Reforming Business Practices at the Department of Defense

The Department of Defense is the largest and most unique entity in the world, with over $1 trillion in assets, a workforce of 3.3 million and disbursements of over $400 billion. DoD has a worldwide presence of nearly 500,000 military and civilian personnel deployed across the globe.

To support its operations, the department relies on more than 2,000 business systems covering everything from accounting and logistics to procurement and personnel management. This infrastructure is hampered by a lack of functional and technical integration. Many of the systems are "home-grown"-built from the ground up to serve a particular purpose and not intended to be integrated. Integrating these systems is the key to ensuring that managers have timely, reliable and accurate information to accomplish their missions. In a bold attempt to break down an entrenched culture of stovepiped systems and achieve a new level of integration, DoD's Office of the Comptroller launched the Business Management Modernization Program (BMMP) in 2001. If successful, this new enterprise architecture and the management changes it envisions will revolutionize the way things are done at DoD.

As chairman of the House Government Reform Subcommittee on Efficiency and Financial Management, I have been closely following the progress made in implementing the BMMP. As with any major overhaul, daunting challenges need to be overcome. Our job in Congress is to ensure that the department has the tools and support needed to complete the job. I applaud DoD for setting its sights on achieving a clean audit opinion in 2007, but there is much more at stake here than producing financial statements. A clean opinion only tells part of the story. Problems with business systems are starting to have an impact on the department's mission. Over the past two years, we have heard from the Government Accountability Office (GAO) about serious problems relating to financial management and business systems: chem-bio suits unaccounted for, soldiers not receiving the right compensation, and vehicles cannibalized for parts because of inadequate supply systems.

These instances are troubling because they hinder operational effectiveness. While it is imperative to address these specific problems as soon as possible, we must keep in mind that we need the right solution for the long term.

Paycheck Woes

Often, it is difficult to impart a sense of urgency when discussing financial management. For this reason, I would like to highlight one of the most distressing examples of how poor financial management has affected operational effectiveness: problems with paying our men and women in uniform.

In a November 2003 report, GAO highlighted significant pay problems in National Guard units. I was one of several members of the Government Reform Committee to request a similar review of Army Reserve soldiers. Unfortunately, in both case studies, more than 90 percent of soldiers experienced serious problems receiving proper compensation-issues that distracted them from their missions, imposed financial hardships on their families and had a negative impact on morale and retention.

Most troubling is the fact that the vast majority experienced problems while they were deployed, often in remote, hostile environments. When our soldiers are risking their lives, the last thing they should worry about is the accuracy of their paychecks.

Although it is just one of many financial management functions performed at DoD, I cannot imagine a more important issue than how we take care of the courageous men and women who serve our country every day. As I visit troops overseas in places like Iraq, Afghanistan and Bosnia, I am always struck by the fact that their biggest concern is how their families are doing at home. Pay problems have a devastating effect on morale.

In light of the heavy burden placed on our reservists and the plan to activate more than 5,000 individual ready reserves, it is imperative that any pay issues and the underlying systemic problems that cause them be resolved as quickly as possible. I appreciate the fact that the Army has placed a high priority on fixing these problems, and I applaud the work that has been done so far. Since GAO identified pay problems for guardsmen back in November, officials from the Defense Finance and Accounting Service and the Army Finance Command have worked closely with the Government Reform Committee to communicate the many actions they have taken.

I want our soldiers to know that Congress is on top of this critical issue, and we want it fixed-both in the near term and over the long haul as DoD re-engineers its business processes. Mitigating and preventing these problems are the reason we need better financial management.

To a certain extent, there is a certain irony in that we have the finest military force in the history of the world, but our business structure is stuck in the middle of the 20th century. We have no choice but to aggressively reform DoD's financial management and business processes-not only because billions of tax dollars are at stake, but because our soldiers in the field deserve nothing less.

Representative Todd R. Platts represents the 19th District of Pennsylvania and is chairman of the House Government Reform Subcommittee on Efficiency and Financial Management.

(This editorial appeared in the September 2, 2004 issue of Military Information Technology magazine).