NGEN Alternatives

A new Government Accountability Office report released today finds that the Navy "did not sufficiently analyze alternative acquisition approaches" for the Next Generation Enterprise Network, the program that is supposed to replace the Navy-Marine Corps Intranet.

GAO found that the Navy's "alternatives analysis contained key weaknesses, and none of the alternatives assessed match the current acquisition approach." Specifically:

[T]he cost estimates for the respective alternatives were not reliable because they were not substantially accurate, and they were neither comprehensive nor credible. Further, the operational effectiveness analysis, the other key aspect of an analysis of alternatives, did not establish and analyze sufficient measures for assessing each alternative's ability to achieve program goals and deliver program capabilities. Moreover, the acquisition approach that DON is actually pursuing was not one of the alternatives assessed in the analysis, and it is riskier and potentially costlier than the alternatives analyzed because it includes a higher number of contractual relationships.

GAO found that the Navy's analysis "reflects the most that could be done in the time that was available to complete it, and [service officials] do not view the alternative selected as materially different from the assessed alternatives, even though it is about $4.7 billion more costly."

Additionally, the report states that the Navy "does not have a reliable schedule for executing NGEN." Specifically:

Only two of the four subschedules that GAO reviewed, each of which help form the master schedule, adequately satisfied any of the nine practices that are associated with developing and maintaining a reliable schedule. These weaknesses have contributed to delays in key program milestones. During the course of GAO's review, DON stated that action was taken to address some, but not all, of these weaknesses. According to program officials, schedule estimating was constrained by staffing limitations. NGEN acquisition decisions were not always performance- and risk-based. In particular, the program was approved in the face of known performance shortfalls and risks. For example, the program was approved at a key acquisition review despite the lack of defined requirements, which was recognized as a risk that would impact the completion of other key documents, such as the test plan. This risk was later realized as a critical issue. According to program officials, the decisions to proceed were based on their view that they had sufficiently mitigated known risks and issues. Collectively, these weaknesses mean that DON does not have a sufficient basis for knowing that it is pursuing the best approach for acquiring NGEN capabilities and the program's cost and schedule performance is unlikely to track to estimates. GAO is recommending that DOD limit further investment in NGEN until it conducts an interim review to reconsider the selected acquisition approach and addresses issues discussed in this report. In its comments, DOD stated that it did not concur with the recommendation to reconsider its acquisition approach; GAO maintains that without doing so, DOD cannot be sure it is pursuing the most cost-effective approach.

Consequently, GAO makes the following recommendations:

To ensure that NGEN capabilities are acquired in the most cost-effective manner, the Secretary of Defense should direct the Under Secretary of Defense for Acquisition, Technology, and Logistics to conduct an interim NGEN milestone review.

To ensure that NGEN capabilities are acquired in the most cost-effective manner, the Secretary of Defense should direct the Secretary of the Navy to immediately limit further investment in NGEN until this review has been conducted and a decision on how best to proceed has been reported to the Secretary of Defense and congressional defense committees.

To facilitate implementation of the acquisition approach resulting from the review, the Secretary of Defense should direct the Secretary of the Navy to ensure that the NGEN integrated master schedule substantially reflects the key schedule estimating practices.

To facilitate implementation of the acquisition approach resulting from the review, the Secretary of Defense should direct the Secretary of the Navy to ensure that future NGEN gate reviews and decisions fully reflect the state of the program's performance and its exposure to risks.

Inside the Navy reported in October that the service had transitioned to a continuity-of-services contract with Hewlett-Packard to keep NMCI up and running into fiscal year 2014 as the Navy prepared to put out the first request for proposals for NGEN. Moreover:

The service had originally planned to replace the 10-year-old NMCI program with NGEN on Oct. 1, but in April 2009 officials told reporters the transition was more complex than they envisioned and the service would need 43 months to phase in NGEN, during which NMCI would need to remain operational. Capt. Scott Weller, NMCI program manager, and Capt. Timothy Holland, NGEN program manager, told reporters in an Oct. 13 teleconference call that there would be little recognizable change over the next three-and-a-half years for the end user, but the Navy will take a greater role in the operation of the network.

"Continuity of services is just that: It supports a continuation of NMCI services while we transition to NGEN," Weller said. "By roughly 2014, we'll have all of NGEN in place with multiple contracts and at least two vendors."

The original contract for NMCI called for the vendor to basically run the network and make all necessary procurements, but officials now want the Navy to have greater say in the operation of the network. The Navy has already acquired copyrights from HP and will buy infrastructure from the company on an as-needed basis as leadership figures out how many government workers the Navy should have in key positions operating the network as opposed to the contractor.