GAO chastises DOD buying system

Continued Investment in the Standard Procurement System Has Not Been Justified

The Defense Department has failed to follow the elemental steps for its troubled $326 million Standard Procurement System, according to a Sept. 4 General Accounting Office report.

"DOD's management of SPS is a lesson in how not to justify, make and monitor the implementation of [information technology] investment decisions," states the strongly worded GAO report dated July 2001. "Currently, DOD is not effectively performing any of these basic tenets of effective investment management on SPS and, as a result, DOD lacks the basic information to make informed decisions about how to proceed with the project.

SPS is intended to automate the often tedious and complicated process that DOD procurement shops use to buy supplies. American Management Systems Inc. won the SPS contract in 1997.

The system was scheduled to debut in March 2000, but has been plagued by delays. So far, SPS has been rolled out to roughly half of the armed service's 42,000 contracting officers.

The GAO report says the Defense Department has failed to:

* Ensure that accountability and responsibility for measuring progress against commitments are clearly understood, performed and reported.

* Demonstrate, on the basis of reliable data and credible analysis, that the proposed solution will produce economic benefits that make the cost worthwhile.

* Divide the project into incremental decisions to spread the risks over smaller, more manageable components.

* Use data to track project cost, schedule and performance to make investment decisions.

"DOD has not met any SPS program commitments and does not know whether it is meeting others," according to the GAO report, "DOD Systems Modernization: Continued Investment in the Standard Procurement System Has Not Been Justified."

GAO recommended that the Defense secretary make future SPS funding contingent on demonstrated benefits "that exceed costs" and that future investment decisions be based on "complete and reliable economic justifications."

DOD acting deputy chief information officer Margaret Myers, in a letter included as part of the report, said that while DOD concurs with parts of the report, "we disagree with the report's fundamental finding that the Standard Procurement System has not been justified."

"Requiring separate cost/benefit analysis and performance measures before each new software release or enhancement would increase the costs and increase the time needed to implement SPS," DOD said in its response.

DOD procurement director Deidre Lee is conducting a review of the system. That review has not yet been completed, a DOD spokesman said.