These efforts were aimed at improving the department’s financial  management and related business operations. The report stated that “The Defense Travel System was being substantially  developed without the requisite requirements, cost, performance, and  schedule documents and analyses needed as the foundation for assessing  the effectiveness of the system and its return on investment.”  The report  further noted there was increased risk that the $114.8 million and 6 years of  effort already invested will not fully realize all goals to reengineer  temporary duty travel, make better use of IT, and provide an integrated  travel system. For fiscal year 2003, DOD has requested approximately $26 billion in IT  funding to support a wide range of military operations as well as DOD  business system operations. As shown in table 3, approximately $18 billion—the nearly $5.2 billion for  business systems and the $12.8 billion for business systems  infrastructure—relates to the operation, maintenance, and modernization  of DOD’s 1,731 business systems. Investment Management and Oversight of Key DFAS Accounting Systems Has Not Been Effective

DOD management and oversight authorities for the four case study  projects are DFAS, the DOD Comptroller, and the DOD CIO. Table 4 highlights these  cost increases and schedule delays. However, these analyses had not been updated to reflect  schedule delays, cost increases, and changes in scope that have occurred— each of which has an impact on the projected benefits that were originally  justified. DOD Oversight of DFAS IT Projects Has Not Been Effective

DOD’s oversight over the four DFAS projects we reviewed has been  ineffective. In  fact, as previously noted, after an investment of over $126 million and 7  years of effort, the DOD Comptroller terminated DPPS in December 2002. We reported that this stovepiped decision-making  process has contributed to the department’s current complex, error prone  environment of over 1,700 systems. In each of the four system projects we discuss in the report, DOD has  invested millions of dollars without economically justifying its investments,  in large part because those entities responsible for managing and  overseeing these investments have not required such justification despite  schedule slippages, cost overruns, and reductions in planned capability. Scope and Methodology

To obtain an overview of DOD’s current business systems environment we  met with representatives of the then Financial Management Modernization  Program Office to obtain information on the number of systems that are  part of the current systems environment. To determine if DOD was effectively managing and overseeing its IT  investments, we focused on the four system projects previously noted. Order by Mail or Phone

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Why GAO Did This Study

The Department of Defense's (DOD) long-standing financial management and business systems modernization problems result in a lack of information needed to make sound decisions, hinder the efficiency of operations, and leave the department vulnerable to fraud, waste, and abuse. Such problems led us in 1995 to put financial management and business systems modernization at DOD on our list of high risk areas in the federal government, a designation that continues today. GAO was asked to (1) provide information on the number and cost of DOD's current business systems and (2) determine if DOD is effectively managing and overseeing selected accounting system investments.

What GAO Found

DOD estimated that it had 1,731 business systems for its day-to-day operations as of October 2002. As GAO previously reported, these systems have evolved over time into the overly complex, error prone, duplicative, stovepiped environment that exists today. To support the operation, maintenance, and modernization of its business systems, the department requested approximately $18 billion for fiscal year 2003. Funding is only part of the solution to improving DOD's current system environment. A key ingredient to success is effectively managing and overseeing these investments. DOD has invested approximately $316 million in four key Defense Finance and Accounting Service (DFAS) projects. However, DOD has not demonstrated that this substantial investment will markedly improve DOD financial management information needed for decision-making and financial reporting purposes. In fact, the DOD Comptroller terminated one project in December 2002, after an investment of over $126 million, citing poor program performance and increasing costs. Continued investment in the other three projects has not been justified because requisite analyses of the costs, benefits, and risks of each one do not reflect cost increases and/or schedule delays. DOD oversight of the four DFAS projects has not been effective. Collectively, DFAS, the DOD Comptroller, and the DOD Chief Information Officer share investment management responsibility for these four projects. However, these DOD oversight entities have not questioned the impact of the cost increases and schedule delays and allowed the projects to proceed absent the requisite analytical justification.