DOD sizing up financial chaos

The Defense Department's comptroller called the effort to get DOD's financial systems under control a "mammoth undertaking," but he said that awarding the contract to develop the department's financial management architecture is a critical first step.

"This is a serious effort that is unprecedented," said Dov Zakheim, undersecretary of Defense and comptroller, during an April 10 Pentagon briefing.

Just a day earlier, DOD selected a team led by IBM Corp. to create the Pentagon's blueprint for fixing the department's tangle of more than 976 financial management systems. And Zakheim said that DOD officials are still not sure that they have accounted for all of the systems.

"We're pretty confident that now we are about 85 percent there," he said, adding that he would not be surprised if there were as many as 1,100 financial systems across the department.

The overall goal is for DOD managers to have the financial data needed to make management decisions, Zakheim stressed. DOD officials have largely given up efforts to achieve auditable books and are instead focusing on setting up the architecture for systems that will provide accurate data, which will then result in a clean opinion from auditors.

In a somewhat unusual move, DOD awarded the contract as a blanket purchase agreement through the Defense Finance and Accounting Service's contracting shop. By having contractors work through individual tasks, each awarded under that BPA, Pentagon officials will be able to keep tabs on the team's progress, officials said.

"What we were looking at is, who could put together a team that would bring to bear all aspects of this strategic initiative," he said.

The first task, which will take about a month, will be for the IBM-led team to present its plan for creating the architecture, said Tina Jonas, deputy undersecretary of Defense for financial management. That plan should include specific milestones for the coming year, she said.

DOD officials aim to have the financial management architecture in place by March 2003.

Zakheim said that it is important for DOD to get its financial house in order, and this architecture will allow the department to size up the problem for the first time.

"Financial management isn't just accounting," he said. "Financial management is a strategic activity. Everybody in industry knows that. Not everybody in government knows that."

IBM's team includes American Management Systems Inc., KPMG LLP, DynCorp, Science Applications International Corp. and Accenture.