	Background

DOD’s IT budget submission for fiscal year 2004 totaled about $28 billion. The IT-1 spreadsheet is  submitted to the Congress. These inconsistencies, inaccuracies, and omissions are attributable in part  to insufficient management attention to the reliability of the reports as well  as ambiguities in DOD’s Financial Management Regulation (FMR) and a  lack of supporting systems and control processes for ensuring consistency  between reports. Without  sufficient information, decision makers could approve or deny funding for  programs that might otherwise have been treated differently. DOD’s Exhibit 300s Are Not Consistent with Its IT-1 Budget Spreadsheet

Information in DOD’s Exhibit 300 Capital Investment Reports, reported for  its major IT initiatives as part of the fiscal year 2004 budget submission, is  not consistent with funding information in DOD’s fiscal year 2004 IT budget  summary, which DOD submits to the Congress in the form of the IT-1  spreadsheet and to OMB in the form of the Exhibit 53. DOD’s fiscal year 2004 IT budget submission does not consistently  use the same appropriations accounts to fund the same types of activities. That is, defense components used two different appropriations—the  Research, Development, Test, and Evaluation (RDT&E) and O&M—to fund  the same types of activities (the cost of civilian personnel and other costs  for performing or managing development/modernization activities). At a minimum, we recommend that revisions to policies,  procedures, and supporting systems ensure that  Exhibit 300s and IT-1 spreadsheets are consistent in terms of (1) the  major initiatives that are included in each report (unless otherwise  explained) and (2) the funding reported for each of these initiatives;  Exhibit 300s are complete, accurate, and internally consistent, in that  (1) funding information is provided for each life cycle phase for each  initiative; (2) total amounts reported for each initiative equal the sum of  the individual line items for the initiative; and (3) the format used to  display the funding information clearly shows the total funding amount  for each initiative;  amounts are properly categorized as development/modernization or  current services in the IT budget submission, so that OMB and  congressional decision makers are provided with accurate information  on the funding required to (1) develop new systems or significantly  improve existing systems and (2) operate and maintain existing  systems;  budget submissions are consistent in the costs that are funded with the  RDT&E appropriation and those that are funded with the O&M  appropriation; and  budget submissions fully account for all relevant costs, including  military personnel costs and indirect costs, to the extent that these costs  can be identified and properly allocated to each initiative, so that OMB  and congressional decision makers are provided with complete budget  information for each initiative. Objective, Scope, and Methodology

Our objective was to determine whether the fiscal year 2004 information  technology (IT) budget submission for the Department of Defense (DOD)  was reliable, including identifying opportunities to improve its reliability in  the future. To identify inconsistencies between the reports, we assessed the Exhibit  300 Capital Investment Reports and the IT-1 budget summary spreadsheet.
Why GAO Did This Study

The Department of Defense (DOD) spends more on information technology (IT) annually than any other department or agency, accounting for about half of the $59 billion governmentwide IT budget in fiscal year 2004. It is thus important that consistent, accurate, and complete DOD IT budget information is available to the Congress and the Office of Management and Budget (OMB) so that they can make informed decisions among competing demands for funds. Accordingly, GAO reviewed the department's fiscal year 2004 IT budget submission to determine whether it was reliable, including identifying opportunities for future improvement.

What GAO Found

DOD's IT budget submission for fiscal year 2004 contains material inconsistencies, inaccuracies, or omissions that limit its reliability. Two primary parts of the submission--the IT budget summary report and the detailed Capital Investment Reports on each IT initiative--are inconsistent. In particular, 15 initiatives that appear in the budget summary do not appear in the Capital Investment Reports, and discrepancies exist between the two types of reports in the amounts requested for 73 major initiatives. These discrepancies total about $1.6 billion. Major initiatives do not consistently use the same type of appropriations to fund the same activities. That is, to fund the same types of activities, some DOD organizations used the Research, Development, Test, and Evaluation appropriations and others used the Operation and Maintenance appropriations. The IT budget summary does not include all the costs of the IT initiatives, which is contrary to federal guidance. For example, the IT budget reports do not always include the costs of military personnel working on the initiatives. These problems are largely attributable to insufficient management attention and limitations in departmental policies and procedures, such as guidance in DOD's Financial Management Regulation, and to shortcomings in systems that support budget-related activities. The result is that OMB and the Congress are constrained in their ability to make informed IT funding decisions and conduct effective oversight and control, which could cause decision makers to approve or deny funding for programs that they might otherwise have treated differently, as well as increasing the chances of funds in an appropriation not being sufficient to cover obligations.