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IG: DoD may miss audit deadlines because of delays in system upgrades

Jul. 16, 2012 - 03:04PM   |  
By SEAN REILLY   |   Comments
Secretary of Defense Leon Panetta speaks at a press briefing at the Pentagon on June 29.
Secretary of Defense Leon Panetta speaks at a press briefing at the Pentagon on June 29. (Staff Sgt. Sun L. Vega / U.S. Army)

The Defense Department could miss deadlines for improving its financial audits because of delays in six modernization projects affecting financial management, logistics and other areas, the agency’s inspector general said in a report released Monday.

Those projects — known as enterprise resource planning systems — have collectively experienced $8 billion in cost overruns and schedule delays of a year-and-a-half or more in development and implementation, the report said (PDF).

Besides cutting into hoped-for cost savings, the delays increase the odds that the Pentagon will not meet a statutory September 2017 target for passing a full financial audit. Defense Secretary Leon Panetta’s 2014 goal of successfully completing a budget audit — one of four steps involved in meeting the full audit-readiness goal — is also at growing risk, the report said.

“DoD officials need to be more proactive and provide more oversight during development and implementation” of the systems, the report said

The Air Force’s Defense Enterprise Accounting and Management System (DEAMS), for example, was originally supposed to be fully deployed by October 2009. That milestone has now slipped to April 2017, while the projected price tag has quintupled from $420 million to almost $2.2 billion.

Also far behind schedule is the Army’s Logistics Modernization Program, now set for full deployment in September 2016, or more than 12 years later than once expected.

In both cases, program managers blamed the problems on the projects’ complexity and other factors.

Of the remaining four systems, the Army’s General Fund Enterprise Business System is scheduled for full deployment this month; the Navy’s Enterprise Resource Planning system, in August 2013; the DoD Enterprise Business System, in June 2014; and the Defense Agencies Initiative, in January 2016.

The state of the Pentagon’s books has been a mounting concern on Capitol Hill. Last year, an ad hoc panel of the House Armed Services Committee held a series of hearings dedicated to the subject. A spokesman for the panel’s chairman, Rep. Michael Conaway, R-Texas, had no immediate comment Monday on the IG’s findings.

Oversight of the overall modernization endeavor is the responsibility of the Defense Department’s Deputy Chief Management Officer, Beth McGrath. McGrath’s office did not respond to the findings of the draft report, the IG said, but has been asked to comment on the final report by Aug. 13.

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