ERPs continue to fail the DOD

The Defense Department is not going to be able any time soon to produce auditable financial statements on its own programs because its major enterprise resource planning programs (ERP) continue to remain late and way over budget, according to a June 13 report from the DOD Inspector General.

The DOD IG identified six ERP systems they deemed necessary to replace legacy systems and enable the department to produce auditable financial statements: General Fund Enterprise Business System (GFEBS), Logistics Modernization Program (LMP), Defense Enterprise Accounting and Management System (DEAMS), Defense Agencies Initiative (DAI), Navy ERP, Enterprise Business System-Energy Convergence (EBS-EC) and EBS-EProcurement.

According to the IG, those six ERP systems have experienced cost increases of $8 billion, and been delayed for anywhere from 1.5 years to 12.5 years.

As a result, there is “risk that DOD will not achieve an auditable Statement of Budgetary Resources by FY 2014 or accomplish its goal of full financial statement audit readiness by FY 2017,” according to the report.

The IG also blamed the DOD deputy chief management officer (DCMO) and the chief management officers (CMO) of the military departments for not verifying “business processes were streamlined and efficient as required by Public Law 111-84, “National Defense Authorization Act For Fiscal Year 2010.”

This occurred, according to the report, “because DOD officials relied on the program management offices’ self-compliance assertions when they certified and approved funding of $302.7 million, instead of reviewing the business processes and verifying the accuracy, completeness, and reliability of the Program Management Office submissions. As a result, there is an increased risk the ERP systems will incur additional delays and cost increases to ensure the systems are as streamlined and efficient as possible.”

According to the DOD IG, the DOD DCMO did not respond to the draft report. The Undersecretary of Defense (Comptroller) and chief financial officer of the DOD, as well as the CMOs of the Army, Navy, and Air Force agreed with the IG’s recommendations, though the Army and Air Force CMOs did not address corrective actions.