Conclusions

DOD does not have a financial management enterprise architecture, and it does not currently have the management structures and processes in place to effectively develop, implement, and maintain one. DOD has not applied recognized best practices: in particular, support and sponsorship by the head of the enterprise, and assignment of accountability and commensurate authority for developing, implementing, and maintaining a DOD-wide financial management enterprise architecture. Nevertheless, DOD’s various components are either spending or planning to spend billions of dollars to acquire new or modify existing financial management systems. If DOD continues down this road, it runs the serious risk that its components will spend billions of dollars modifying and modernizing financial management systems independently from one another, resulting in DOD perpetuating an existing systems environment that suffers from duplication of systems, limited interoperablity, and unnecessarily costly operations and maintenance. As part of its plans for investing in financial management systems modernization, DOD has taken some actions that appropriately exploit lessons learned from its Year 2000 program. DOD can build upon actions such as these and activities already underway to ensure that it employs recognized best practices for enterprise architecture management. DOD can thus position itself to cost effectively manage the billions of dollars it plans to spend to address its high-risk financial management operations. This approach will increase DOD’s chances of modernizing its financial management operations and supporting systems in a way that will optimize financial management performance and accountability. We further recommend that the Secretary immediately (1) issue a DOD policy that directs the development, implementation, and maintenance of a financial management enterprise architecture and (2) modify the Senior Financial Management Oversight Council’s charter to   designate the Deputy Secretary of Defense as the Council chair and the Under Secretary of Defense (Comptroller) as the Council vice-chair;   empower the Council to serve as DOD’s financial management enterprise architecture steering committee, giving it the responsibility and authority to ensure that a DOD financial management enterprise architecture is developed and maintained in accordance with the DOD C4ISR Architecture Framework;   empower the Council to serve as DOD’s financial management investment review board, giving it the responsibility and authority to (1) select and control all DOD financial management investments and (2) ensure that its investment decisions treat compliance with the financial management enterprise architecture as an explicit condition for investment approval that can be waived only if justified by a compelling written analysis; and   expand the role of the Council’s System Compliance Working Group to include supporting the Council in determining the compliance of each system investment with the enterprise architecture at key decision points in the system’s development or acquisition life cycle.
What GAO Found

The Department of Defense (DOD) does not have a financial management enterprise architecture, and it does not have the management structures in place to effectively develop, implement, and maintain one. DOD has not applied recognized best practices--particularly support and sponsorship by the head of the enterprise and assignment of accountability and commensurate authority--to develop, implement, and maintain a DOD-wide financial management enterprise architecture. Nevertheless, DOD's various components are either spending or planning to spend billions of dollars to acquire new or modify existing financial management systems. In the absence of a complete, enforceable enterprise architecture, such investments are unwise. DOD runs the risk that its components will spend billions of dollars to modify and modernize financial management systems independently from one another, forcing DOD to maintain a system that suffers from duplication, limited interoperability, and unnecessarily costly operations and maintenance. As part of its plan to invest in financial management systems modernization, DOD has tried to use lessons learned from its Year 2000 program. DOD can build upon these actions to ensure that it uses recognized best practices for enterprise architecture management. This approach will allow DOD to position itself to cost effectively manage the billions of dollars it plans to spend on financial management operations. This approach will also increase the odds that DOD will modernize its financial management operations and supporting systems in a way that will optimize financial management performance and accountability.