GAO Report Highlights Need for Improved Planning in DOD Financial Systems Transition by USMC
The GAO report "DOD Financial Management: Additional Steps Needed to Guide Future Systems Transitions" (GAO-24-106313) presents a thorough assessment of the Department of Defense's (DOD) transition of the Marine Corps to the Defense Agencies Initiative (DAI) accounting system. This change was intended to improve the Marine Corps' financial management and result in an unmodified, or clean, audit opinion. However, the research identifies numerous important areas where the DOD's planning and implementation fell short, resulting in delays and greater complexity.
The analysis demonstrates that the DOD did not include for all relevant expenses in its $1.448 billion life-cycle estimate for the Marine Corps' transition to DAI. While program expenditures were disclosed, numerous ancillary costs, such as contractor support and operation costs, were removed. This omission resulted in an underestimate of the transition's difficulty and the resources required. The DOD also failed to account for all necessary procedures and efforts in its schedule estimate, resulting in considerable miscalculation of the transition period. Initially, the Marine Corps intended to complete the transition by December 2021, however this goal was not met until February 2024. This delay emphasizes the significance of careful planning and realistic timing in large-scale changes.
The report blames the Marine Corps for failing to adequately define performance measures for measuring and monitoring the DAI transition's progress. Although some indicators were recorded, they were not sufficiently related to the transition's strategic goals, which included streamlining financial management capabilities, enhancing financial reporting accuracy, and ensuring financial statement auditability. Without detailed performance measurements, it is difficult to determine whether the transition is fulfilling its intended objectives or identifying areas for improvement.
Another worry raised in the report was the data migration and conversion process. For data migration and conversion, the Marine Corps adhered to five leading practices and partially followed another five. During the pre-conversion phase, the Marine Corps devised a comprehensive conversion strategy that included data mapping, cleansing, and testing. However, it did not adequately plan for post-go-live data cleansing and quality efforts, which are critical to ensuring data integrity in the new system. The cutover phase entailed completing the transition from the legacy system to DAI, although there were difficulties reconciling converted data and implementing a solid backup strategy. While the Marine Corps confirmed that the converted data worked as expected, it needed to do more extensive data cleansing to resolve remaining errors and unmatched transactions.
Throughout the transition, change management procedures were also inconsistent. To manage commitment, the Marine Corps implemented certain leading practices, including defining a vision for change, identifying stakeholders, and engaging with them. However, it partially followed techniques for identifying stakeholder opposition to change and improving staff skills and competencies. Effective change management is essential for ensuring that all stakeholders are in agreement and that any barriers to change are handled proactively. According to the report, the Marine Corps did not undertake formal stakeholder feedback surveys during or after the transition, which may have offered useful information about user acceptance and satisfaction.
The GAO study presents 14 suggestions to the Department of Defense to improve cost estimation, schedule planning, performance evaluation, data migration, and change management for future system migrations. These proposals emphasize the importance of more extensive and inclusive planning processes, accurate cost and effort estimates, and the implementation of strong performance measures. The DOD agreed with 13 of these recommendations, recognizing the need for improvement in these areas. However, given the progress made thus far, the department recommended that some recommendations be combined, eliminated, or closed.
The Marine Corps' transition to the DAI accounting system exemplifies the problems and complications of updating financial systems in large organizations. The GAO report emphasizes the need for extensive planning, realistic cost and schedule estimates, comprehensive performance measurement, and effective change management. By resolving these issues, the DOD may increase the success rate of future system changes and strengthen its financial management capabilities. The lessons acquired from this transition can serve as a valuable guide for other federal agencies embarking on similar modernization programs, ensuring that they meet their strategic goals and provide improved outcomes for their stakeholders.