United States Government Publishing Office publisher pbl distributor dst United States Government Accountability Office Accounting and Information Management Division author aut Government Organization text government publication eng GAOREPORTS Legislative Agency Publications gao legislative 2010-08-12 U.S. Government Printing Office 1998-09-15 monographic deposited born digital 69 p. GA 1.13:AIMD-98-182 https://www.govinfo.gov/app/details/GAOREPORTS-AIMD-98-182 P0b002ee18038b02b f:ai98182 DGPO 2010-08-12 2011-03-23 GAOREPORTS-AIMD-98-182 machine generated eng fdlp REPORT GAOREPORTS-AIMD-98-182 AIMD-98-182 Federal agency accounting systems Accounts receivable Funds management Industrial funds Comparative analysis Financial management systems Mainframe computers Defense cost control Accounting procedures Information systems DOD Working Capital Fund Army Working Capital Fund Navy Working Capital Fund Air Force Working Capital Fund DOD Automatic Digital Network DOD Defense Message System DOD WCF Capital Investment Program DOD Defense Property Accountability System Defense Business Operations Fund DBOF Chapter Report AIMD

Pursuant to a congressional request, GAO provided information on the Defense Information Systems Agency's (DISA) price-setting process, focusing on: (1) whether DISA is being reimbursed for the services provided; and (2) the accuracy of DISA's financial management information.<p/>GAO noted that: (1) DISA has difficulty: (a) setting prices for information technology services that result in the recovery of the full cost of doing business; (b) getting reimbursed for the services it provides; and (c) producing reliable financial information on the Defense Information Services business area; (2) these weaknesses impair the business area's ability to focus management attention on the full costs of carrying out operations and managing those costs effectively; (3) DISA is embarking upon a major effort to consolidate its Defense megacenters (DMC) and increase their efficiency by allowing them to specialize in mainframe processing and thereby lower their prices; (4) by consolidating the mainframe processing from the current 16 DMC sites to 6 and optimizing mainframe operations, DISA anticipates that planned savings will be passed on to its customers through reduced prices; (5) however, the reported cost of doing business varies considerably from computer center to computer center; (6) an analysis of the cost differences would provide management the opportunity to understand the cases of the differences and thereby help identify inefficiencies and make improvements in the services provided; (7) the DMCs have difficulty estimating future workload; in fiscal year 1997, the Department of Defense's (DOD) records showed that the estimated versus actual workload varied from 15 percent to 174 percent for individual centers; (8) because the DMCs underestimated the amount of work they would perform in fiscal year 1997 for IBM and UNISYS mainframe services, they reported a net profit of $90 million, which is 13 percent of the reported fiscal year 1997 revenue of approximately $682 million; (9) in setting prices for telecommunications services, the Communications Information Services Activity did not incorporate about $137 million of costs related to transitioning independent networks to DISA's new common-user network, prior-year losses, and overhead expenses; (10) because these costs were not included, the prices charged for services were not based on the full costs incurred; (11) since business area costs were offset by appropriations, its prices were further understated; (12) as of January 1998, DISA reports showed that 31 percent of the business area's receivables, or about $173 million, had been outstanding for more than 60 days; and (13) weaknesses within DISA's internal control and accounting systems have hindered the development of accurate financial reports. https://www.govinfo.gov/content/pkg/GAOREPORTS-AIMD-98-182/html/GAOREPORTS-AIMD-98-182.htm https://www.govinfo.gov/content/pkg/GAOREPORTS-AIMD-98-182/pdf/GAOREPORTS-AIMD-98-182.pdf GAO/AIMD-98-182 https://www.govinfo.gov/app/details/GAOREPORTS-AIMD-98-182 Chapter Report GAO/AIMD-98-182; DOD Information Services: Improved Pricing and Financial Management Practices Needed for Business Area; Federal agency accounting systems Accounts receivable Funds management Industrial funds Comparative analysis Financial management systems Mainframe computers Defense cost control Accounting procedures Information systems DOD Working Capital Fund Army Working Capital Fund Navy Working Capital Fund Air Force Working Capital Fund DOD Automatic Digital Network DOD Defense Message System DOD WCF Capital Investment Program DOD Defense Property Accountability System Defense Business Operations Fund DBOF Title 10 Section 2208 10 U.S.C. 2208 H. Rept. 105-532