Government Waste: Can’t Track Spending on $4.3 Billion Army System to Track Spending

Inspector General Reports New System Does Not Follow the Law

Government Waste: Can’t Track Spending on $4.3 Billion Army System to Track Spending
September 25, 2014

It is getting harder and harder to parody government programs these days. Every time we think we have seen the heights of absurdity, something even more breathtaking in its absurdity comes along.

This month’s candidate is provided courtesy of the U.S. Army.

Back in 1997, the Army launched the Global Combat Support System (GCSS–Army), a comprehensive system for logistical support that allows integrated tracking of spare parts, supplies and other equipment – as well as tracking maintenance efforts, cost of ownership, and various financial metrics.

That effort is still underway; it is scheduled for completion in September 2017. That is not a surprise given the scope of the project and the levels of bureaucracy to deal with. GCSS-Army is intended to replace 13 legacy systems, and upon completion, it is expected to host 160,000 users across 343 different units.

Technology has obviously advanced since 1997, and accordingly, in 2003, the program was switched from a customized software system to a flexible and adaptable web-based ERP (Enterprise Resource Planning) system based on SAP®. The Army spent around $95 million before switching to the ERP approach. Again, we are not surprised.

As of February 2014, the Army has spent approximately $725.7 million so far implementing GCSS–Army, and the total cost will be approximately $4.3 billion. We are certainly not surprised by the size of those numbers.

According to a recent inspector general’s (IG) report, GCSS-Army does not comply with multiple federal laws. It does not meet government standards for reporting and the preparation of auditable financial statements. Basically, the system the Army has been installing for 17 years to track spending does not meet standards to track spending.

Okay, now we are surprised. Perhaps we shouldn’t be, but we are.

The IG’s report goes on to say that the collective Army and Department of Defense (DoD) management did not have sufficient annual reviews in place to guarantee compliance, nor did it have the procedures necessary to conduct them.

Of 15 account attributes that were tested, one-third of them were not compliant with Treasury/DoD guidelines, encompassing approximately $1.8 billion of collective financial impact.

Further, the accounting system of the Army showed discrepancies in the debits and credits that were reported – potentially undercounting the amount that has been spent and correspondingly overstating the amount left to spend. GCSS-Army has capabilities to detect abnormal balances in accounts, but this system misidentified balances in some cases – calling abnormal balances normal and vice versa.

The GCSS-Army webpage states that it will be financially compliant and financially auditable by the end of fiscal 2017, and the IG’s report outlines recommendations for reviews and other goals to meet the implementation date. There is no mention of how much it is expected to cost when it is done, although the responses from the Army in the IG’s report suggests that there will be some further modifications needed to SAP and significant cost overruns. Is anybody surprised?

Joking aside, we want the Army to succeed in this venture. Arguably, the problems the Army has encountered in putting in a comprehensive logistics and cost-tracking system shows just how badly the Army needs one.

$4.3 billion is an astonishing amount of money for a system, but given the overall budget of the Army, a functioning system would probably pay itself back in a relatively short period of time – as well as gaining America’s trust that our tax dollars are being properly monitored. If and when that occurs, we will truly be surprised!

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