DOD financial track suggested

The Defense Department will have to undergo a "radical financial management transformation," but even then it will take more than a decade before DOD is able to produce clean books, the authors of the latest report on DOD's financial management mess said July 10.

Unlike previous failed attempts to improve DOD's financial practices, there is a new push by DOD leadership to make this issue a priority, said Stephen Friedman, retired chairman and senior partner of Goldman Sachs & Co., who led the team that published the report.

The report, "Transforming Department of Defense Financial Management: A Strategy for Change," was commissioned by Defense Secretary Donald Rumsfeld two months ago.

Friedman said that the new leadership understands that it needs to fix the antiquated, stovepiped system that prevents the department from even assessing how much it would cost to fix the financial mess.

The report recommends a twin-track program. The first part of the plan is where DOD would employ a coordinated departmentwide management approach to developing standard integrated systems.

The second part, which the report calls "close-in success," would target projects within and across each military service that would provide short-term successes.

Critical to the success of the report's recommendations is the creation of a new Financial Management Information Integration Office, which would spearhead integration efforts, and a Management Initiatives Office, responsible for creating metrics for tracking progress.

There is no silver bullet, however, the report states bluntly: "The path to full transformation is a long one."

Yet DOD clearly illustrated its ability to effectively mobilize around an issue during efforts to fix computers for the Year 2000 date change, Friedman said. "This is doable," he said.