginal Expected Value of Military Asset
Deployment System Warrant Reassessment of Planned Investment
* Contents
* Results in Brief
* Background
* Overview of TC-AIMS II Genesis, Purpose, and Acquisition
Strategy
* Description of TC-AIMS II Roles and Responsibilities
* Prior Review Identified Strengths and Weaknesses in DOD's
Acquisition Policies and Guidance
* TC-AIMS II Has Not Been Managed in Accordance with Certain DOD
System Acquisition Policies and Related Guidance
* Investment in TC-AIMS II Has Not Been Adequately Justified
on the Basis of Costs and Benefits
* Latest Economic Analysis Does Not Recognize System's
Uncertain Joint Use and Shows Marginal Expected Value
* Investments Have Not Been Incrementally Justified
* TC-AIMS II Has Not Been Defined and Developed within the
Context of a DOD Enterprise Architecture
* Well-defined DOD Enterprise Architecture to Guide and
Constrain TC-AIMS II Has Not Existed
* Army Reports That TC-AIMS II Is Aligned with an
Army-Specific Architecture
* Risk Management Has Not Been Effectively Implemented
* System Requirements Are Being Effectively Managed
* Important Steps Have Been Taken to Effectively Leverage
Commercial Components
* Effective Contractor Management Practices Have Not Been
Fully Employed
* Effective Contractor Tracking and Oversight Practices
Have Been Followed
* Performance-Based Contracting Approach Is Not Fully
Consistent with Policy and Best Practices
* Conclusions
* Recommendations for Executive Action
* Agency Comments and Our Evaluation
* Objective, Scope, and Methodology
* Assessment of Problem Reports
* Comments from the Department of Defense
* GAO Contact and Staff Acknowledgments
Report to the Subcommittee on Readiness and Management Support, Committee
on Armed Services, U.S. Senate
December 2005
DOD SYSTEMS MODERNIZATION
Uncertain Joint Use and Marginal Expected Value of Military Asset
Deployment System Warrant Reassessment of Planned Investment
Contents
Table
Figures
December 15, 2005Letter
The Honorable John Ensign Chairman The Honorable Daniel K. Akaka Ranking
Minority Member Subcommittee on Readiness and Management Support Committee
on Armed Services United States Senate
Because it is so important that the Department of Defense (DOD) adhere to
disciplined information technology (IT) acquisition processes in order to
successfully modernize its business systems, you requested that we
determine whether the department is following its own IT acquisition
policies and guidance, which were recently revised.1 As part of our
response to your request, we agreed to review the Transportation
Coordinators' Automated Information for Movements System II (TC-AIMS II)
program. TC-AIMS II was initiated in 1995 by DOD as a joint services
system with the goal of helping to manage the movement of forces and
equipment within the United States and abroad. Assigned the lead
responsibility for acquiring the system, the U.S. Department of the Army
estimates the system has a 25-year, life-cycle cost of $1.7 billion.
Our objective was to determine whether TC-AIMS II is being managed
according to important aspects of DOD's acquisition policies and guidance
as well as other relevant acquisition management best practices. We
focused on the program's (1) economic justification; (2) architectural
alignment; (3) risk management; (4) requirements development and
management; (5) commercial component management; and (6) contract
management, including contractor oversight and performance-based
contracting.
We conducted our work between October 2004 and October 2005, in accordance
with generally accepted government auditing standards. Details of our
objective, scope, and methodology are included in appendix I.
Results in Brief
The Army has managed the TC-AIMS II program in accordance with some, but
not all, key aspects of DOD's system acquisition management policies and
related guidance. Collectively, DOD's acquisition management policies and
guidance are intended to reasonably ensure that investment in a given IT
system represents the right solution to fill a mission need-and, if it
does, that acquisition and deployment of the system are handled in a
manner that maximizes the chances of delivering defined system
capabilities on time and within budget. In particular, the Army has not
managed TC-AIMS II in accordance with DOD policy and related guidance,
including related federal and other best practice guidance, that are
intended to reasonably ensure that a proposed system is the right solution
to meeting mission needs.
o The Army has not economically justified its investment in TC-AIMS II on
the basis of reliable estimates of costs and benefits. The most recent
economic justification included cost and benefit estimates predicated on
all four military services using the system. However, two services (U.S.
Department of the Air Force and U.S. Marine Corps) have stated that they
do not intend to use it. Even with costs and benefits for all four
services included, the analysis showed a marginal return on investment;
that is, for each dollar spent on the system, slightly less than one
dollar of benefit would be returned.
o The Army has not invested in TC-AIMS II within the context of a
well-defined enterprise architecture, which is an institutional blueprint
to guide and constrain program investment decisions in a way that promotes
interoperability and reduces redundancy among related and dependent
systems. As we recently reported,2 the version of the department's
business enterprise architecture that has been available to the program
has not contained sufficient context (depth and scope of operational and
technical requirements) to effectively guide and constrain system
investments. The Army has instead focused on aligning TC-AIMS II with the
Army's logistics architecture; this means that even though TC-AIMS II was
to be a DOD-wide program, it has been based on a service-specific
architecture, rather than a DOD-wide architecture. As a result, the
system, as defined, may not properly fit within a DOD-wide enterprise
architecture.
At the same time, the Army has largely managed the program in accordance
with key policies and related guidance that are intended to reasonably
ensure that the acquisition and deployment of a given system solution are
handled in a manner that maximizes the chances of delivering defined
capabilities on time and within budget. However, aspects of this policy
and guidance have not been followed.
o The Army has not fully implemented the department's risk management
policy and guidance. While the program office has developed a risk
management plan, it has not effectively implemented it. For example, the
program office identified 22 active risks to the program but only
developed mitigation strategies for 16 of these risks, increasing the
probability that program risks will lead to cost, schedule, and
performance problems.
o The Army has not implemented a key feature of performance-based contract
management. Specifically, the most recent contract to acquire TC-AIMS II
does not specify effective disincentives or penalties for the contractor
if it fails to meet performance criteria. Among other things, this limits
the Army's ability to effectively influence contractor performance.
Reasons that the Army cited for not following relevant policies and
guidance include lack of management attention and training. By not
following them, the Army does not have an adequate basis to know whether
TC-AIMS II is the right systems solution to meet DOD's asset deployment
support needs, and, thus, it is unclear whether planned investment in
TC-AIMS II is warranted. Even if the uncertainty is adequately addressed,
the manner in which the system is being acquired can be strengthened.
Accordingly, we are making recommendations to the Secretary of Defense
that are aimed at first developing the basis for determining whether
continued investment in TC-AIMS II is a prudent use of limited resources.
We are also making recommendations, conditional upon a decision by DOD to
proceed with further investment in TC-AIMS II, to further enhance the
department's adherence to other acquisition practices.
The Office of the Assistant Secretary of Defense for Networks and
Information Integration provided written comments on a draft of this
report. In its comments, the department stated that it either concurred or
partially concurred with our recommendations. It also described efforts
initiated or planned to bring the program into compliance with applicable
guidance. In our view, the department's comments are largely consistent
with our report. These comments, along with our responses, are discussed
in detail in the Agency Comments and Our Evaluation section of this
report. The DOD comments are also reprinted in their entirety in appendix
III.
Background
As one of the largest and most complex organizations in the world, DOD
spends billions of dollars each year to operate, maintain, and modernize
IT systems that support core business operations. These business
operations consist of various interrelated and interdependent business
functions, including logistics management, procurement, health care
management, and financial management. Further, execution of these business
operations span a wide range of defense organizations, including the
military services and their respective major commands and functional
activities, defense agencies and field activities, and combatant and joint
operational commands that are responsible for military operations in
geographic regions or theaters. For fiscal year 2005, DOD requested
approximately $13 billion to operate, maintain, and modernize about 4,150
business systems and related IT infrastructure. The Army's share of this
funding and systems is about $2.7 billion and 727 systems.
In 1995, we designated DOD's business systems modernization efforts as a
high-risk program, and we continue to designate it as such today3 for
several reasons, including the department's challenges in implementing
effective IT investment management structures and processes, developing
and implementing an enterprise architecture, and implementing effective IT
system acquisition and development processes.
Overview of TC-AIMS II Genesis, Purpose, and Acquisition Strategy
In the early 1990s, DOD recognized the need to integrate defense IT
systems by ordering the consolidation of systems that serve multiservice
purposes. Accordingly, it directed that approximately 150 operating
transportation systems be evaluated for consolidation opportunities. In
1995, DOD initiated TC-AIMS II as one of a number of programs that were
commenced following this evaluation to consolidate and replace existing
systems, and to automate transportation management function areas for all
services. In doing so, DOD designated the Army as the "executive agent"
responsible for managing TC-AIMS II, including acquiring the system.
Expected TC-AIMS II benefits included enhancing and improving the
efficiency and effectiveness of the support planning needed to deploy and
redeploy forces and equipment, both within the United States and abroad;
improving the visibility of assets; and enhancing cargo and passenger
receiving, controlling, and shipping. The system is also expected to
enable decision makers at various command levels to access information
about unit movement and installation transportation, and is to provide key
shared functionality related, for example, to load planning.
The Army defined the following five-block acquisition and implementation
strategy for TC-AIMS II. According to the strategy, each block is to
address a functional portion of the requirements.
o Block 1: This block is to import data about assets (people, equipment,
and supplies) from the services' existing systems and is to manage these
data to (1) plan and execute organizational moves (i.e., provide
documentation, packing and shipping labels, and orders) and (2) request
and schedule strategic and local transportation vehicles (e.g., trucks,
ships, airplanes, motor pools, and trucks).
o Block 2: This block is to add Web access to permit automated data
exchange with related systems, such as airlift load planning systems and
global transportation networks. This increment is to link and track cargo
and personnel (via DOD's standard smart cards), and their corresponding
transports. It also is to generate and manage the documentation associated
with these functions.
o Block 3: This block is to add interfaces to both supply and personnel
systems to facilitate control over "in theater" operations, such as
reception (unit arrival and off-loading in theater), staging (preparation
for departure to assigned locations), onward movement (transit to assigned
locations), and integration (coordinating and linking the movement of
multiple related units). It also is to generate and manage documentation
associated with these functions.
o Block 4: This block is to add the capability to manage maritime forces
associated with prepositioned equipment and cargo (e.g., tank ammunition
for an armored cavalry unit), including the ability to manage cargo
logistics (loading and off-loading), as well as greater capability to
manage theater operations, including the availability, distribution, and
dispatch of vehicle fleets and drivers. It also is to generate and manage
documentation associated with these functions.
o Block 5: This block is to automate the management of transportation
assets and traffic operations at military installations both in the United
States and worldwide. At this point, TC-AIMS II is to be able to generate
and manage all data and documentation related to moving units within DOD's
transportation system. As part of this block, the interfaces to systems
that are to be integrated with TC-AIMS II are to be upgraded or created,
as required, in response to changes in technology.
Figure 1 shows the Army's timeline for acquiring the five TC-AIMS II
blocks. In particular, the Army reports that it is currently acquiring
Block 3 with the goal of making it operational by late 2006.
Figure 1: TC-AIMS II Acquisition, Operations, and Maintenance Timeline, by
Fiscal Year
The Army estimates the total life-cycle cost of TC-AIMS II to be $1.7
billion over 25 years, including $569 million for acquisition and $1,168
million for operations and maintenance. The Army reports that it has spent
approximately $751 million on TC-AIMS II since its inception.
Description of TC-AIMS II Roles and Responsibilities
A number of DOD and Army organizations are involved in managing the
TC-AIMS II program and acquisition. Briefly, they are as follows:
o The Assistant Secretary of Defense for Network Information and
Integration, who has overall responsibility for the program.
o The Army's Program Executive Office for Enterprise Information Systems,
Transportation Information Systems, oversees the management of TC-AIMS II,
which is managed on a day-to-day basis by the Project Manager, Joint
Program Management Office.
o The Joint Requirements Board represents TC-AIMS II users and includes
stakeholders from the military services and other DOD organizations. The
board is responsible for managing TC-AIMS II requirements development
activities.
These and other key organizations and their roles and responsibilities are
described in more detail in table 1.
Table 1: TC-AIMS II Management Entities and Their Roles and
Responsibilities
Entity Roles and responsibilities
Assistant Secretary of Serves as the chair of the TC-AIMS II IT
Defense for Network integrated product team and is the milestone
Information and Integration decision authority. Assigned overall
responsibility for the TC-AIMS II program;
approves the program to proceed through its
acquisition cycle on the basis of a review of
key documents, such as an acquisition plan, an
independently evaluated life-cycle
cost-and-benefit estimate, Acquisition Program
Baseline documents, and Defense Acquisition
Executive Summary reports.
Department of the Army, Serves as the program executive office.
Program Executive Office Assigned overall responsibility for TC-AIMS II
for Enterprise Information program oversight; reviews the component cost
Systems, Transportation analysis, acquisition strategy, and
Information Systems Acquisition Program Baseline prior to approval
by the milestone decision authority.
Joint TC-AIMS II Management Provides guidance and vision for TC-AIMS II.
Board This board includes representatives from the
Joint Command, Transportation Command, and the
Military Services, including the U.S.
Departments of the Air Force, Army, and Navy
and the U.S. Marine Corps.
Joint Program Management Serves as the program office. Assigned
Office responsibility for day-to-day program
management of TC-AIMS II and, as such, is the
single point of accountability for managing
the program's objectives through development,
production, and sustainment, including risk
management, management of commercial
components, and contractor tracking and
oversight. Manages cost, schedule, and
performance reporting. Prepares and updates
the acquisition strategy, component cost
analysis, and acquisition program baselines.
Coordinates all testing activities with
requirements, including measuring system
quality and managing problem reportsa and
change requests.
Joint Requirements Board Represents the system users. Participates in
the process of establishing functional
requirements. Consists of key system
stakeholders and representatives and is
chaired by the Joint Forces Command. The board
is responsible for managing requirements
development activities for TC-AIMS II. Among
other things, the board's duties include
defining, reviewing, validating, prioritizing,
and approving the system's requirements.
Source: GAO analysis of DOD data.
aProgram officials provided data on, among other things, the number and
type of problem reports that the program has encountered since system
initiation. For details, see appendix II.
The Army uses a system integration contractor to support the program
office in managing the acquisition of TC-AIMS II. Most recently, it
awarded a firm, fixed-price contract to a contractor in April 2004 to
deliver the Block 3 solution. The contract has 5 option years, which are 1
year in duration. To help it oversee contractor activities, the program
office has employed the help of the General Service Administration's
Federal Systems Integration and Management Center, whose mission is to
provide acquisition management expertise and support to DOD and other
federal agencies on large, complex IT projects.
Prior Review Identified Strengths and Weaknesses in DOD's Acquisition
Policies and Guidance
In July 2004, we reported4 that DOD's revised systems acquisition policies
and guidance incorporated many best practices for acquiring business
systems, such as (1) justifying system investments economically, on the
basis of costs, benefits, and risks, and (2) continually measuring an
acquisition's performance, cost, and schedule against approved baselines.
However, the revised policies and guidance did not incorporate a number of
other best practices, particularly those associated with acquiring
commercial component-based business systems, and DOD did not have
documented plans for incorporating these additional best practices into
its policies. We also reported that the department's revised acquisition
policies did not include sufficient controls to ensure that military
services and defense agencies would appropriately follow these practices.
We concluded that until these additional best practices were incorporated
into DOD's acquisition policies and guidance, there was increased risk
that department system acquisitions would not deliver planned capabilities
and benefits on time and within budget, and increased risk that DOD
organizations would not adopt and use best practices that were defined.
Accordingly, we made 14 recommendations to the Secretary of Defense that
were aimed at strengthening DOD's acquisition policy and guidance by
including additional IT systems acquisition best practices and controls
for ensuring that these best practices were followed. DOD agreed with most
of our recommendations and has since issued additional system acquisition
guidance.
TC-AIMS II Has Not Been Managed in Accordance with Certain DOD System
Acquisition Policies and Related Guidance
The Army, as DOD's acquisition agent for TC-AIMS II, has not managed this
program in accordance with certain department acquisition policies, and
related guidance, that are intended to reasonably ensure that a proposed
system is the right solution to meet mission needs. In particular, the
Army has not economically justified the program on the basis of reliable
estimates of life-cycle costs and benefits, and it has not ensured that
this program, which is intended to produce a departmentwide military
deployment management system, is aligned with a departmentwide business
enterprise architecture or an integrated blueprint for business systems
modernization. As a result, the Army does not know that investment in
TC-AIMS II as planned is warranted, represents a prudent use of limited
DOD resources, and will be interoperable with and not be duplicative of
related systems.
Even if TC-AIMS II happens to be the right system, both economically and
architecturally, the Army has not fully implemented risk management and
has not fully employed performance-based contracting practices. However,
it has largely managed system requirements, commercial components, and
contractor tracking and oversight in accordance with DOD policies and
related guidance. If the program can be economically justified and
architecturally defined, then fully addressing these key acquisition
management areas will be essential to the program's success.
Investment in TC-AIMS II Has Not Been Adequately Justified on the Basis of
Costs and Benefits
DOD's acquisition management policy and related guidance5 recognize the
importance of developing reliable economic analyses to support investment
decision making. Accordingly, they describe how these analyses should be
developed and used. For TC-AIMS II, the Army has not adhered to important
aspects of departmental policy and related guidance, such as updating
analyses to reflect material changes in program scope and justifying
investment in large, multiyear programs on an incremental basis. As a
result, the Army currently lacks an adequate basis to justify its planned
investment in TC-AIMS II.
Latest Economic Analysis Does Not Recognize System's Uncertain Joint Use
and Shows Marginal Expected Value
DOD policy and guidance state that projects should be economically
justified on the basis of reliable analyses of expected life-cycle costs
and benefits and that cost and benefit estimates should be based on
realistic plans for the program's scope. Federal guidance also advocates
economically justifying proposed investments on the basis of a
benefit-to-cost ratio that is greater than 1, basing that ratio on
reliable analyses of expected, quantifiable life-cycle benefits, costs,
and risks. The guidance also promotes the calculation and consideration of
qualitative benefits in preparing an economic analysis. Further, the
guidance calls for updating the analysis when significant program changes
occur. These practices help to continually ensure a positive return on
investment-even as program changes occur.
The program office developed economic analyses to justify investment in
the system in August 2002 and again in December 2003. The program office
was supported in its efforts by the Office of the Deputy Assistant
Secretary of the Army's Office of Cost and Economics and the Office of the
Secretary of Defense's Office of Program Analysis and Evaluation, whose
missions include verifying and validating the reliability of cost and
benefit estimates found in Army and other services' economic analyses.
However, this most recent economic analysis is not based on reliable
estimates of life-cycle costs and benefits. Specifically, the analysis was
based on the assumption that TC-AIMS II would be used by all four military
services, and, thus, it included life-cycle cost estimates showing all of
the services' data-as well as the benefits that would accrue through its
use by all four. However, this assumption is not valid. Specifically, the
Air Force's Assistant Deputy Chief of Staff, Installations and Logistics,
informed the program office in a September 2002 correspondence that it
would not use the system, stating that the Air Force would rely instead on
its existing system capabilities. Similarly, in March 2004, the Marine
Corps' Deputy Commandant for Installations and Logistics informed the
program office that the Corps would not use the system because of concerns
about whether the system would, among other things, deliver expected
capabilities. Program officials told us that the latest economic analysis
includes the costs and benefits for all services because, despite
communications to the contrary from the Air Force and Marine Corps, the
program office still considers TC-AIMS II to be a multiservice program and
has not yet been directed to assume and plan otherwise.
In addition to the unreliable cost and benefit estimates, the latest
analysis does not show a benefit-to-cost ratio that is greater than 1.
Specifically, the analysis identified present value, total expected
benefits of $928 million versus present value, and total estimated costs
of $929 million, for a benefit-to-cost ratio of slightly less than 1. This
means that for each dollar spent on the system, slightly less than one
dollar of benefit is returned. In addition, the analysis cited various
qualitative benefits (e.g., increasing commander visibility of assets and
enhancing worker productivity) that would be derived from the system.
However, the analysis did not provide any underlying support or analysis
for these qualitative benefits.
Program officials said that they recognize that the system's expected
return on investment is marginal, but they nevertheless have been directed
by the milestone decision authority-the Assistant Secretary for Defense,
Networks and Information Integration-to deliver the system's capabilities
as planned. According to the officials in the Assistant Secretary's
office, the decision to continue investing in TC-AIMS II was based on
quantitative and qualitative benefits, which they stated together exceeded
costs, thus making the investment justified. However, these officials did
not provide supporting justification for their qualitative benefit claims.
In addition, their position does not recognize the intended change in the
program's scope that is not reflected in the latest analysis. Thus, the
Army lacks the basis for knowing whether its planned investment in TC-AIMS
II is justified.
Investments Have Not Been Incrementally Justified
DOD policy and guidance, as well as other related federal and best
practice guidance,6 state that large projects, such as TC-AIMS II, should
be divided into a series of smaller, incremental subprojects or releases
so that investment decisions can be made on each increment. By doing this,
the tremendous risk associated with investing large sums of money over
many years in anticipation of delivering system capabilities and
associated expected business value far into the future can be spread
across project increments that are smaller, of shorter duration, and
capable of being more reliably justified and more effectively managed
against cost, benefit, and risk expectations.
The Army has neither analyzed TC-AIMS II costs and benefits, nor made
associated investment decisions, on an incremental basis. Specifically,
while the program office divided the system's acquisition into five
smaller increments (blocks), the economic analyses addressed life-cycle
costs and benefits for the entire system. The analyses did not identify
separately the costs and benefits for each of the five increments, and,
thus, this information was not considered as program officials made
decisions about TC-AIMS II at key milestones. Program officials stated
that they have not analyzed costs and benefits on an incremental basis
because once the program had been approved and initiated, they did not see
the need thereafter to justify each increment. By not determining the
costs and benefits of each of the system's increments, the Army runs the
risk of discovering too late (i.e., after it has invested hundreds of
millions of dollars) that TC-AIMS II is not cost-beneficial.
TC-AIMS II Has Not Been Defined and Developed within the Context of a DOD
Enterprise Architecture
DOD's acquisition policies and guidance,7 as well as federal and best
practice guidance,8 recognize the importance of investing in IT business
systems within the context of an enterprise architecture. Our research and
experience in reviewing federal agencies show that not doing so often
results in systems that are duplicative, are not well integrated, are
unnecessarily costly to interface and maintain, and do not optimally
support mission outcomes.9 TC-AIMS II has not been defined and developed
in the context of a DOD enterprise architecture. Instead, the Army has
pursued the system on the basis of an Army logistics-focused architecture.
This means that TC-AIMS II as a DOD-wide program is based on a
service-specific architecture and not a DOD-wide architecture, thus
increasing the risk that TC-AIMS II, as defined, will not properly fit
within the context of future DOD enterprisewide business operations and IT
environments.
Well-defined DOD Enterprise Architecture to Guide and Constrain TC-AIMS II
Has Not Existed
A well-defined enterprise architecture provides a clear and comprehensive
picture of an entity, whether it is an organization (e.g., a federal
department) or a functional or mission area that cuts across more than one
organization (e.g., personnel management). This picture consists of
snapshots of both the enterprise's current or "As Is" environment and its
target or "To Be" environment, as well as a capital investment road map
for transitioning from the current to the target environment. These
snapshots consist of integrated "views," which are one or more
architecture products that describe, for example, the enterprise's
business processes and rules; information needs and flows among functions,
supporting systems, services, and applications; and data and technical
standards and structures.
DOD has long operated without a well-defined enterprise architecture for
its business environment. In 2001, we first reported that DOD did not have
such an architecture, and we recommended that it develop one to guide and
constrain IT business systems, such as TC-AIMS II.10 Over the next 4
years, we have reported that DOD's architecture development efforts were
not resulting in the kind of business enterprise architecture that could
effectively guide and constrain business system investments,11 largely
because the department did not have in place the architecture management
structures and processes described in federal guidance. In particular, we
most recently reported in July 200512 that despite spending about $318
million producing eight versions of its architecture, DOD's latest version
still did not have, for example, a clearly defined purpose that could be
linked to the department's goals and objectives, and a description of the
"As Is" environment and a transition plan. Further, we reported that the
description of the "To Be" environment was still missing important content
(depth and scope of operational and technical requirements) relative to,
for example, the actual systems to be developed or acquired to support
future business operations and the physical infrastructure (e.g., hardware
and software) that would be needed to support the business systems. Over
the last several years, we have also reported that DOD's efforts for
determining whether ongoing investments were aligned to its evolving
architecture were not documented and independently verifiable.13 On
September 28, 2005, DOD's Under Secretary of Defense for Acquisition,
Technology, and Logistics and Under Secretary for Defense (Comptroller)
issued the next version of its business enterprise architecture,14 which
we are required to review, along with other things, such as the
department's efforts to review certain investments' alignment with the
architecture, pursuant to the Fiscal Year 2005 National Defense
Authorization Act.15
According to program officials, the system has not been assessed against
DOD's business enterprise architecture because one has yet to be
completed. Instead, as described in more detail below, program officials
told us they have aligned TC-AIMS II with the Army's enterprise
architecture for logistics. However, without a well-defined architecture
that sets the DOD-wide context within which a DOD-wide system is to fit,
and a firm understanding of the extent to which TC-AIMS II, as defined,
fits within that context, the program office risks acquiring a system that
does not meet DOD business needs and introduces redundancies and
incompatibilities that require costly and time-consuming rework to fix.
Army Reports That TC-AIMS II Is Aligned with an Army-Specific Architecture
In the absence of a DOD-wide architecture, program officials told us they
have developed the system in the context of the Army's enterprise
architecture for logistics-the Single Army Logistical Enterprise, which is
managed by the Army's Chief Information Officer. For example, in 2004,
program officials requested the Army's Chief Information Officer to
determine whether TC-AIMS II was aligned with the logistic architecture.
The Office of the Chief Information Officer conducted an analysis during
the fall of 2004 that focused on, among other things, tracing TC-AIMS II
business processes and requirements to those specified in the logistics
architecture. The Chief Information Officer reported in March 2005 that
TC-AIMS II, as defined in Blocks 1 to 3, was aligned with the logistics
architecture. We did not review, and thus do not question, this analysis
because TC-AIMS II is intended to be a joint system, and thus aligning it
solely with the Army's logistics architecture will not provide the program
with sufficient basis for managing the risk of not being able to
adequately ensure that a DOD-wide system aligns with a DOD-wide
architecture.
Risk Management Has Not Been Effectively Implemented
Effective risk management is vital to the success of any system
acquisition. Accordingly, DOD acquisition management policies and
guidance,16 as well as other relevant best practice guidance,17 advocate
proactively identifying facts and circumstances that can increase the
probability of an acquisition's failing to meet cost, schedule, and
performance commitments and then taking steps to reduce the probability of
their occurrence and impact. Effective risk management includes
o developing written policies and procedures;
o assigning roles and responsibilities for managing risk;
o developing a risk management plan that provides for (1) identifying and
prioritizing risks, (2) developing and implementing the appropriate risk
mitigation strategies, and (3) tracking and reporting on progress in
implementing the strategies; and
o executing the plan.
To its credit, the program office has satisfied the first three of these
four key practices. First, it has adopted and uses the risk policies and
procedures specified in DOD's major IT systems acquisition guidance.18
Second, the program office has assigned risk management roles and
responsibilities to the Government Risk Manager, who chairs the program's
Risk Management Board. The board, which consists of key program managers
and stakeholder representatives,19 is responsible for ensuring that the
risk management program is implemented according to the risk management
plan. Among other things, this includes assigning individuals who are to
develop and implement risk mitigation plans for all newly identified
risks. Third, the program office has a risk management plan, dated October
2004, and this plan provides for (1) identifying and prioritizing risks,
(2) developing and implementing the appropriate mitigation strategies, and
(3) tracking and reporting on progress in implementing the strategies. For
example, the plan defines procedures for program staff and the board to
follow in prioritizing risks, including assessing its "risk exposure" on
the basis of a probability of occurrence and potential impact. On the
basis of the assessment, "risk exposure" is designated as either high,
medium, or low.20 As of May 2005, the TC-AIMS II program office had
identified 22 active risks in its risk inventory with the following
exposures-1 high, 18 medium, and 3 low.
Fourth, since the program office has not fully implemented its risk
management plan, it has not satisfied the fourth risk management
practice-execution. For example, of the 22 active risks, 6 did not have
mitigation strategies. Of these 6, 1 is high exposure and 5 are medium
exposure risks. As another example, the program office's inventory does
not include all key risks, such as the lack of reliable economic
justification and alignment to a DOD-wide architecture as previously
described in this report.
Program office officials stated that these risk management practices have
not been fully implemented because of other competing priorities. Further,
officials attributed the lack of risk mitigation strategies to staff
turnover, which resulted in relatively few staff receiving training on how
to use the automated tool employed by the office to document and track
risks. In particular, program officials stated that only about 20 percent
of the program staff (40 individuals) has attended the program's training
on how to use the automated tool.
When we concluded our audit work, program officials acknowledged the
missing risk mitigation strategies and stated that they are in the process
of addressing them. Until the program fully implements effective risk
management practices, there is increased probability that program risks
will become actual problems leading to program cost, schedule, and
performance shortfalls.
System Requirements Are Being Effectively Managed
DOD policy and guidance, as well as other relevant best practices,21
recognize the importance of effectively developing and managing system
requirements. According to the policy and guidance, well-defined
requirements are important because they establish agreement among the
various stakeholders on what the system is to do, how well it is to do it,
and how it is to interact with other systems. Having this agreement is key
to acquiring a system that meets end-user needs and performs as intended.
Effective requirements development and management involve, among other
things, (1) establishing a written policy on establishing and conducting
requirements development and management activities; (2) eliciting desired
and required system capabilities from users and translating them into
system requirements; (3) documenting the requirements, including having
users validate that they have been accurately captured; (4) ensuring that
requirements changes are controlled as the system is developed and
implemented; and (5) maintaining bidirectional traceability, meaning that
a given requirement can be traced backward to its source and forward to
both the component or increment that will satisfy the requirement and the
test that will verify that it is satisfied.
The program office is managing TC-AIMS II requirements in accordance with
these five practices. First, the program office adopted DOD Instruction
5000.2 and related guidance,22 as the program's policy for requirements
development and management activities. The directive and guidance are also
incorporated in program office plans that detail how the office develops
and manages requirements during their life cycle-that is, from when
requirements are first documented to when system responsibility is
transferred to operations and maintenance support. According to program
officials responsible for managing requirements, they use the guidance and
plans to perform their work.
Second, program officials elicited required system capabilities from end
users through the program's Joint Requirements Board, which consists of
key system stakeholders and representatives and is chaired by the Joint
Forces Command. The board is responsible for managing requirements
development activities. Among other things, the board's charter states
that its duties include defining, reviewing, validating, prioritizing, and
approving the system's requirements. Board meeting minutes show evidence
of it performing these duties, including, for example, reviewing the Block
3 baseline requirements document on September 8, 2004.
Third, program officials showed us how they document the requirements,
using an automated tool. Further, the Joint Requirements Board approved
the requirements baseline for each of the three blocks.
Fourth, to manage system requirement changes, the program office
established a change control structure (configuration control board) and
supporting processes, which are documented in its 2004 configuration
management plan. Consistent with the plan, the board has six voting
members and includes representatives from the four services. As shown in
board meeting minutes and supporting documentation, the board meets
monthly to consider and decide on change requests.
Fifth, the program maintains bidirectional traceability for the
requirements using an automated tool.23 Specifically, program officials
demonstrated to us how each requirement can be traced back and to its
source (e.g., TC-AIMS II's operational requirements document) and forward
to the block in which the requirement is to be satisfied.
Important Steps Have Been Taken to Effectively Leverage Commercial
Components
The quality of the processes and practices followed in acquiring
software-intensive systems greatly influences the quality of the systems
produced. Moreover, acquiring custom-developed system solutions is
sufficiently different from acquiring commercial component-based systems
that adherence to certain practices unique to the latter is key to their
success. As we have previously reported,24 DOD's revised systems
acquisition policies and guidance25 require that commercial components be
used to the maximum extent that is feasible. Collectively, they also
provide for the following commercial component acquisition management best
practices:
o modifying components only after a thorough analysis of life-cycle costs
and benefits,
o ensuring that integration contractors are explicitly evaluated on their
ability to implement commercial components, and
o ensuring that project plans provide for the time and resources needed to
integrate commercial components with existing (legacy) systems.
The Army has largely complied with these practices for TC-AIMS II. First,
program officials stated that it is their policy to discourage component
modifications, which they have communicated in meetings and other program
management directives. In addition, the program has established a joint
configuration control board and supporting processes to limit and control
changes to the commercial products being used. As stated in the program's
configuration management plan (dated June 30, 2005), the board, which
consists of key program managers and stakeholder representatives, only
approves proposed changes to those products if the change is justified by
a thorough analysis of costs, benefits, and risks. The board meets monthly
to discuss and decide upon such changes, and, according to program
officials, this approach has resulted in no major modifications to date.
Second, the program office evaluation of competing contractors included
consideration of their ability to implement commercial components. For
example, the TC-AIMS II request for proposal specified that the
contractor's ability to implement commercial products was to be a
significant factor in evaluating overall performance.
Third, the program's work breakdown schedule (dated Nov. 9, 2004)
specifies the time and resources needed for integrating commercial
components with existing systems.
By following these best practices associated with acquiring
commercial-based systems, the program is increasing the likelihood that
TC-AIMS II will be successfully implemented and effectively used.
Effective Contractor Management Practices Have Not Been Fully Employed
DOD policy and guidance and other relevant system acquisition management
best practices recognize the importance of effectively managing contractor
activities. To this end, policy and guidance call for, among other things,
performing contractor tracking and oversight activities and using
performance-based contracts to the maximum extent practicable. To its
credit, the Army has performed key activities related to tracking and
oversight. However, it has not fully implemented one key aspect of
performance-based contracting. By not doing so, the program office has
limited its ability to effectively influence contractor performance.
Effective Contractor Tracking and Oversight Practices Have Been Followed
Department policy and guidance and related best practices guidance26
identify effective contractor tracking and oversight as a key contract
management activity and define a number of associated practices to follow,
including
o establishing a written policy on contract tracking and oversight;
o designating responsibility for contract tracking and oversight
activities and having contracting specialists perform these activities;
and
o using approved contractor planning documents as part of periodic reviews
and interchanges with the contractor, during which actual cost and
schedule performance is compared with the contractor's planned budgets and
schedules to identify variances and issues.
The program office's tracking and oversight of the systems integration
contractor from Block 3 largely satisfies these three practices. First,
the program office has adopted the department's acquisition management
polices and guidance as its written program-specific policy on contractor
tracking and oversight.
Second, the program office assigned responsibility for contract tracking
and oversight to its Budget Management Division, which has three staff
devoted to these duties. The devoted staff are contracting specialists on
detail from the General Services Administration's Federal Systems
Integration and Management Center.
Third, the program office uses approved contractor planning documents as
the basis for overseeing the contractor. These planning documents are
specified in the contract and include a program management plan, a master
project schedule, and program status reports. Collectively, these
documents delineate when and how products and services are to be
delivered. According to program officials, these planning documents are
used during monthly status meetings with the contractor to track progress.
In particular, they are used to compare actual cost and schedule
performance to date with planned budgets and schedules to identify
potential variances.
Program officials attribute the state of their contract tracking and
oversight capability to two factors. First, the program has been in
existence for about 10 years, thus allowing time for the office to develop
disciplined processes in this area. Second, in hiring the Federal Systems
Integration and Management Center contract specialists, the program has
subject matter experts who know the importance of, and who actively
advocate, rigorously following the processes. By employing key contract
tracking and oversight practices, the program office is increasing the
likelihood that the contractor will perform as expected.
Performance-Based Contracting Approach Is Not Fully Consistent with Policy
and Best Practices
Department policy, federal acquisition regulations, and other relevant
best practices27 also advocate the use of performance-based contracting
when acquiring services. Effective performance-based contracting includes
o defining clearly the work to be performed,
o specifying performance standards (quality and timeliness) that are tied
to contractual requirements,
o establishing positive and negative incentives that are tied to the
contractor's performance, and
o having a quality assurance plan that describes how the contractor's
performance in meeting requirements will be measured against standards.
The program office's approach to managing the contract is largely
consistent with these four practices. First, the contract for Block 3
(dated Apr. 30, 2004) includes a statement of objectives that define the
work to be performed. For example, the contract identifies specific
project tasks (e.g., establishing a Block 3 development help desk for
system users) and associated project management products (e.g., program
management plan, program schedule, and program status reports) that the
contractor is to perform and deliver, respectively, in accordance with the
contract.
Second, the contract includes performance standards (measures) that are
contractually required. For example, it states that the help desk is to be
staffed 24 hours per day, 7 days a week, with help operators capable of
resolving 80 percent of user calls within 1 hour, while limiting caller
on-hold time to 3 minutes or less.
Third, the contract provides positive incentives that are tied to
contractor performance. That is, in addition to the base contract (cost
plus fixed fee) amount, the contract includes an additional 8 percent fee
that can be awarded to the contractor for satisfying specified performance
criteria.
Fourth, the latest quality assurance plan, dated August 2004, describes
how the contractor's performance will be measured and what remedial steps
are to be taken in case the contractor does not meet contractual
requirements.
However, the contract does not specify effective disincentives or
penalties for failing to meet the performance criteria. More precisely,
the contract does not provide for forfeiting all or part of the fee if the
contractor fails to perform as expected. Instead, program officials stated
that their practice of withholding the additional award fee when
expectations are not met, constitutes a disincentive. For example, they
said that they withheld the award fee for the contractor's first
performance period (which totaled about $900,000) because the contractor
failed to develop two deliverables on time (the program management plan
and the performance metrics).
We do not agree that this practice constitutes an effective negative
incentive because it merely withholds an incentive that is tied to
exceeding expectations. It does not penalize performance that fails to
meet expectations. Moreover, program officials told us that in the above
example, withholding the award fee was not a forfeiture, because it was
actually deferred to the second performance period when the contractor had
another opportunity to earn it. According to program officials, during the
second performance period, the contractor earned almost $780,000 of the
withheld fee from the first period by completing, among other things,
first period tasks.
In the absence of specific negative incentives that are tied to intended
performance, the program is at increased risk in the case of contractor
nonperformance. This practice puts the program at risk of taking more time
and spending more money than necessary to acquire contract deliverables
and services.
Conclusions
It is unclear whether the Army's planned investment in TC-AIMS II is
warranted. Of critical concern is the absence of reliable analysis showing
that further investment will produce future mission benefits commensurate
with estimated costs. This is due in large part to the evident change in
the scope of the program, which was initiated on the basis of the four
military services using TC-AIMS II but has not been revised to reflect
that two services have stated their intentions not to use the system.
Compounding this uncertainty is the inherent risk of defining and
developing this multiservice system outside the context of a well-defined
DOD-wide enterprise architecture. Without this information, the Army
cannot currently determine whether TC-AIMS II, as defined and as being
developed, is the right solution to meet its strategic business and
technological needs.
If these uncertainties are addressed and the Army demonstrates that
TC-AIMS II plans are the right course of action, the department largely
has the capabilities that are essential to successful system acquisition
and deployment, although there is room for strengthening its practices
related to risk management and performance-based contracting.
It is vital that Army and DOD authorities responsible and accountable for
ensuring prudent use of limited resources first reassess whether allowing
TC-AIMS II to continue as planned is warranted, and that the decision on
how to proceed be based on reliable data about program costs, benefits,
risk, and status.
Recommendations for Executive Action
We recommend that the Secretary of Defense direct the Secretary of the
Army to determine if continued investment in TC-AIMS II as planned
represents a prudent use of the department's limited resources. To
accomplish this, the Secretary of the Army should take the following three
actions:
o collaborate with the Office of the Assistant Secretary of Defense for
Networks and Information Integration/Chief Information Officer, the Office
of Program Analysis and Evaluation, and the Army Cost Analysis Division to
prepare a reliable economic analysis;
o ensure that development of this economic analysis (1) complies with
cost-estimating best practices and relevant Office of Management and
Budget cost benefit guidance, (2) incorporates available data on whether
deployed TC-AIMS II capabilities are actually producing benefits, and (3)
addresses that the Air Force and Marines are not planning to use the
system; and
o collaborate with the Undersecretary of Defense for Acquisition,
Technology, and Logistics and the Under Secretary of Defense (Comptroller)
to ensure that TC-AIMS II is adequately aligned with the evolving DOD
business enterprise architecture.
In addition, we recommend that the Secretary of Defense direct the
Secretary of the Army to present the results of these analyses to the
Deputy Secretary of Defense, or his designee, and seek a departmental
decision on how best to proceed with the program. Until this is done, we
recommend that the Secretary of Defense direct the Secretary of the Army
to limit future investment in already deployed applications to essential
operation and maintenance activities and only developmental activities
deemed essential to national security needs.
If-on the basis of reliable data-a decision is made to further develop
TC-AIMS II, we recommend that the Secretary of Defense direct the
Secretary of the Army to ensure that the program implements effective
program management activities related to risk management and
performance-based contracting.
Agency Comments and Our Evaluation
In its written comments on our draft report, signed by the Deputy to the
Assistant Secretary of Defense for Networks and Information Integration
(Command, Control, Communications, Intelligence, Surveillance, and
Reconnaissance and Information Technology Acquisition) and reprinted in
appendix III, DOD either agreed or partially agreed with our
recommendations, and it stated that some of our findings have merit and
that it has significant efforts ongoing to comply with applicable
guidance. For example, while DOD agreed that TC-AIMS II was originally
defined and implemented without a complete and formal enterprise
architecture and that the program had not identified the lack of a mature
architecture as a program risk, it stated that the program is taking steps
to ensure alignment to relevant enterprise architectures and is thereby
mitigating this risk. In addition, although the department agreed that the
latest economic analysis shows a negative return on investment, it said
that other intangible benefits not included in the analysis, such as
improved planning and equipment tracking, bolster the value of TC-AIMS II.
Further, it agreed that the system was originally envisioned as a single
DOD-wide solution and that the Air Force and Marine Corps are no longer
intending to use the system, but added that it was now evaluating whether
these two services' existing (legacy) systems should be enabled to share
data with TC-AIMS II, rather than be replaced in their entirety by a joint
system as was originally envisioned. According to DOD, the results of this
evaluation are to be considered at the next milestone review, which is
planned for early to mid-2006.
These comments are largely consistent with our report. Specifically, the
report makes clear that DOD is managing TC-AIMS II in accordance with some
key practices and has efforts under way, such as those previously cited,
intended to bring the program into compliance with other key practices.
However, the report also points out noncompliance in areas intended to
provide sufficient information to determine how the TC-AIMS II program
should proceed. Accordingly, it contains recommendations to ensure that
the economic analysis is updated to (among other things) reflect current
operating assumptions, and that the program is adequately aligned with the
department's evolving enterprise architectures. It is precisely because
the program does not have this information that, despite having invested
$751 million over 11 years, the department does not know whether the
program as defined is the right solution to meet DOD-wide asset deployment
needs.
DOD offered five detailed comments on our four recommendations. The
department's comments and our responses are as follow:
1.DOD stated that the TC-AIMS II program has used best practices and
followed all economic analysis requirements specified in relevant DOD and
OMB guidance, and has successfully passed milestone reviews at which it
was required to show costs and benefits for both the entire system and its
increments. In addition, the department stated that even though its
economic analysis showed a slight negative return on investment, the
system's intangible benefits bolster the program's overall value.
According to DOD, the program identified these intangible benefits to
obtain department milestone approval, and this documentation was provided
to us on October 31, 2005. This notwithstanding, the department stated the
program will (1) conduct, in coordination with the Office of the Secretary
of Defense's Program Analysis and Evaluation, an analysis to determine the
relationship of TC-AIMS II and other programs, such as the Global Combat
Support System, that may provide similar functionality to ensure optimal
return on investment and (2) brief the Networks and Information
Integration Overarching Integrated Product Team in preparation for the
next major milestone decision review. It also stated that these results
will be used to justify further investment.
We do not agree that the program has used all best practices and followed
all requirements specified in relevant guidance. In particular, the Army
did not economically justify its TC-AIMS II investment on the basis of
reliable estimates of costs and benefits and did not invest in TC-AIMS II
within the context of a well-defined architecture, both of which are
recognized best practices as well as DOD and OMB requirements. In
addition, while it is appropriate to consider intangible benefits in
economically justifying an investment, these benefits are not in the
economic analysis, and the separate document provided on October 31, 2005,
did not contain sufficient rationale and justification for claimed
qualitative benefits. Rather, the information provided was a restatement
of the quantitative benefits in the economic analysis. Further, by stating
that it is to conduct an analysis of the relationships of TC-AIMS II to
other programs that provide similar functionality and use the results of
this analysis to justify further system development, DOD is recognizing
that it does not have the information it needs to make informed investment
decisions. If done thoroughly, the analysis, which the department
committed to conduct, should help to inform future program decisions.
2.Consistent with our report, DOD stated that TC-AIMS II was established
as a joint military service program. However, in explaining why the Air
Force and Marine Corps are not intending to use TC-AIMS II, it added that
changes to operations throughout the world since then have necessitated
changes to the services' deployment processes. In light of this, the
department stated it will evaluate other options for data exchange among
Air Force and Marine Corps existing asset deployment systems and TC-AIMS
II, instead of having all the services use a single, joint system.
Further, the department said it will have the program, in coordination
with Program Analysis and Evaluation, develop an economic analysis for
TC-AIMS II that is based on the system being used solely by the Army and
the Navy. DOD also commented that our report assumed a positive
cost-benefit impact from including the Air Force and Marine Corps in the
program.
We support the department's decision to develop an economic analysis that
reflects this material change in the program's scope, which is what we
recommended. However, we would note that DOD's comments do not explain how
unspecified changes to operations throughout the world caused unspecified
changes to each of the services' deployment processes, which in turn
required DOD to have to interface multiple service-unique systems, rather
than adopting a joint system. We would expect such an explanation to be an
integral part of updating the economic analysis, as will the costs of
pursuing service-unique courses of action.
With regard to the comment that we assumed the inclusion of the Air Force
and Marine Corps would have a positive cost-benefit impact, we do not
agree. We made no assumption about the impact of the program's scope on
the cost-to-benefit or return on investment ratios. Rather, our point is
that DOD policy and related guidance state that programs should be
economically justified by, among other things, cost and benefit estimates
that are based on realistic plans for the program's scope. Such realistic
plans did not exist because DOD's justification was based on the four
services using the system, when in reality the Air Force and Marine Corps
do not intend to do so. Relevant guidance calls for updating economic
analyses when significant program changes such as these occur.
Accordingly, we recommended that the department follow this guidance to
ensure it had adequate information for informed decision making.
3.DOD commented that it has worked over the past several years to develop
an enterprise architecture and is on a path to fully defining and
effectively managing its enterprise architecture. It also said that it is
working to align TC-AIMS II with relevant evolving architectures. In
particular, DOD stated that Blocks 1 through 4 are aligned with the Joint
Deployment Operational Architecture and the program office continues to
work to align the program with the Joint Deployment and Distribution
Architecture, which it said is currently aligning to the evolving Business
Enterprise Architecture.
We do not take issue with the comments that work has been and is under way
in this area. Our point is that the Business Enterprise Architecture is
still a work in progress and what has been available to guide and
constrain business system investments, such as TC-AIMS II, has not been
sufficient. Moreover, program officials told us that TC-AIMS II has not
been assessed against the Business Enterprise Architecture because this
architecture has not yet been completed. Without a well-defined DOD-wide
architecture that sets the context within which such a joint military
service system is to fit, and a firm understanding of the extent to which
TC-AIMS II, as defined, fits within that context, the program office
risks, among other things, acquiring a system that does not meet DOD's
strategic business needs.
4.DOD stated that while comprehensive mitigation and contingency
strategies were not developed for all of the 22 risks cited in our report,
the program office has subsequently developed strategies for them. DOD
also commented that subsequent risk management data, along with evidence
that risks are continuously reviewed and updated, was provided to us on
October 28 and November 3, 2005.
We acknowledge that program officials orally stated that this had
occurred. However, we have yet to receive any documentation to
substantiate these statements.
5.DOD stated that while the current TC-AIMS II contract does not include
direct disincentives for contractor failure to meet performance criteria,
its semiannual award fee mechanism serves a similar purpose. Nonetheless,
DOD commented that it will review its award fee implementation on future
TC-AIMS II contract actions.
We do not agree that this semiannual award fee approach is an effective
disincentive because award fees are only being withheld when contractor
performance does not exceed certain targets; conversely, direct
disincentives penalize poor performance that falls short of meeting
contractually required levels of performance. Without direct
disincentives, the program is at increased risk of contractor
nonperformance, and thus taking more time and spending more money than
necessary to acquire contract deliverables and services. We support the
department's stated commitment to address this issue.
We are sending copies of this report to interested congressional
committees. We are also sending copies to the Director, Office of
Management and Budget; the Secretary of Defense; the Deputy Secretary of
Defense; the Undersecretary of Defense for Acquisition, Technology, and
Logistics; the Assistant Secretary of Defense (Networks and Information
Integration)/Chief Information Officer; the Secretaries of the Air Force,
Army, and Navy; the Commandant of the Marine Corps; the Department of the
Army's Chief Information Officer; and the Program Executive Officer,
Enterprise Information Systems, Transportation Information Systems,
Department of the Army. We are also sending copies to other interested
parties. This report will also be available at no charge on our Web site
at h ttp://www.gao.gov.
Should you have any questions about matters discussed in this report,
please contact me at (202) 512-3439 or h [email protected]. Contact points for
our Offices of Congressional Relations and Public Affairs may be found on
the last page of this report. A GAO contact and staff who made major
contributions to this report are listed in appendix IV.
Randolph C. Hite Director, Information Technology Architecture and Systems
Issues
Objective, Scope, and Methodology Appendix I
Our objective was to determine whether the Transportation Coordinators'
Automated Information for Movements System II (TC-AIMS II) was being
managed according to important aspects of the Department of Defense's
(DOD) acquisition policies and guidance, as well as other relevant
acquisition management best practices. To accomplish this, we focused on
the program's (1) economic justification; (2) architectural alignment; (3)
risk management; (4) requirements development and management; (5)
commercial components; and (6) contract management, including contractor
oversight and performance-based contracting.
To determine whether the Department of the Army had economically justified
its investment in TC-AIMS II, we reviewed the latest economic analysis to
determine the basis for the cost and benefit estimates and net present
value calculations. This included evaluating the analysis against DOD
policies and guidance1 as well as other relevant best practices guidance.2
It also included interviewing responsible program officials, including the
program and deputy program managers, regarding their respective roles,
responsibilities, and actual efforts in developing and/or reviewing the
economic analysis. In addition, we also interviewed the program and deputy
program manager and the Office of the Assistant Secretary of Defense for
Network Information and Integration about the purpose and use of the
analysis for managing the Army's investment in the TC-AIMS II program,
including the extent to which measures and metrics showed that benefits
projected in the economic analysis were actually being realized.
To determine whether the Army had aligned TC-AIMS II to the DOD business
enterprise architecture,3 we relied on our prior reports addressing DOD
and Army architecture development and implementation efforts and documents
on the Army's efforts to align TC-AIMS II with its logistics architecture
(the Single Army Logistics Enterprise), as well as documents on the Army's
efforts to align the logistics architecture with DOD's business enterprise
architecture. We also interviewed officials from the TC-AIMS II joint
program management office, the Office of the Assistant Secretary of
Defense for Networks and Information Integration/Chief Information
Officer, and the Office of the Army's Chief Information Officer about DOD
and Army architecture efforts and TC-AIMS II's alignment to them.
To determine whether the Army was effectively managing key system
acquisition activities, namely risk management, requirements development
and management, commercial components, and contract management, we did the
following:
o To assess risk management, we reviewed the program's risk policies,
processes, management plan, and related documentation. We also observed
how the program used an automated tool (database) to document and track
risks, including developing risk mitigation strategies. In addition, we
analyzed a version of the database to determine, among other things, the
state of risk mitigation strategies. We then compared these activities
with DOD policy, guidance, and related best practices to determine whether
variances existed, and if so, why. Moreover, we interviewed Army officials
involved with risk management, including the program manager and risk
manager, to discuss their roles and responsibilities for managing risk
associated with acquiring and implementing TC-AIMS II.
o To assess requirements development and management capabilities, we
reviewed program documentation, such as the official list of requirements,
and system specifications and evaluated them against these relevant best
practices4 for several characteristics, including traceability and
prioritization. We observed program office staff trace requirements to
both higher level documents and lower level specifications using an
automated tool. We interviewed Army officials involved in the requirements
development process, including the program and deputy program managers, to
discuss their roles and responsibilities for developing and managing
requirements.
o To evaluate the management of commercial components, we reviewed a
variety of documents, such as program and contractor studies of commercial
components' products, as well as the program office's project plans, and
contract task order documentation. Additionally, we conducted interviews
with the program officials, including the program and deputy program
managers, responsible for selecting the commercial components for planned
TC-AIMS II blocks, to determine whether the commercial component products
had been acquired in accordance with DOD policy, guidance, and related
best practices.
o To assess contract management, we focused on the program office's
contract tracking and oversight activities as well as its use of
performance-based contracting. For tracking and oversight, we reviewed
program management plans, contractor monthly status reports, and related
documentation of the program office's policies, processes, and activities
for overseeing its system integration contractor for Block 3. We then
compared these with DOD policies, guidance, and related best practices. We
also interviewed program offices responsible for managing these
activities. For performance-based contracting, we reviewed the Block 3
contract (issued in April 2004) and related documentation, such as
contract modifications, quality assurance plan, and reports on determining
contractor award fee, and then compared them with department policy and
guidance, federal acquisition regulations, and related best practices. We
also interviewed program management officials, including the contract
specialist from the General Service Administration's Federal Systems
Integration and Management Center, who are responsible for performing
these activities.
We did not independently validate information on the program's cost and
budget as well as the number of problem reports.
We conducted our work at DOD headquarters in the Washington, D.C.,
metropolitan area and at the Army's Joint Program Management Office in
Northern Virginia. We performed our work from October 2004 through October
2005, in accordance with generally accepted government auditing standards.
Assessment of Problem Reports Appendix II
One indicator of system quality is defect density, which can be measured
in a number of ways, including the trend in the number of system defects
being reported and resolved. The program office prepares problem reports
to document and prioritize system defects, and it established a database
to manage and track these reports. Further, the program office assigns
priority (i.e., criticality) levels to problem reports, with category 1
being the most critical, and category 5 being the least critical. The
program office's definition of each category is as follows:
Category 1: The system or function does not work and the problem must be
addressed immediately, before any further work can be completed.
Category 2: The system or function may work, but the problem is severe and
must be addressed before the end of the current block.
Category 3: Essentially, this is a category 2 problem with a known
solution that would provide a temporary fix.
Category 4: A routine problem that does not pose a significant threat and
thus no immediate action is required.
Category 5: A minor problem that does not pose a significant threat to
system functionality.
As depicted in figure 2, the data show that the number of open (yet to be
resolved) problem reports over the first two development blocks has
decreased. In particular, the total number of open problem reports has
decreased by 321 (or 75 percent), from 426 in fiscal year 1999 to 105 at
the end of fiscal year 2004. During the same period, categories 1 and 2
problem reports decreased by 216 (or about 100 percent), from 217 to 1.
This downward trend reversed for the less critical defects in fiscal year
2005. Specifically, as of September 30, 2005, there were 534 total
defects, 25 of which were categories 1, 2, and 3. Program officials
attributed this reversal of categories 4 and 5 defects to current Block 3
testing activities and stated that they anticipated the increase and are
actively managing it. In addition, they stated that while overall defects
have recently increased, the number of critical defects has increased only
slightly, and program staff are working to resolve these increases, with
the goal of having permanent solutions implemented before Block 3 is
deployed, which is scheduled to begin in October 2006.
Figure 2: Number of Problem Reports, Fiscal Years 1999 through 2005
Comments from the Department of Defense Appendix III
GAO Contact and Staff Acknowledgments Appendix IV
Randolph C. Hite, (202) 512-3439 or [email protected]
In addition to the contact named above, Gary Mountjoy, Assistant Director;
Justin Booth; Hal Brumm Jr.; Joanne Fiorino; Anh Le; Kush K. Malhotra;
Teresa M. Neven; Dr. Rona Stillman; Amos Tevelow; and Bill Wadsworth made
key contributions to this report.
(310295)
www.gao.gov/cgi-bin/getrpt? GAO-06-171 .
To view the full product, including the scope
and methodology, click on the link above.
For more information, contact Randolph C. Hite at (202) 512-3439 or
[email protected].
Highlights of GAO-06-171 , a report to the Subcommittee on Readiness and
Management Support, Committee on Armed Services, U.S. Senate
December 2005
DOD SYSTEMS MODERNIZATION
Uncertain Joint Use and Marginal Expected Value of Military Asset
Deployment System Warrant Reassessment of Planned Investment
Because of the importance of the Department of Defense's (DOD) adherence
to disciplined information technology (IT) acquisition processes in
successfully modernizing its business systems, GAO was asked to determine
whether the Transportation Coordinators' Automated Information for
Movements System II (TC-AIMS II) program is being managed according to
important aspects of DOD's acquisition policies and guidance, as well as
other relevant acquisition management best practices. TC-AIMS II was
initiated in 1995 as a joint services system to help manage force and
equipment movements within the United States and abroad. The U.S.
Department of the Army has the lead responsibility for managing the
system's acquisition and estimates its life-cycle cost to be $1.7 billion
over 25 years.
What GAO Recommends
GAO is making recommendations to the Secretary of Defense to, among other
things, develop the analytical basis needed to determine if continued
investment in TC-AIMS II, as planned, represents prudent use of limited
defense resources. In written comments on a draft of this report, DOD
concurred or partially concurred with GAO's recommendations. It also
described planned actions that are largely consistent with GAO's
recommendations.
The Army has managed the TC-AIMS II program in accordance with some, but
not all, key aspects of DOD's system acquisition management policies and
related guidance. These policies and guidance are intended to reasonably
ensure that investment in a given IT system represents the right solution
to fill a mission need-and, if it does, that acquisition and deployment of
the system are handled in a manner that maximizes the chances of
delivering defined system capabilities on time and within budget. The Army
has not managed the program in accordance with those DOD policies and
related guidance, including related federal and other best practice
guidance, that are intended to reasonably ensure that a proposed system is
the right solution to meet mission needs. Specifically:
o The Army has not economically justified its investment in
TC-AIMS II on the basis of reliable estimates of costs and
benefits. For example, the most recent economic justification
included cost and benefit estimates predicated on all four
military services using the system. However, two services (U.S.
Department of the Air Force and U.S. Marine Corps) have stated
that they do not intend to use it.
o The Army has not invested in TC-AIMS II within the context of a
well-defined enterprise architecture, which is an institutional
blueprint to control program investment decisions in a way that
promotes interoperability and reduces redundancy among systems.
The Army has instead focused on aligning TC-AIMS II with its
logistics architecture; this means that even though TC-AIMS II is
intended to be a DOD-wide program, it has been based on a
service-specific architecture rather than a DOD-wide architecture.
As a result, it may not properly fit within departmentwide plans.
To its credit, the Army has largely managed the program in accordance with
key policies and related guidance that are intended to reasonably ensure
that the acquisition and deployment of a given system are handled in a
manner that maximizes the chances of delivering defined capabilities on
time and within budget. However, some aspects of this policy and guidance
have not been followed. For example, the Army has not fully implemented
risk management and has not adhered to a key feature of performance-based
contracting.
Reasons the Army cited for not following policies and guidance ranged from
management inattention to lack of training. As a result, the Army, among
other things, does not know whether the system is the right solution.
Until this uncertainty and the previously discussed problems are
addressed, it will remain unclear whether further planned investment in
TC-AIMS II is warranted, and certain aspects of the program's management
will be limited.
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