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9/29/2010
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DoD Financial Systems $6.9 Billion Over Budget

As much as 12 years behind schedule, Pentagon officials blame the military's complexity and say that meeting Congressional audit requirements by 2017 will increase costs even further.




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The Department of Defense is $6.9 billion over budget and as much as 12 years behind schedule on a series of major financial systems upgrades, according to Congressional investigators.

The delays involve several enterprise resource planning systems that will replace as many as 500 existing systems. For example, the Expeditionary Combat Support System, which would replace disparate Air Force logistics systems with a single, consolidated logistics system, is about $2.2 billion dollars and 4 years behind schedule.

Among other functionality, the new systems, which include systems for the Army, Navy, Air Force and Marines, were slated to allow units to share financial information, create a common authoritative source for financial data, upgrade logistics systems and standardize financial processes within the military branches. Overall, the military spends more than $32 billion annually on information technology.

"The Department of Defense has again proven itself incapable of managing its budget and breaking promises to be auditable by 2017," Sen. Tom Coburn, R-Neb., said in a statement. "The American people deserve financial accountability from the Defense Department, and to know how their hard-earned dollars are being spent."

In a hearing before the Senate government affairs committee's subcommittee on federal financial management on Wednesday, defense officials will admit that many DoD financial systems are old, handle information in ways that don't meet current audit standards, and don't record data at the transactional level. However, they will express concern that Congressional requirements placed on the military to have fully auditable financial systems by 2017 will be a challenge.

"We have concerns that the cost far exceeds any benefits," under secretary of defense and DoD comptroller Robert Hale and DoD deputy chief management officer Elizabeth McGrath said in prepared testimony, adding that meeting this goal would require "expenditure of large sums" of money to improve the quality of information that DoD managers rarely use.

However, despite the massive cost and schedule over-runs, the upgrades are seen as important, as DoD has reported to Congress in the past that it can't assure that information reported in its financial systems is reliable, with the Government Accountability Office blaming the problems on problems with DoD business processes, controls and systems.

"Making sure the Department of Defense's financial books are in order isn't just about being a good steward of taxpayer's money," Sen. Tom Carper, D-Del., said in a statement. "It's about ensuring that our brave service men and women have the equipment and supplies that they need and that we're paying for."

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