DoD trying to take cost out of operations

Beth McGrath, DoD\'s deputy chief management officer, said reworking acquisition regulations will include new ways to buy technology and promote agile developme...

By Jason Miller
Executive Editor
Federal News Radio

The Defense Department’s acquisition regulations are undergoing a major rewrite for the first time since 2008.

Known as the 5000 regulations, DoD’s Office of Acquisition Technology and Logistics (ATL) will issue new acquisition policy later this year, said Beth McGrath, DoD’s deputy chief management officer.

McGrath said DoD will include new approaches for how to buy technology in the rewrite.

“Our templates for the IT types, so if you are buying a service, or an ERP or some other type of IT capability, will be included in the 5000 rewrite,” said McGrath in an exclusive interview with Federal News Radio.

Part of DoD’s new approach to buying technology is the move to agile development where testing and evaluation, and certification and accreditation are done together instead of as separate, time consuming and costly efforts.

McGrath said the Air Force is testing this agile approach with the test and evaluation and certification and accreditation combination with its Defense Enterprise Accounting Management System (DEAMS) project.

“Once the baseline is stable enough to go through tests and it passes its operational tests, we have restructured its acquisition approach to then be deployed to five additional sites, which is at least a year or year-and-a-half sooner than it was previously planned by taking advantaged of acquisition reform,” she said after her speech at the 2011 Performance Symposium sponsored by Six Sigma Live, DoD and the Performance Improvement Council in Lansdowne, Va.

The Air Force DEAMS pilot includes more than 1,100 users at Scott Air Force Base in Illinois and other military bases around the country. DEAMS will replace outdated financial systems with Oracle software that will give DoD timely and accurate financial data.

DEAMS is one of 12 enterprise resource planning (ERPs) systems across DoD.

McGrath said the goal is improve oversight over these ERPs by standardizing data, decreasing interfaces and ensuring data interoperability.

“What we are trying to do is make sure we are maximizing those investments,” she said. “Of the $7 billion we spend on the business IT about $1.4 billion is to the new stuff and it’s predominantly the ERPs. It really is opening up the investment aperture to say, ‘where is our money being invested because there is a whole lot being invested in the legacy environment just by doing the straight math. So we want to maximize the capabilities of the ERPs whenever we can.'”

She added as they look at the ERPs and see capabilities that military services are underutilizing or not using, they are indicators of potential business process change.

McGrath said her office is making sure the services’ ERPs are using standard data and standard interfaces.

“In the financial space, we have the standard financial information structure,” she said. “So we actually have enterprise standards defined in the HR space, the Common HR Information Standards, known as CHRIS. As we know investments are coming, we need to make sure we have the standards locked so we can aggregate the data at the end of the day.”

Along those lines, McGrath expects the Army and Air Force to issue request for proposals in the coming year for new HR systems to replace the failed Defense Integrated Military HR System (DIMHRS). DoD ended DIMHRS after spending about $1 billion and realizing the services and Defense agencies can’t use the same HR system.

But what DoD also realized after it ended DIMHRS was the services could standardize certain business processes.

McGrath is leading a broader effort, called business process reengineering, to standardize 15 common, commercial processes, such as hire-to-retire, procure-to-pay and order-to-cash.

She said DoD is focusing on hire-to-retire and procure-to-pay initially because all the services are updating or implementing new systems.

“We want to ensure as they pursue their acquisition solutions they are aligned with the HR standards, that we have a standard process, so at the end of the day we can aggregate the information,” McGrath said. “That’s the important piece to define the process and data standard so you can aggregate the information at the end of the day.”

DoD has documented all 15 of the commercial processes in their business architecture at a high level. But for hire-to-retire and procure-to-pay, McGrath said those business processes are more detailed under the architecture.

She said eventually all 15 will be broken down in greater detail to define data and data standards.

She said order-to-cash is the next focus area because of the financial management impact. Additionally, DoD is trying to standardize its case management systems for selling military hardware to foreign countries. She said DoD has four or five case management systems and they want to harmonize the data to improve visibility into the cases.

Congress required DoD to go through this business process reengineering (BPR) for any system that cost more than $1 million. McGrath said there is a provision in the 2012 Defense authorization bill that could expand BPR to all DoD systems.

The end goal of all of this is to have better, less expensive business processes. McGrath said DoD is looking at how best to take the cost out of operations.

“We are taking a look at the basic cost drivers. Can we be more efficient and effective in just the administration of some of our most basic activities, workflow instead of doing manual processes in terms of doing documentation management, utilizing standard forms and format for basic correspondence, those kind of things?” she said. “There is a lot that can be saved from a productivity perspective that we are really focused on so we are more current from an IT perspective.”


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