The Defense Department is protesting cuts made by House and Senate appropriators to its Business Management Modernization Program, a multiyear effort to overhaul Pentagon financial systems and business practices.
In its version of the fiscal year 2005 defense appropriations bill, the House reduced President Bush's $226 million BMMP request by $99 million, or nearly 44 percent. For its part, the Senate cut $45 million, or 20 percent.
One reason cited by some lawmakers for the cuts is a concern that BMMP lacks effective oversight of Pentagon-wide information technology spending.
"The department opposes the reductions because the change in direction of the programs will result in a substantial delay in implementation of solutions that enable transformation across DOD," a July 8 Pentagon appeal to lawmakers states. "Funding reductions will force the department to stop critical management reforms, impede our efforts to achieve a clean audit opinion, and jeopardize the president's desire to improve financial and business accountability throughout the federal government."
DOD officials want defense appropriations conferees to include the money Bush requested in the final version of the bill.
One of the top priorities for the BMMP effort is achieving clean financial audits for the department by the end of fiscal year 2007.
For years, the Pentagon has been hampered in trying to justify its books because its business processes and systems have been poorly integrated, according to the BMMP Web site. Thousands of systems employed by the services -- including those needed to inventory defense items -- cannot work together; not surprisingly, they fail to deliver timely information to decision-makers.
Plus, the systems are expensive to maintain, the site explains. With billions of dollars at stake, such inefficiencies mean less money for meeting more urgent warfighting needs.
The Clinton administration had started an effort to address faulty accounting in the Pentagon. Early in 2001, then Defense Secretary-designate Donald Rumsfeld promised Sen. Robert Byrd, the Appropriations Committee chairman at the time, he would endeavor to balance the department's books. DOD has to prepare audited financial statements under the Chief Financial Officers Act of 1990.
Not long afterwards, then-Pentagon Comptroller Dov Zakheim kicked off the Bush administration's effort to tackle the problem with a $100 million initial investment. In April 2002, the department hired IBM to help put together a vision for future DOD investments in business management technology.
For Rumsfeld, the project would become more than a matter of better bookkeeping. The initiative became part of his overall transformation agenda, which involves changing DOD practices to help the military become a more effective fighting force.
The defense secretary established BMMP to offer policy direction and oversight for business transformation. This includes making sure DOD business systems are in sync with the BMMP "transition plan" and "business enterprise architectures," more specific blueprints for moving the program along. Existing law says all investments in business systems costing more than $1 million must be consistent with an applicable BEA and the transition plan.
In its FY-05 defense appropriations report, the House explains why lawmakers in that chamber want to cut funds for BMMP. House appropriators are concerned about the way in which BMMP is being administered.
"Since implementation, Congress has appropriated over $300 million for BMMP, yet the General Accounting Office reports no significant changes in the [Pentagon's] business architecture or its investment in existing or new systems," the report states.
A May GAO review of BMMP found the Pentagon has implemented only two of 24 recommendations from earlier audits, according to the report. Recommendations that have yet to be adopted include one to institute "key architecture management best practices," it says.
"Additionally, GAO found that BMMP continues to lack effective control over investments in information technology programs resulting in billions of dollars being spent on the development and modernization of programs that may be duplicative or interoperable" with other DOD systems, the report states.
The Senate did not offer an explanation for its BMMP cut, according to the appeal.
For their part, defense officials say the Pentagon has made "great strides" this fiscal year in crafting an organizational structure to maximize oversight, while strengthening managerial and fiduciary controls, the appeal states. For example, within BMMP a "joint governance structure" has been established by dividing DOD business activities into six domains, each led by officials with "clearly defined roles and responsibilities."
The domains are accounting and finance, acquisition, human resources, installations and environment, logistics and strategic planning and budgeting. The DOD comptroller's office is playing a leading role in implementing changes in the accounting and finance and strategic planning and budgeting domains.
Each of the domains is intimately involved in crafting the BAE, as well as portfolio management and "capability migration strategies," the appeal states.
The president's full funding request is needed to "assess new and existing business systems to ensure they are compliant with business transformation goals, to document and unify desired business capabilities in an integrated DOD-wide blueprint (the BEA), and design and employ integrated business systems throughout the department with collaborative governance process and policies," the document adds.
The appeal goes into further detail to let lawmakers know how cuts made to specific funding areas would impact BMMP.
For example, operations and maintenance cuts would impair the development of a domain architecture, as well as an "integrated data strategy" and management processes like performance measurement.
Reductions in acquisition funding would slow progress in modernizing equipment for DOD business processes. The acquisition domain "has made great progress in re-engineering procurement processes, which are critical as they relate to the department's financial management goals," the appeal states. "The transformation of acquisition processes and consolidation of acquisition business systems is necessary to implement a modern integrated net-centric business environment."
The acquisition domain is pushing an aggressive program for FY-05, defense officials say. Plans include developing new means of assessing property and equipment accountability and valuation, and linking the domain's activities to broader federal "eGov" initiatives.
Proposed reductions to BMMP research and development accounts would make it difficult to examine new and existing business systems to ensure compliance with business transformation goals, according to the appeal.
Further, requested funds are needed to implement an "integrated end-to-end solution" that will "overcome current system limitations and enable DOD to produce auditable financial statements," it says. "A key aspect of the solution is the Standard Financial Information Structure that standardizes and centrally controls financial data across the department." -- Keith J. Costa