This report is to  1.  describe actions taken and planned for meeting the act’s requirements,  a)  specific milestones and actual performance against specified  performance measures and any revision of such milestones and  performance measures and b)  specific actions on the defense business system modernizations  submitted for certification under such subsection; 2.  discuss specific improvements in business operations and cost savings  resulting from successful defense business systems modernization  efforts;  3. identify the number of defense business system modernizations  certified; and  4. identify any defense business system modernization with an obligation  in excess of $1 million during the preceding fiscal year that was not  certified as required, and the reasons for the waiver. Business system investments costing more than $1 million continue to be  certified and approved, but these decisions were not always based on  complete information. To its credit, DOD’s annual report includes milestones, performance  against milestones, and milestone revisions for 76 programs. However,  other important performances measures, which typically include measures  associated with determining progress against program cost, capability, and  benefit commitments, are not included in the report. Further, they said they focused  on program milestones because most of the investments covered by the  report have not progressed far enough in their life cycles to measure cost,  capability, and benefit performance. Nevertheless, the report includes descriptions of a  number of programs that have progressed to the point where DOD reports  on actual operational efficiencies and dollar savings that have accrued,  which, in turn, means that these programs have progressed to the point  that DOD can report on progress against defined performance  commitments, such as the costs that have been incurred, the capabilities  that have been delivered, and benefits that have been realized. Moreover,  the programs that have not yet delivered capabilities or realized benefits  have incurred costs, which DOD can report relative to expected costs. DOD’s Annual Report Does Not Describe Certification Actions for All Systems, and Justification of Reported Certification Actions Is Limited

Among other things, the act requires DOD’s annual report to describe  specific actions the department has taken on each business system  modernization investment submitted for certification. However, certification  actions associated with 40 other investments are not included. Further, the  bases for several of the fiscal year 2009 system certification actions and  subsequent approvals are limited because program weaknesses and issues  that our prior work has raised about, for example, the systems’ economic  analyses and BEA compliance determinations, are not reflected in the  reported certification actions. According to BTA officials, only new certifications are included in the  report, even though DOD guidance states that recertifications are also  certification actions. Moreover, DOD guidance defines a recertification  as a type of certification action, thus making it subject to the act’s  reporting requirements. Conclusions

DOD’s latest annual report on its business systems modernization program  complies with statutory requirements pertaining to the report’s content,  but the scope and completeness of key information that is provided in the  report is otherwise limited. Collectively, this means that DOD’s annual report does not  provide congressional committees with the full range of information  necessary to permit meaningful and informed oversight of DOD’s business  systems modernization program. As a result, these certification and approval decisions may not be  sufficiently justified. Recommendations for Executive Action

To facilitate congressional oversight and promote departmental  accountability, we recommend that the Secretary of Defense direct the  Deputy Secretary of Defense, as the chair of the DBSMC, to ensure that  the scope and content of future DOD annual reports to Congress on  compliance with section 332 of the Ronald W. Reagan National Defense  Authorization Act for Fiscal Year 2005, as amended, be expanded to  include:    Cost, capability, and benefit performance measures for each business  system modernization investment and actual performance against these  measures.
Why GAO Did This Study

Since 1995, GAO has designated the Department of Defense's (DOD) multibillion dollar business systems modernization program as high risk, and it continues to do so today. To assist in addressing DOD's modernization challenges, the Ronald W. Reagan National Defense Authorization Act for Fiscal Year 2005 (the act) requires the department to, among other things, report specific information about business system investments, including (1) milestones and actual performance against specified measures and any revisions and (2) actions taken to certify that a modernization investment involving more than $1 million meets defined conditions before obligating funds. The act also directs GAO to review each report. As agreed, GAO focused on the fiscal year 2010 report's compliance with, among other things, these provisions of the act. To do so, GAO compared DOD's report to the act's reporting requirements, interviewed DOD officials, analyzed relevant documentation, and leveraged prior GAO reports.

What GAO Found

DOD's fiscal year 2010 report to Congress on its business systems modernization program complies with key provisions in the act, but its scope and content are nevertheless limited. Specifically, (1) The report includes milestones, performance against milestones, and milestone revisions for specific investments. However, other important performance measures, such as measures of progress against program cost, capability, and benefit commitments are not included in the report. DOD officials attributed the missing performance-related information to various factors, including that most of the investments addressed in the report have not progressed far enough in their life cycles to measure cost, capability, and benefit performance. However, the report also cites a number of investments that have produced business improvements and cost savings, and thus it follows that performance-related information about investment costs incurred, capabilities delivered, and benefits realized is available and can be reported relative to program expectations. Moreover, programs that have not yet delivered capabilities or realized benefits have nevertheless incurred costs, which DOD can report relative to expected costs. (2) The report identifies certification actions associated with 116 business system modernization investments. However, the report omits certification actions for 40 other investments. According to DOD officials, the omitted actions are not new certifications, but rather are recertifications that were intentionally excluded from the report. However, certification memoranda show this is not the case for four of the actions and DOD guidance defines a recertification as a type of certification action. Further, the underlying bases for a number of reported actions are limited because program weaknesses that GAO's prior work has raised, such as the reliability of the systems' economic analyses and the sufficiency of business enterprise architecture compliance determinations, are not reflected in the reported certification actions. DOD's guidance does not require that certification submissions disclose program weaknesses that GAO has raised, and DOD officials stated that reviews are limited to the information that is submitted. As a result, DOD's annual report does not provide the full range of information that is needed to permit meaningful and informed congressional oversight of the department's business systems modernization efforts. Moreover, the bases for some certification actions exclude relevant information about known investment weaknesses, and thus these actions may not be sufficiently justified.