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Friday, October 01, 2010

DoD will spend at least $6.9 billion more on ERPs

The future financial systems health of the Defense Department depends on enterprise resource planning projects that are mostly late and over budget, according to the Government Accountability Office.

In testimony presented Sept. 29 before a Senate Homeland Security and Government Affairs subcommittee, the GAO said the Defense Department has identified 10 ERPs essential to transforming its business operations. Of those ten, so far one--the Defense Logistics Agency's Business System Modernization--has been implemented despite $5.8 billion already spent, according to the GAO.

That spending figure will likely increase by at least another $6.9 billion, according to figures in the GAO's prepared testimony.

During the hearing, Defense officials emphasized the importance of ERPs in making the notoriously messy DoD books auditable at fiscal year's end. The 10 ERPs being implemented should replace more than 500 legacy systems.

As for the department's stated goal of achieving a clean audit by 2017--a goal that previously was by 2007, but which was changed after the Pentagon realized it would be impossible--Robert Hale, the DoD comptroller and chief financial officer, said it's doable. That is, doable for budget information and information pertaining to mission critical assets.

"If we try for everything, I'm afraid we'll get nothing once again. I believe firmly we've got to pick some priorities and go after it. The only way, in my mind, to set those priorities is to focus on what we use to manage in the Department of Defense," Hale said.

Under current audit guidelines, a clear financial picture in those areas would be insufficient to get a clean audit, Hale acknowledged. The rules might need to be changed, he added, since the hurdle to getting a clean audit would be historical asset cost data.

-David Perera, FierceGovernmentIT.com
For more:
- go to the hearing webpage, complete with prepared statements, or go directly to the webcast
- download the GAO's prepared testimony (.pdf)
- read the fiscal 2010 Defense authorization bill

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