oversight

Defense IRM: Investments at Risk for DOD Computer Centers

Published by the Government Accountability Office on 1997-04-04.

Below is a raw (and likely hideous) rendition of the original report. (PDF)

                 United States General Accounting Office

GAO              Report to the Chairman, Committee on
                 National Security, House of
                 Representatives


April 1997
                 DEFENSE IRM
                 Investments at Risk for
                 DOD Computer
                 Centers




GAO/AIMD-97-39
                   United States
GAO                General Accounting Office
                   Washington, D.C. 20548

                   Accounting and Information
                   Management Division

                   B-271572

                   April 4, 1997

                   The Honorable Floyd D. Spence
                   Chairman, Committee on National Security
                   House of Representatives

                   Dear Mr. Chairman:

                   This report responds to your request that we review the Department of
                   Defense’s (DOD) plans to consolidate, outsource, and modernize its
                   computer center operations and assess whether DOD has an effective
                   framework in place for making and executing these decisions. DOD and the
                   individual military services have consolidated a number of their computer
                   centers in recent years and contracted with the private sector for
                   information processing services that were previously performed in-house.
                   These actions were part of an effort to find better and less costly ways of
                   meeting Defense information processing needs. DOD has recognized that
                   there are opportunities for further consolidations since, according to DOD
                   reports, about 40 percent of its computer centers still fall well below
                   governmentwide minimum processing capacity targets.

                   You also asked us to perform a subsequent detailed review of the plans of
                   the Defense Information Systems Agency (DISA) to consolidate and
                   modernize DOD’s megacenters, or central processing facilities. As agreed
                   with your office, we will be reporting separately on this issue.


                   DOD  has recognized the need to continue reductions in the cost of its
Results in Brief   computer centers’ operations through consolidation, modernization, and
                   outsourcing, but it has not yet established an effective framework for
                   making these decisions. This framework would include departmentwide
                   policies and procedures critical to the success of its efforts to improve
                   computer centers. These policies and procedures would establish targets
                   for how many computer centers the Department actually needs, define
                   how mainframe and mid-tier computer operations should be consolidated,
                   and identify the numbers and skill mix of staff that are required to operate
                   the centers, and what constitutes an optimum computer center. Defense
                   also has no mechanism for ensuring that the best money-saving
                   opportunities have been considered by the individual services and
                   components or that consolidation efforts will conform to federal
                   requirements or even meet the needs of the Department as a whole.




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              As a result, Defense services and components have developed individual
              strategies for consolidating and modernizing their computer centers that
              are inconsistent and contradictory to the Department of Defense as a
              whole and may well cause Defense to waste millions of dollars in
              computer center expenditures. For example, the consolidation plans of
              DOD’s primary information processing service provider, the Defense
              Information Systems Agency, assume services and components will send
              DISA additional information processing business. Most of the services and
              components, however, are not planning to do so. Thus, DISA’s planned
              investment, and in turn DOD’s, in providing new information processing
              services may be wasted. In addition, the consolidation strategies of the
              military services and DOD components did not always fully address critical
              planning elements required by the Office of Management and Budget (OMB)
              requirements that could help reduce the risk of waste, including
              alternative analyses, high-level implementation plans, and funding plans.
              Further, we found that the OMB and departmental guidance, particularly in
              addressing mid-tier computer centers, was unclear. This resulted in
              inconsistent interpretation and reporting for these centers. Therefore, OMB
              and DOD do not have assurance that the computer consolidation strategies
              are sound.

              Without better management over the implementation of its computer
              center strategies, Defense at best will only achieve optimization at the
              component level and forgo optimization for the Department as a whole.
              Moreover, Defense’s chief information officer is now required by the
              Paperwork Reduction Act of 1995, the Clinger-Cohen Act of 1996, and the
              Fiscal Year 1997 Department of Defense Authorization Act to develop and
              implement a plan for a management framework with policies and
              procedures as well as effective oversight mechanisms for ensuring that
              major technology related efforts, such as the computer center
              consolidations, conform to departmentwide goals.


              In conducting our review, we reviewed and analyzed various DOD
Scope and     computer center consolidation plans and reported costs and assessed how
Methodology   these plans met OMB’s Bulletin 96-02 requirements. We also compared DOD
              plans and practices to the practices and strategies employed by
              private-sector companies we visited during our review that have
              successfully consolidated computer centers. In addition, we met with
              consultants who advise computer center managers on improving services
              and with the General Services Administration’s Office of Governmentwide
              Policy and Federal Systems Management Center. We conducted numerous



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             interviews with DOD officials to discuss their approach to consolidating
             and modernizing computer centers. We also discussed with OMB officials
             the OMB Bulletin governing computer centers and their views on DOD
             responses. Details of our scope and methodology are included in appendix
             I.

             We did not validate the accuracy of the information provided by DOD on
             the numbers and costs of computer centers, the alternatives analyses,
             funding plans, and processing capacities. Our work was performed from
             March 1996 through January 1997 in accordance with generally accepted
             government auditing standards.

             The Department of Defense provided written comments on a draft of this
             report. These comments are presented and evaluated at the end of this
             letter and are reprinted along with our more detailed evaluation in
             appendix II. The Office of Management and Budget provided oral
             comments on a draft of this report which are incorporated in the report as
             appropriate and discussed at the end of this letter.


             The federal government owns hundreds of computer centers that perform
Background   such services as processing agency software programs, providing office
             automation and records management, and assisting in the management of
             wide area computer networks. In recent years, the federal government has
             recognized that most of these centers operate below optimum capacity,
             use outdated technology, and perform redundant services. It has
             concluded that it can achieve significant dollar savings and operational
             efficiencies by consolidating computer centers or by acquiring its
             information processing services from the private sector.

             In 1993, the Vice President’s National Performance Review1 recommended
             that the federal government take advantage of evolving technology and
             begin consolidating and modernizing its computer centers to reduce the
             duplication in information processing services and decrease information
             processing costs. To help implement this recommendation, a committee
             formed by the Council of Federal Data Center Directors2 recommended
             that the Office of Management and Budget establish operating capacity
             targets for the consolidated centers and that federal agencies follow an

             1
              Report of the National Performance Review: Creating a Government That Works Better and Costs
             Less, September 7, 1993.
             2
              The Council is a nonprofit organization that promotes the administration of information technology
             and computer centers.



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approach successfully used by private-sector companies and other
government agencies to plan, implement, and optimize their own
computer centers.

The Committee’s recommendations formed the basis of OMB guidance to
promote computer center improvements and consolidations, which was
issued in October 1995. This guidance, OMB Bulletin 96-02, Consolidation of
Agency Data Centers, called on agencies to (1) reduce the number of their
computer centers, (2) collocate small and mid-tier computer platforms in
larger computer centers, (3) modernize their remaining centers in order to
improve the delivery of services, and (4) outsource information processing
services to other federal or commercial computer centers when aggregate
computer center capacities were below minimum target sizes. Table 1 lists
OMB’s specific requirements.




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Table 1: OMB Requirements for
Computer Centers                Deadline                  Agency action
                                March 1, 1996             Submit an inventory of agency computer centers,
                                                          including

                                                          —each computer center’s name, location, and mission;
                                                          —the basic hardware configuration of the centers,
                                                          including the type of mainframe processors used and the
                                                          use of small and mid-tier processors (those machines that
                                                          fall in the range between a work station and mainframe
                                                          and provide such services as client servers and network
                                                          controllers);
                                                          —the numbers and skill mix of staff; and
                                                          —costs for hardware, software, staffing, utilities,
                                                          communications, and contract services.
                                June 3, 1996              Submit a computer center consolidation strategy for either
                                                          (1) meeting minimum computer center sizes established
                                                          by OMB or (2) describing how the agency planned to
                                                          outsource its processing to other federal or commercial
                                                          computer centers. This strategy was to include

                                                          —an alternatives analysis reflecting the technical
                                                          feasibility and cost- effectiveness of
                                                          alternatives—including outsourcing;
                                                          —an architecture design, or technical solution, identifying
                                                          the receiving and closing data centers and workload
                                                          realignment as well as the communications architecture;
                                                          —a high-level implementation approach identifying major
                                                          consolidation tasks and presenting a schedule,
                                                          milestones, and resources;
                                                          —a funding plan identifying and forecasting costs
                                                          associated with the consolidation process and funding
                                                          requirements for all major tasks associated with the
                                                          consolidation; and
                                                          —exceptions that could not be included in the
                                                          consolidation plan.
                                September 2, 1996         Submit a detailed implementation plan for consolidating
                                                          or outsourcing, including a detailed technical
                                                          architecture, a transition plan, a security and disaster
                                                          recovery plan, a human resources plan, and an
                                                          acquisition plan.
                                June 1998                 Complete consolidations.

                                OMB allowed agencies considerable discretion as to which data centers
                                they chose to retain and close so long as their consolidation scenario was
                                cost-effective and minimal data center target sizes were met. The target
                                sizes OMB set were based on a standard industry measure for information
                                processing: millions of instructions per second, or MIPS. OMB asked that
                                centers using IBM mainframe computers operate at 325 MIPS and centers




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    using UNISYS operating systems3 operate at 225 MIPS.4 Further, OMB
    permitted agencies to justify not consolidating centers that fell below the
    target size if a particular center

•   had a staff of less than five full-time employees,
•   housed scientific processors and would otherwise be at least 90 percent of
    the minimal target size, or
•   housed a large number of small and mid-tier processors and would
    otherwise be at least 90 percent of the minimal target size.

    OMB’s guidance is in keeping with recent congressional initiatives that
    focus on strengthening the planning and management of information
    technology efforts. In implementing the Paperwork Reduction Act and the
    Clinger-Cohen Act, OMB requires that information technology investments
    support core/priority mission functions and that they be undertaken by the
    requesting agency because no alternative private-sector or governmental
    source can efficiently support the function. These laws and OMB guidance
    also require agencies to establish an enterprisewide investment approach
    to information technology that includes selecting, controlling, and
    evaluating investments as part of an integrated set of management
    practices designed to link investments to organizational goals and
    objectives. Further, the National Defense Authorization Act for Fiscal Year
    1997 requires the Secretary of Defense to report the Department’s plan for
    establishing an integrated framework for management of information
    resources within the Department by March 1, 1997.5

    OMB’s guidance is also in keeping with the approach private-sector
    companies have taken in successfully consolidating and modernizing their
    own computer processing centers. We analyzed successful consolidation
    and modernization efforts carried out by three corporations and learned
    that they believed it was necessary to implement their strategies from a
    corporatewide perspective, rather than have separate components of their
    companies consolidate and modernize their own centers.6

    These companies also ensured that from the outset of their consolidation
    efforts, they had clear and consistent policies and procedures governing

    3
     Operating systems are the software that controls the execution of programs. An operating system may
    provide such services as resource allocation, scheduling, input/output control, and data management.
    4
     OMB set its MIPS targets below the private sector’s generally accepted targets because it believed that
    these targets were more achievable for government agencies and would result in significant savings.
    5
     This plan was submitted to the Congress on March 14, 1997.
    6
     We identified the corporations with successful computer center efforts through discussions with
    private-sector consultants and Defense officials.


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                      how computer center services would be improved. This guidance spelled
                      out such things as what constitutes an optimum computing center in terms
                      of capacity and staff, what skills were needed to operate the centers, what
                      cost and performance goals were relevant for the centers, and which
                      services could be outsourced. In setting capacity goals, the private-sector
                      companies we visited also generally attempt to reach targets that are
                      substantially higher than the ones set by OMB—from 1,000 to 3,500 MIPS.

                      In addition, we learned that private-sector companies we visited during
                      this review established strong oversight processes for ensuring that their
                      computer center decisions were based on accurate, complete, and current
                      information on cost, schedules, benefits, and risks; that all valid options
                      for their computer center services were fully addressed; and that their
                      current services were correctly benchmarked against comparable services.


                      In 1996, Defense reported to OMB that it owned 155 computer centers that
DOD Recognizes        perform a variety of information processing related services for the
Benefits of Further   services and components. Among other things, the centers run software
Consolidating,        programs developed by the military services and various Defense
                      components and provide information security services, customer help
Modernizing, and      desk services, and records management services. Sixteen of these centers
Outsourcing           are central processing facilities known as megacenters and are owned by
                      DISA. The remaining 139 centers are service- or component-unique centers.
Computer Centers
                      DOD  also reported that it was continuing to further optimize and
                      standardize its computer centers operations as part of departmentwide
                      and intra-agency consolidations that had started in 1990 and continue
                      today. Defense has recognized that these computer centers have been
                      operating inefficiently and that they need to adopt new technologies and
                      address the increasing loss of in-house technical expertise in order to
                      continue supporting the Department’s large and complex information
                      infrastructure. We agree with DOD that there are still many opportunities
                      for savings. In fact, table 2 shows that many of these reported centers
                      operate below the minimum processing capacity targets established by
                      OMB for government-owned computer centers and thus are good
                      candidates for consolidation or outsourcing.




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Table 2: Status of DOD Computer Centers at the Time of OMB Submissions (as of September 30, 1995)
Dollars in thousands
                                                                                                                     Number meeting
                                                                                           Number of centers private-sector minimum
                                Computer center                    Number of             meeting OMB criteria    capacity standard of
Service or component                     costsa               computer centers              for consolidation              1000 MIPS
DISA                                    $531,121                                 28                            16                            0
Other components                             60,287b                             26                            16                            0
                                                                                                                 c
Army                                     135,321                                 59                             3                            0
Navy                                         56,724d                             14e                           14e                           0
                                                                                                                    f
Air Force                                132,035                                 28                            13                            0
Total                                   $915,488                               155                             62                            0
                                         a
                                             Costs as defined in OMB Bulletin 96-02.
                                         b
                                             Does not include cost recovery for Defense Intelligence Agency. These costs are classified.
                                         c
                                           Army reported that 56 of its 59 centers, including its small and mid-tier centers, are used for
                                         remote or local processing or for unique service missions (e.g., National Guard, command and
                                         control) and therefore should not be considered for consolidation.
                                         d
                                             The Navy reported the costs of all its computer centers.
                                         e
                                          The Navy did not report the number of all its computer centers, only the mainframe centers were
                                         reported in its aggregate center inventory.
                                         f
                                          According to Air Force officials, 11 of its 13 small and mid-tier data centers are exempt from
                                         consolidation because they meet the provisions of the national security exemption within the
                                         Clinger-Cohen Act, which they believe exempts combat ammunition systems from consolidation.

                                         Source: DOD’s OMB Bulletin 96-02 inventory submissions. We did not independently verify this
                                         information.



                                         As table 2 indicates, 62 of DOD’s 155 computer centers—about
                                         40 percent—met OMB criteria for possible consolidation based on
                                         processing capacity targets. However, we believe that these numbers
                                         could be higher. As indicated in the table notes, many small or mid-tier
                                         centers were not considered as candidates for consolidation. According to
                                         OMB officials responsible for implementing the Bulletin, these centers
                                         should have been included unless otherwise exempted. Further,
                                         private-sector and government-sector studies have found that larger
                                         facilities allow organizations to economize on floor space, staff, and
                                         operating expenditures, and smaller centers tend to be cost-inefficient.7



                                         7
                                          Council of Federal Data Center Directors’ Federal Data Center Consolidation Committee,
                                         Consolidation of Federal Data Centers (February 1995) and KPMG Peat Marwick, Best Data Center
                                         Practices (December 1994).



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Before OMB issued its computer center Bulletin 96-02, DOD had determined,
based on industry practices, that consolidation would ’’position DOD to
more effectively support common data processing requirements across
services by leveraging information technology and resource investments to
meet multiple needs.’’ Since 1990, the Department has initiated and
completed multiple intra-agency consolidations. In 1993, the megacenters
were established as a result of (1) DOD’s base closures and (2) other
consolidation and cost reduction efforts. In establishing these centers, DOD
expected to change its information processing environment from one that
was stovepiped, or confined to individual military services and
components, to one that supported information sharing DOD-wide.
Accordingly, since 1990, DOD consolidated its computer center operations
by moving the workload and equipment from 194 DOD computer centers
into 16 DISA megacenters by fiscal year 1996, reporting a reduction in
processing costs of over $500 million.

After these consolidations, DOD initiated several studies that looked into
the question of whether the remaining megacenters should be further
consolidated, modernized, or outsourced. One study—done by the
Defense Science Board on the question of outsourcing DOD functions in
general—reported in August 1996 that processing at computer centers was
more expensive than at private-sector computer centers and it
recommended that DOD computer center services be outsourced.8

A second study—done by a private contractor on the question of
outsourcing, modernizing, and consolidating DISA’s megacenters for the
Assistant Secretary of Defense for Command, Control, Communications,
and Intelligence (C3I) in 1996—concluded that further consolidation and
outsourcing of megacenter operations was feasible.9 The contractor
reported that the megacenters’ life cycle (10 years) cost could be cut by
more than a billion dollars if the megacenters were consolidated to 6 from
16 and if certain computer center services—such as the customer help
desk and those services associated with day-to-day operation of the
centers—were fully outsourced.10

The Undersecretary of Defense, Comptroller, was also directed to submit a
report on the feasibility of outsourcing DOD’s megacenters to the House

8
  Report of the Defense Science Board Task Force on Outsourcing and Privatization, dated
August 1996.
9
 Strategy Options for Defense Information Services, Final Report, Coopers and Lybrand Consulting,
dated February 1996.
10
    We did not validate the savings estimate in this study.



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                         Appropriations Committee11 by January 1, 1996. In this report, which was
                         submitted to the Congress on December 26, 1996, the Comptroller largely
                         agreed with the recommendations made by the contractor study described
                         above and supported DISA’s proposed management plan to implement
                         those recommendations. Some of our concerns with this plan, which is
                         DISA’s consolidation strategy, are discussed in more detail in the next
                         section of this report. In addition, as noted in the beginning of this report,
                         we will be reporting separately on our detailed review of DISA’s plans.


                         While DOD and its components have made progress in consolidating and
Consolidation            finding opportunities to optimize and outsource many of the functions of
Strategies Are           its computer center operations, DOD is still missing opportunities to
Inconsistent and Fall    achieve even greater savings under its current approach. The Defense
                         leadership has chosen to allow the individual military services and
Short of Meeting OMB     components to carry out their computer center consolidation and
Requirements             modernization efforts independent of any departmentwide framework. In
                         fact, the Assistant Secretary of Defense for C3I, as part of his guidance
                         when forwarding the OMB Bulletin, stated “that each Service and Defense
                         Agency has the flexibility to reduce its data centers in a manner that is
                         consistent with the DOD Component’s goals, management philosophy, and
                         environment as long as such reductions occur within the framework of the
                         OMB guidelines.” This decision has resulted in inconsistent and
                         contradictory strategies which fall short of meeting OMB’s requirements
                         and what we believe to be the intent of OMB’s Bulletin. We also learned that
                         some of the inconsistency and incompleteness of reported plans and
                         strategies was caused, in part, by DOD’s broad and inconsistent
                         interpretations of the OMB Bulletin. Appendix IV provides a detailed
                         analysis of how the military services and components responded to OMB’s
                         Bulletin. The following discussion highlights our findings.


Strategies Vary Widely   As shown in the two tables that follow, the computer center consolidation
                         plans of the individual military services and components submitted to OMB
                         to date vary widely. For example, the Air Force, the Army, three Navy
                         commands, and three Defense components plan to further consolidate
                         in-house, while other parts of the Army and Navy, as well as the Defense
                         Investigative Service, are choosing to keep their computer center
                         operations in-house without further consolidation. Many of the strategies
                         reflect a move toward mid-tier solutions without considering the potential


                         11
                          As directed by the House and Conference Reports accompanying the Fiscal Year 1996 Defense
                         Appropriation Act.



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                                  for consolidation. Only the National Imagery and Mapping Agency and
                                  parts of the Navy chose to outsource (to DISA) their center operations.
                                  Further, just two services—the Air Force and the Army—considered
                                  inter-service consolidation of their respective computer centers within the
                                  Pentagon, and this action was already underway prior to the OMB Bulletin.
                                  Table 3 describes the approaches the services and components have
                                  decided on. Table 4 compares the strategies.

Table 3: Computer Center
Consolidation and Modernization   Agency                        Approach
Approaches                        DISA                          Continue to consolidate to 16 megacenters and then to
                                                                further consolidate the 16 megacenters and outsource
                                                                certain services. Attract new mainframe and mid-tier
                                                                processing business from other components and military
                                                                services.
                                  Air Force                     Continue its ongoing modernization, moving to a
                                                                client-server architecture and outsourcing efforts at three
                                                                of its computer centers, and consolidate its Pentagon
                                                                Center with the Army’s. Identify computer centers that can
                                                                transfer applications from mainframe to other
                                                                environments. Consolidate or outsource any remaining
                                                                computer centers.
                                  Army                          Retain local area networks and file servers at the
                                                                installation level. Consolidate its center in the Pentagon
                                                                with Air Force. Continue with in-house operations for its
                                                                Personnel Information Systems Command and Army
                                                                Reserve Personnel Data Centers, pending further analysis
                                                                on migration to client-server architecture.
                                  Navy                          Transfer the workload from eight centers to DISA. Retain
                                                                the Navy Medical Information Management Center
                                                                computer in-house pending further review of alternatives.
                                                                Transfer the remaining processing that is below MIPS
                                                                target levels to new, in-house, mid-tier computers.
                                  Defense Commissary Agency Moving to a client-server architecture.
                                  Defense Intelligence Agency   Continuing to consolidate and modernize in-house
                                                                systems and outsource some services.
                                  Defense Investigative Service Its center exceeds minimum consolidation thresholds.
                                                                Moving to a client-server architecture.
                                  Defense Logistics Agency      Mainframe processors consolidated. Continuing in-house
                                                                consolidation of mid-tier centers. Explored using other
                                                                federal data centers for potential outsourcing; analysis
                                                                supported retaining the work in-house.
                                  National Imagery and          Will transfer new system work to DISA’s megacenters.
                                  Mapping Agency
                                  Defense Special Weapons       In final stages of consolidating its three computer centers
                                  Agency                        into two in-house computer centers.




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Table 4: Comparison of the Consolidation and Modernization Strategies
                        Maintain status     Consolidate         Outsource       Outsource           Attract new
Agency                  quo                 in-house            centers         selected services   business
DISA                                       X                                    X                   X
Air Force                                  X                                    X
Army                    X                  X
Navy                    X                  X                   X
Defense Commissary      X
Agency
Defense Intelligence                       X                                    X
Agency
Defense Investigative   X
Service
Defense Logistics                          X
Agency
National Imagery and                                           X
Mapping Agency
Defense Special                            X
Weapons Agency

                                         We found that some of these strategies had contradictions that might well
                                         have been prevented had Defense better coordinated its computer center
                                         efforts. For example, as table 3 notes, the Department’s primary
                                         information processing service provider, DISA, intends to modernize and
                                         consolidate its megacenters and begin to offer mid-tier processing services
                                         to attract additional business from the services and components. DISA
                                         believes that significant reductions in the cost of operations could be
                                         achieved and that much of DOD’s computer processing is well suited for
                                         consolidation to DISA’s computer center operations.

                                         However, it is clear from the strategies described above that most of the
                                         services and agencies are not considering sending additional business to
                                         DISA, and DISA has no authority to require the services and components to
                                         make such transfers. The Army, the Air Force, and the Defense Logistics
                                         Agency, for example, do not plan to increase their use of DISA services.
                                         Together, about $385,000 of the reported $915,500 spent on computer
                                         center operations is outside of DISA.


Consolidation Strategies                 Most of the consolidation strategies submitted by the military services and
Do Not Meet OMB                          components to OMB failed to fully address all of the planning elements
Requirements                             addressed in the Bulletin. For example, some services and components did



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not provide sufficient information to show that they had (1) performed
thorough analyses of their planned options, (2) demonstrated that they
had ensured that they have the correct technical solutions to their
computer center operations, (3) prepared even a high-level
implementation approach to the major tasks associated with
consolidation, or (4) provided estimates on how much it will cost to
consolidate and modernize. Therefore, DOD and OMB do not have assurance
that the services and components are addressing these critical planning
elements in carrying out their strategies or that the approaches they have
chosen are sound.

Table 5 summarizes how the individual services and components
responded to the OMB Bulletin. (“N” meaning they didn’t respond, “Y”
meaning they did respond, “P” meaning they partially responded, and
“N/A” meaning not applicable.) The table illustrates that the Defense
Intelligence Agency, Defense Investigative Service, and Defense Special
Weapons Agency were the only DOD components in compliance with all of
the OMB requirements. The Army was the only other component to have
submitted a complete alternatives analysis for its computer centers. The
table also shows that the Air Force, DISA, the Defense Commissary Agency,
and the Defense Logistics Agency either partially addressed or did not
address the requirements. As noted earlier, a more detailed analysis of the
responses is provided in appendix IV.




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Table 5: GAO Analysis of How Services and Components Responded to OMB Requirements for Consolidation Strategies
                                                Air
OMB requirements                          DISA  Force Army Navy       DeCA DIA        DIS     DLA     NIMA DSWA
Alternatives analysis reflecting technical       P         P         Y         P          N         *         Y         P         P         Y
feasibility and cost-effectiveness of
alternatives including outsourcing?
Architecture design identifying receiving and    N         P         Y         P          N         *         *         P         Y         Y
closing centers and workload realignment as
well as communications architecture?
High-level implementation approach               N         P         P         P          N         *         *         P         P         Y
identifying major consolidation tasks and
presenting a schedule, milestones, and
resources?
Funding plan identifying and forecasting       N           P         P         P          N         *         *         P         N         Y
costs associated with the consolidation
process and funding requirements for all
major tasks associated with the consolidation?
Exceptions identified that could not be          N/A       Y         Y         N/A        N         Y         Y         Y         N/A       Y
included in the consolidation plan?
                                                *Agency reported that its computer centers met OMB’s consolidation threshold for processing
                                                capacity.

                                                Legend

                                                Y=Responded.
                                                N=Did not respond or response was inadequate.
                                                P=Partial response provided. (Partial responses are explained in more detail in appendix IV.)
                                                N/A=Did not request or did not apply.



                                                As reflected in table 5, we determined that the DOD submissions did not
                                                always comply with the OMB requirements. When we discussed this with
                                                DOD officials, they said that their submissions did not always describe their
                                                consolidation plans for their non-mainframe computer centers because
                                                some of the components believed that the guidance only applied to
                                                mainframes and others believed that the guidance did not apply to actions
                                                already underway and approved through DOD’s life cycle management
                                                process. These officials had interpreted the Bulletin as requiring that
                                                non-mainframe computer centers be included in the inventory but not in
                                                the consolidation strategies, unless they affected the center’s meeting the
                                                minimum target size. When we discussed this with OMB officials, they
                                                disagreed with DOD’s interpretation. They stated that the Department’s
                                                non-mainframe centers also should have been addressed in both the
                                                inventories and the consolidation strategies.




                                                Page 14                                                            GAO/AIMD-97-39 Defense IRM
                        B-271572




                        We also asked OMB officials why they required submissions from each of
                        the military departments and one from DOD. OMB officials told us that they
                        required four separate submissions based on their interpretation of the
                        Paperwork Reduction Act of 1995, which defined DOD as the Department
                        of Defense and the three services. However, they further stated they would
                        have preferred to receive from DOD a departmentwide inventory,
                        consolidation strategy, and implementation plan that clearly reflected a
                        departmentwide analysis and direction for DOD decisions on computer
                        centers. We believe such a departmentwide approach is consistent with
                        the intent of the Bulletin and the Clinger-Cohen Act to ensure that
                        opportunities to consolidate centers among services and components
                        were maximized. Instead, these officials stated that OMB received separate
                        and conflicting responses that failed to provide a clear view of
                        consolidation across components. OMB officials further stated they had
                        difficulty determining how many centers DOD currently had and planned to
                        have after the consolidations.

                        When we discussed the multiple submissions from DOD with Defense
                        officials, the Assistant Secretary of Defense for C3I acknowledged that the
                        military services and DOD components had developed individual plans.
                        However, he believed that separate plans were allowed by the OMB Bulletin
                        and that OMB did not request a departmentwide strategy or plans. However,
                        the Assistant Secretary agreed that the Department needs a
                        departmentwide policy guidance and framework as DOD seeks additional
                        opportunities for economies and efficiencies in its data center operations.
                        The Assistant Secretary also agrees that future decisions should be based
                        on sound business analyses and that the Clinger-Cohen Act provides a
                        context and leverage for these guidelines.


                        Although DOD has been consolidating its computer centers since 1990, we
DOD Lacks Critical      found, and the Assistant Secretary of Defense for C3I agreed, that DOD lacks
Decision-making         several decision-making tools that are imperative to any computer
Tools for               consolidation and modernization effort. First, it has not set targets or
                        established policy for basic things, such as how many computer centers
Consolidation Efforts   the Department actually needs, the numbers and skill mix of staff that are
                        required to operate the centers, and what constitutes an optimum
                        computer center. It also has no mechanism for ensuring that the best
                        money-saving opportunities have been considered by the individual
                        services and components or that consolidation efforts will conform to
                        federal requirements or even the needs of the Department as a whole. As
                        discussed earlier in this report, private companies we visited during our



                        Page 15                                            GAO/AIMD-97-39 Defense IRM
                          B-271572




                          review found that setting such targets—through policies and
                          procedures—and oversight mechanisms were key to the success of their
                          consolidation efforts. Without them, DOD will have difficulty identifying
                          problematic strategies and preventing some of its computer center
                          investments from being wasteful.


DOD Has No                The private companies we visited during our review found it necessary to
Departmentwide Policies   direct their computer center consolidation efforts from a corporatewide
and Procedures on         perspective and to clearly delineate the makeup and number of centers
                          that the companies were aiming for. More specifically, these companies
Computer Centers          established policies that defined what constituted an optimum computer
                          center in terms of processing capacity and the numbers and skill mix of its
                          staff; how many centers the corporation needed; what computer center
                          functions were so critical to carrying out the company’s mission that they
                          could not be outsourced; what cost and performance goals were relevant
                          for the centers; and how the centers should be compared, or
                          benchmarked, to more successful operations. They also established
                          corporatewide procedures for implementing these policies.

                          During our review, we also learned that DOD visited private companies,
                          including the ones we visited. DOD officials benchmarked this industry
                          experience to determine how best to prepare, justify, and implement prior
                          departmentwide efforts to consolidate and standardize computer centers
                          from 1990 to 1994. For example, DOD learned examples of private-sector
                          criteria that could be used to select megacenters and the level of
                          processing capacity and expandable floor space these centers should
                          have. However, it did not use the lessons learned from these visits to
                          prepare departmentwide policies and procedures.

                          As a result, individual services and components do not have a consistent
                          basis for determining what constitutes an optimum center; what their
                          performance or staffing targets should be; or which functions are
                          inherently governmental or can be outsourced. For example, these
                          services and components do not have departmentwide targets that they
                          can set as goals for the processing capacities of their mainframe or
                          mid-tier centers.

                          In a March 1996 report12 on DOD’s acquisition of computer centers, DOD’s
                          inspector general specifically noted that Defense lacked complete

                          12
                           Acquisition of Computers That Process Corporate Information (DOD/OIG Report 96-081, March 5,
                          1996).



                          Page 16                                                         GAO/AIMD-97-39 Defense IRM
                      B-271572




                      “policies and procedures on acquiring and managing the proper mix of
                      mainframe and mid-tier computers to process corporate data” and that
                      without such policies and procedures—especially those for mid-tier
                      processors—DOD’s potential for acquiring excess computer processing
                      capabilities increases. The Inspector General also noted that if DOD would
                      coordinate its processing needs it could, among other things, (1) take
                      advantage of the open systems13 infrastructure concept to resolve
                      operational problems, (2) better track and report information management
                      costs on a DOD-wide basis, (3) better manage the transition from existing
                      outdated systems to migration systems, and (4) improve management of
                      computer security. DOD agreed with the Office of the Inspector General
                      that it should establish procedures for evaluating and providing corporate
                      information processing and storage requirements on a DOD-wide basis
                      rather than on an individual program basis. However, DOD noted that it
                      should proceed with care in implementing this recommendation because
                      of its implications for centralized management and control. According to
                      officials in the office of the Assistant Secretary for C3I, DOD plans to
                      determine if, and to what extent, it has a mid-tier computing problem
                      before issuing policies and procedures to address that problem.

                      Under the Paperwork Reduction Act of 1995 and the Clinger-Cohen Act,
                      passed in 1996, the Assistant Secretary of Defense for Command, Control,
                      Communications and Intelligence, as DOD’s Chief Information Officer (CIO),
                      is supposed to develop and implement management policy and procedures
                      to ensure that major information technology related efforts conform to
                      departmentwide goals. In a memorandum dated November 6, 1995, the
                      Assistant Secretary expressed an intent to monitor the consolidation
                      initiatives to (1) ensure consistent interpretation and implementation of
                      OMB Bulletin 96-02 across the Department, (2) ensure that consolidation
                      efforts are consistent with the DISA plans, and (3) identify issues and
                      develop strategies for resolving them quickly. Accordingly, the Assistant
                      Secretary set up an advisory group to provide policy guidance for the
                      Department’s efforts to consolidate and outsource computer center
                      operations. However, this group has not yet prepared this critical guidance
                      nor has it been effective in achieving its stated monitoring objectives.


DOD Has No Means of   Under the Clinger-Cohen Act, the Secretary of Defense, with the advice
Ensuring That Best    and assistance of the CIO, is responsible for establishing a mechanism for
Opportunities Are     ensuring that the military services and components have considered the
                      best investment options and consolidation efforts that will meet the needs
Identified
                      13
                       Computer applications that can communicate with each other across a network and across computer
                      applications that use a common operating system interface.



                      Page 17                                                         GAO/AIMD-97-39 Defense IRM
              B-271572




              of the Department as a whole. In its guidance to agencies on evaluating
              information technology investments, OMB suggests that such a mechanism
              take the form of an investment review board, or senior management team,
              that would review information technology funding decisions. In their
              decision-making process, the team would consider such things as strategic
              improvements versus maintenance of current operations, new projects
              versus ongoing projects, risks, opportunity costs, and budget constraints.
              The Assistant Secretary C3I also charged the advisory group discussed
              above with the responsibility for providing oversight for computer center
              consolidation efforts. Yet, to date, neither the advisory group nor any
              other DOD component has provided this oversight. The Assistant Secretary
              C3I believes that his authority as DOD’s chief information officer for
              providing such oversight has been strengthened by the Clinger-Cohen Act.
              However, he also believes that his office lacks the staff and
              departmentwide support to establish such oversight.

              Without this important oversight mechanism, DOD does not have a means
              for assessing whether the individual services and components considered
              the cost-effectiveness and technical feasibility of their computer center
              alternatives from a departmentwide perspective and whether their
              implementation approaches, schedules, and funding plans are realistic.
              This also precludes Defense from having an opportunity to review the
              consistency of the individual plans and identify and recommend areas
              where even more monetary and efficiency gains could be achieved
              through inter-service and component efforts.


              Without better coordination and oversight of computer center
Conclusions   consolidation efforts, the best Defense can hope to achieve from its
              computer center consolidations is optimization at or below the component
              level. It will certainly miss out on the chance to ensure that the most
              investment worthy opportunities are identified and implemented, such as
              those that involve services and components merging their computer
              centers. Moreover, millions of dollars in computer center investments and
              operating expenses may well end up being wasted since individual
              components and services are planning without departmentwide
              information processing needs in mind and without the benefit of clearly
              defined organizationwide policies and procedures for the consolidation
              efforts and effective oversight mechanisms. Having centralized
              coordination for computer center optimization efforts and strong policies,
              procedures, and oversight were integral to the success of the corporations




              Page 18                                           GAO/AIMD-97-39 Defense IRM
                  B-271572




                  we visited in their efforts to consolidate computer centers. They should be
                  for Defense as well.


                  We recommend that the Secretary of Defense direct the Department’s
Recommendations   Chief Information Officer to develop an integrated, departmentwide plan
                  for improving the cost and operations of its computer centers. Until this
                  plan is approved by the Secretary, we further recommend that the
                  Secretary of Defense limit any capital investments in the Department
                  computer centers to investments that meet critical technology needs to
                  operate the DOD computer centers. The Department’s CIO should certify
                  that these investments comply with departmentwide goals and technical
                  standards.

                  We also recommend that as a basis for this plan and for future decisions
                  concerning consolidation, modernization, and outsourcing of computer
                  centers, Defense’s Chief Information Officer develop policies and related
                  procedures that address the following:

                  (1) what constitutes an optimum computer center in terms of processing
                  capacity and staff numbers and skills;

                  (2) how many computer centers are needed;

                  (3) which of its computer center operations are inherently governmental
                  and/or require component-unique centers solutions and thus cannot be
                  consolidated or outsourced;

                  (4) how DOD should compare its computer center services with those of
                  other public-sector and private-sector services in terms of cost, speed,
                  productivity, and quality of outputs and outcomes; and

                  (5) which cost and performance goals are relevant for comparing
                  departmentwide alternatives.

                  We also recommend that Defense’s Chief Information Officer establish or
                  incorporate within its existing processes, as practical, the necessary
                  oversight to ensure that the above recommended departmentwide plan
                  and future computer center consolidation, modernization, and outsourcing
                  decisions (1) are being developed in accordance with the above policies
                  and procedures, (2) are based on a sound analysis of alternatives, and
                  (3) consider the goals and needs of the entire department.



                  Page 19                                           GAO/AIMD-97-39 Defense IRM
                     B-271572




                     Finally, we recommend that the Director of the Office of Management and
                     Budget (1) clarify its Bulletin, particularly in regard to mid-tier
                     consolidation criteria and its intent to have an integrated Department of
                     Defense submission and (2) require the Department of Defense to replace
                     its prior multiple submissions in response to this new guidance with an
                     integrated departmentwide submission that contains a departmentwide
                     inventory of computer centers, a departmentwide consolidation strategy,
                     and a departmentwide implementation plan.


                     The Department of Defense provided written comments on a draft of this
Agency Comments      report. OMB provided us with oral comments. DOD concurred with our
and Our Evaluation   recommedation on providing oversight over its computer center efforts
                     and partially concurred with our recommendation to develop policies and
                     procedures to guide computer center decisions. However, DOD did not
                     concur with our recommendation to limit any capital investments in the
                     Department’s computer centers until an integrated, departmentwide
                     consolidation plan is prepared. Defense’s response to this report is
                     summarized below, along with our evaluation. Appendix II contains
                     Defense’s comments along with our more detailed evaluation.

                     DOD  agreed that it needs to develop a prudent framework for achieving
                     potential savings through its future computer center consolidation,
                     modernization, and outsourcing decisions. DOD added that it is developing
                     such a framework as part of its effort to implement the Clinger-Cohen Act.
                     DOD also questioned the need for an integrated consolidation and
                     outsourcing plan since the Department has already consolidated many of
                     its computer centers, with significant reported savings, without such a
                     plan. However, during our review, DOD officials acknowledged that unlike
                     prior consolidation efforts, DOD has allowed the components considerable
                     flexibility in their current consolidation efforts, without strategic direction
                     from the Department. Thus, we continue to believe that an integrated,
                     departmentwide plan is needed to show that the Department’s computer
                     center decisions reflect sound choices for meeting departmentwide
                     processing needs and not just those of the individual components.

                     In discussing our recommendation on developing policies and procedures
                     for making consolidation and outsourcing decisions, DOD agreed that these
                     are necessary. However, DOD believed that it should complete its
                     development of an integrated management framework for implementing
                     the Clinger-Cohen Act before developing the specific policies and
                     procedures we recommended. We are encouraged by the Department’s



                     Page 20                                              GAO/AIMD-97-39 Defense IRM
B-271572




effort to begin to develop a management framework for implementing the
Clinger-Cohen Act, especially if it includes the policies and procedures we
recommend in this report. The report detailing DOD’s plans for this
framework was submitted to the Congress on March 14, 1997.
Consequently, if DOD intends to include these policies and procedures in
the framework, we believe it should limit making computer center
decisions and investments to those that meet critical technology needs to
operate the centers until the framework is finalized.

In commenting orally on this report, OMB stated that it believed our report
overemphasized the importance of consolidating mid-tier processors
within the context of OMB Bulletin 96-02. We disagree; we continue to
believe that the consolidation strategy needs to include mid-tier
processors as they are a vital component of the services offered by the
computer centers.


We are sending copies of this report to the Ranking Minority Member of
your Committee and the Chairmen and Ranking Minority Members of the
House and Senate Committees on Appropriations, the Senate Committee
on Governmental Affairs, the House and Senate Committees on the
Budget, the Senate Committee on Armed Services, and the House
Committee on Government Reform and Oversight. Also, we are sending
copies to the Secretaries of Defense, the Army, the Navy, and the Air
Force; the Department of Defense Chief Information Officer; the Director
of the Defense Information Systems Agency; the Director of the Defense
Logistics Agency; the Director of DISA’s Westhem Command; the Director
of Office of Management and Budget; and other interested parties. Copies
will be made available to others upon request.




Page 21                                            GAO/AIMD-97-39 Defense IRM
B-271572




If you have any questions about this report, please call me at
(202) 512-6240 or Mickey McDermott, Assistant Director, at (202) 512-6219.
Other major contributors to this report are listed in appendix IV.

Sincerely yours,




Jack L. Brock, Jr.
Director, Defense Information and
Financial Management Systems




Page 22                                          GAO/AIMD-97-39 Defense IRM
Page 23   GAO/AIMD-97-39 Defense IRM
Contents



Letter                                                                                         1


Appendix I                                                                                    26

Scope and
Methodology
Appendix II                                                                                   28

Comments From the
Department of
Defense
Appendix III                                                                                  36

Detailed Information
About Computer
Centers
Appendix IV                                                                                   38

Analysis of DOD
Service and
Component
Responses to OMB
Appendix V                                                                                    48

Major Contributors to
This Report
Tables                  Table 1: OMB Requirements for Computer Centers                         5
                        Table 2: Status of DOD Computer Centers at the Time of OMB             8
                          Submissions
                        Table 3: Computer Center Consolidation and Modernization              11
                          Approaches
                        Table 4: Comparison of the Consolidation and Modernization            12
                          Strategies




                        Page 24                                        GAO/AIMD-97-39 Defense IRM
Contents




Table 5: GAO Analysis of How Services and Components                     14
  Responded to OMB Requirements for Consolidation Strategies
Table III.1: Number of Mainframes and Mid-tier and Small                 36
  Processors Owned by the Services and Components
Table III.2: MIPS of the Individual Services and Components              37
Table IV.1: DISA’s Consolidation Strategy                                38
Table IV.2: Air Force’s Consolidation Strategy                           39
Table IV.3: Army’s Consolidation Strategy                                40
Table IV.4: Navy’s Consolidation Strategy                                41
Table IV.5: Defense Commissary Agency’s Consolidation Strategy           42
Table IV.6: Defense Intelligence Agency’s Consolidation Strategy         43
Table IV.7: Defense Investigative Service’s Consolidation Strategy       44
Table IV.8: Defense Logistics Agency’s Consolidation Strategy            45
Table IV.9: National Imagery and Mapping Agency’s                        46
  Consolidation Strategy
Table IV.10: Defense Special Weapons Agency’s Consolidation              47
  Strategy




Abbreviations

BRAC       Base Realignment and Closure
C3I        Command, Control, Communications, and Intelligence
CIO        Chief Information Officer
DeCA       Defense Commissary Agency
DIA        Defense Intelligence Agency
DIS        Defense Investigative Service
DISA       Defense Information Systems Agency
DLA        Defense Logistics Agency
DOD        Department of Defense
DSWA       Defense Special Weapons Agency
MIPS       millions of instructions per second
NIMA       National Imagery and Mapping Agency
OMB        Office of Management and Budget


Page 25                                           GAO/AIMD-97-39 Defense IRM
Appendix I

Scope and Methodology


                 To assess whether DOD has an effective framework in place for making and
                 executing its computer center decisions, we interviewed staff and
                 obtained documentation from the following federal activities:

             •   the Office of Management and Budget’s Office of Information Policy and
                 Technology Branch, which has responsibility for overseeing agency
                 implementation of OMB Bulletin 96-02;
             •   the General Service Administration’s Office of Governmentwide Policy and
                 Federal Systems Management Center, which provided documentation on
                 matters federal agencies should consider when making consolidation,
                 optimization, or outsourcing decisions;
             •   the Office of the Assistant Secretary of Defense, Command, Control,
                 Communications, and Intelligence, which is the office of DOD’s Chief
                 Information Officer;
             •   various offices of the Defense Information Systems Agency, primarily in
                 Arlington, Virginia; and
             •   Army, Navy, and Air Force staffs and offices in Arlington, Virginia, with
                 responsibility for making decisions on consolidating, optimizing, or
                 outsourcing their computer center operations.

                 We also met with managers from corporations that had successfully
                 consolidated, modernized, and outsourced their computer centers. We
                 identified these corporations through discussions with private-sector
                 consultants and Defense computer center officials. The corporations
                 contacted were

             •   Boeing Computing Service, Belleview, Washington;
             •   Electronic Data Systems, Plano, Texas; and
             •   GTE Corporation, Fairfax, Virginia.

                 Through these interviews and related documentation, we analyzed how
                 these companies strategically direct and oversee their decisions on
                 alternatives and how they determine the cost and measure the
                 performance of their computer center operations.

                 We also met with consultants who advise computer center managers on
                 improving their services. The consultants contacted were the Center for
                 Naval Analyses, Compass America, Inc., Coopers and Lybrand, and the
                 Gartner Group. In these discussions, we identified best practices and
                 important performance measures that they believe well managed
                 computer centers should use to benchmark their performance with other
                 computer centers. In addition, we interviewed senior officials at the



                 Page 26                                          GAO/AIMD-97-39 Defense IRM
Appendix I
Scope and Methodology




Defense Science Board to discuss the Board’s high-level study done for
DOD management on the outsourcing of select DOD activities, including its
computer centers.

Finally, we met with DOD officials in the Office of the Assistant Secretary
of Defense for Command, Control, Communications, and Intelligence to
discuss their actions to implement a departmentwide decision-making
framework for making computer center investment decisions. To assess
the effectiveness of DOD’s framework, we compared the framework with
best practices used by leading organizations and the Clinger-Cohen Act.
Also, through this office, we obtained and analyzed DOD’s submissions to
OMB in compliance with OMB Bulletin 96-02 to determine whether these
submissions met OMB’s requirements and had been prepared to meet
departmentwide information processing needs. We did not validate the
accuracy of the numbers provided by DOD on its computer centers.

Our work was performed from March 1996 through January 1997 in
accordance with generally accepted government auditing standards. We
performed our work primarily at the office of the Assistant Secretary of
Defense for Command, Control, Communications, and Intelligence and at
DISA headquarters offices in Arlington, Virginia.




Page 27                                             GAO/AIMD-97-39 Defense IRM
Appendix II

Comments From the Department of Defense


Note: GAO comments
supplementing those in the
report text appear at the
end of this appendix.




See comment 1.




                             Page 28   GAO/AIMD-97-39 Defense IRM
                 Appendix II
                 Comments From the Department of Defense




See comment 2.




                 Page 29                                   GAO/AIMD-97-39 Defense IRM
                 Appendix II
                 Comments From the Department of Defense




See comment 3.



See comment 4.




See comment 5.




                 Page 30                                   GAO/AIMD-97-39 Defense IRM
                Appendix II
                Comments From the Department of Defense




Now on p. 19.




                Page 31                                   GAO/AIMD-97-39 Defense IRM
                Appendix II
                Comments From the Department of Defense




Now on p. 19.




Now on p. 19.




                Page 32                                   GAO/AIMD-97-39 Defense IRM
Appendix II
Comments From the Department of Defense




Page 33                                   GAO/AIMD-97-39 Defense IRM
               Appendix II
               Comments From the Department of Defense




               The following are GAO’s comments on the Department of Defense’s letter
               dated March 10, 1997.


               1.We acknowledge that DOD has reported significant savings through its
GAO Comments   prior consolidation efforts and have expanded the report to reflect the fact
               that DOD has consolidated 194 DOD computer centers into 16 DISA
               megacenters, at a reported reduction in processing costs of over
               $500 million. (See section entitled, DOD Recognizes Benefits of Further
               Consolidating, Modernizing and Outsourcing Computer Centers.) As
               appropriate, we also expanded the report to acknowledge DOD’s use of
               industry practices to help make these reductions. (See section entitled,
               DOD Lacks Critical Decision-making Tools for Consolidation Efforts.)


               2.We agree that DOD needs to determine whether further economies and
               efficiencies are possible and, if so, what strategies should be employed to
               reap these savings. The recommendations to DOD and OMB contained in this
               report are intended to facilitate and guide these determinations.

               3.The report fully describes the differing views of DOD and OMB officials for
               interpreting OMB Bulletin 96-02 in two broad areas: (1) DOD’s consolidation
               plans for its non-mainframe small and mid-tier computer centers and
               (2) the number of DOD plan submissions required by OMB. In the report, we
               pointed out that OMB officials did not agree with DOD’s interpretation that
               non-mainframe computer centers should only be included in their
               inventories but not their consolidation strategies. OMB’s position, which we
               support, is that non-mainframe centers should have been described in
               DOD’s inventories and consolidation strategies, as the purpose of OMB
               Bulletin 96-02 is to look for ways to consolidate all DOD’s computer
               centers, not just its mainframe computer centers. We made our
               recommendation that OMB clarify the Bulletin with regard to its mid-tier
               consolidation criteria in order to preclude any future confusion.

               We further recommended that OMB clarify in the Bulletin that while DOD
               has previously been permitted to provide separate submissions for the
               three services and for DOD, it should be required to provide a single,
               integrated submission for the entire Department.

               4.We provided and discussed an earlier draft of this report with DOD
               officials and have incorporated their comments as appropriate to improve
               the accuracy of the report. The reference in DOD’s letter to our handling of
               the Army’s centers in table 2 refers to wording that was provided by the



               Page 34                                            GAO/AIMD-97-39 Defense IRM
Appendix II
Comments From the Department of Defense




Army. However, note b to table 2 has been expanded to reflect Army’s
views that some of its centers provide unique missions (for example,
command and control, and National Guard).

5.We did not include DOD’s second enclosure in appendix II because it is an
annotated copy of this report. This enclosure contained a few technical
comments, which we have incorporated into the final report.




Page 35                                           GAO/AIMD-97-39 Defense IRM
Appendix III

Detailed Information About Computer
Centers

                                        This appendix provides information on the numbers of mainframes and
                                        mid-tier and small processors owned by the services and components.

Table III.1: Number of Mainframes and
Mid-tier and Small Processors Owned     Service/component                                          Mainframes           Mid-tier/Small
by the Services and Components          DISA                                                                162                     173
                                        Air Force                                                             22a                   184
                                                                                                                b
                                        Army                                                                  79                    378
                                        Navy                                                                  28                    107
                                        Defense Commissary Agency                                              0                         20
                                        Defense Intelligence Agency                                            5                         82
                                        Defense Investigative Service                                          1                          4
                                        Defense Logistics Agency                                              19                         84
                                        National Imagery and Mapping Agency                                    5c                         0
                                        Defense Special Weapons Agency                                         1                         27
                                        Total                                                               322                   1,059
                                        a
                                            Includes the exempted computers.
                                        b
                                         Only 11 Army mainframes are being considered for consolidation. Remaining mainframes will be
                                        replaced with minicomputers to support unique local missions, such as civil works, command and
                                        control, research and development, etc.
                                        c
                                            Only one mainframe, with four remote-entry machines.

                                        Source: Agency and component submissions to OMB.




                                        Page 36                                                          GAO/AIMD-97-39 Defense IRM
                                         Appendix III
                                         Detailed Information About Computer
                                         Centers




Table III.2: MIPS (Mainframe Operating
Capacity) of the Individual Services     Service/component                                                                              MIPS
and Components                           DISA                                                                                           7,882
                                         Air Force                                                                                      1,176
                                         Army                                                                                           4,692a
                                         Navy                                                                                            195
                                                                                                                                             b
                                         Defense Commissary Agency
                                         Defense Intelligence Agency                                                                     908
                                         Defense Investigative Service                                                                    43
                                         Defense Logistics Agency                                                                       1,007
                                         National Imagery and Mapping Agency                                                              22
                                         Defense Special Weapons Agency                                                                   28
                                         Total                                                                                         15,953
                                         a
                                           Includes minicomputers or scientific computing; remaining centers support local or unique
                                         missions.
                                         b
                                         The Defense Commissary Agency does not have any mainframes.

                                         Source: Agency and component submissions to OMB.




                                         Page 37                                                            GAO/AIMD-97-39 Defense IRM
Appendix IV

Analysis of DOD Service and Component
Responses to OMB

                                   The tables that follow summarize our analysis of the extent to which DOD
                                   services and components complied with the planning elements called for
                                   by OMB.

Table IV.1: DISA’s Consolidation
Strategy                           OMB requirement                                   Agency response to OMB
                                   Alternatives analysis reflecting the technical    DISA did not submit an alternatives
                                   feasibility and cost-effectiveness of             analysis to OMB. However, during our
                                   alternatives—including outsourcing.               review, we found that DISA had analyzed
                                                                                     the costs and benefits associated with
                                                                                     (1) outsourcing megacenter services and
                                                                                     (2) consolidating 16 megacenters into 6
                                                                                     centers.
                                   Architecture design, or technical solution,       Technical architecture submitted to OMB
                                   based on selected data center consolidation       was not based on an approved alternative
                                   alternative, and identifying the receiving and    analysis, nor did it identify receiving and
                                   closing data centers and workload                 closing data centers. Architecture did not
                                   realignment as well as the communications         address workload realignment or
                                   architecture.                                     communications architecture.
                                   High-level implementation approach                No implementation approach submitted to
                                   identifying major consolidation tasks and         OMB.
                                   presenting a schedule, milestones, and
                                   resources.
                                   Funding plan identifying and forecasting          No funding plan submitted to OMB.
                                   costs associated with the consolidation
                                   process and funding requirements for all
                                   major tasks associated with the
                                   consolidation.
                                   Exceptions that could not be included in the No exceptions identified to OMB.
                                   consolidation plan.
                                   Source: DISA consolidation strategy, dated June 6, 1996.




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Table IV.2: Air Force’s Consolidation
Strategy                                OMB requirement                                   Agency response to OMB
                                        Alternatives analysis reflecting the technical    The Air Force did not submit an
                                        feasibility and cost-effectiveness of             alternatives analysis to OMB; however, it
                                        alternatives—including outsourcing.               did describe plans to move towards a
                                                                                          mid-tier architecture for some of its centers
                                                                                          and to outsource those centers that cannot
                                                                                          be moved to mid-tiers.
                                        Architecture design, or technical solution,       The Air Force did not submit an
                                        based on selected data center consolidation       architectural design to OMB, only
                                        alternative, and identifying the receiving and    individual computer center approaches to
                                        closing data centers and workload                 consolidation.
                                        realignment as well as the communications
                                        architecture.
                                        High-level implementation approach                A partial implementation approach was
                                        identifying major consolidation tasks and         submitted to OMB in that schedules and
                                        presenting a schedule, milestones, and            milestones were provided.
                                        resources.
                                        Funding plan identifying and forecasting          No funding plan submitted to OMB,
                                        costs associated with the consolidation           although some data were provided on
                                        process and funding requirements for all          estimated savings from consolidation.
                                        major tasks associated with the
                                        consolidation.
                                        Exceptions that could not be included in the Exceptions were requested from OMB for
                                        consolidation plan.                          the following reasons: 4 centers performed
                                                                                     applications programming, 12 centers
                                                                                     operated national security systems, 1
                                                                                     center met OMB’s exception criteria by
                                                                                     having less than five full-time employees,
                                                                                     and 2 centers were transitioning to the Air
                                                                                     Force Working Capital Fund.
                                        Source: Air Force consolidation strategy, dated September 18, 1996.




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Table IV.3: Army’s Consolidation
Strategy                           OMB requirement                                   Agency response to OMB
                                   Alternatives analysis reflecting the technical    Alternatives analyses were submitted to
                                   feasibility and cost-effectiveness of             OMB for the computer centers Army
                                   alternatives—including outsourcing.               considered candidates for consolidation or
                                                                                     outsourcing: the separate Single Agency
                                                                                     Manager computer centers operated by
                                                                                     the Air Force and the Army and two Army
                                                                                     personnel computer centers. Outsourcing
                                                                                     to DISA and leasing were among the
                                                                                     alternatives considered.
                                   Architecture design, or technical solution,    Architectural designs were submitted for
                                   based on selected data center consolidation the Single Agency Manager and for the
                                   alternative, and identifying the receiving and two personnel computer centers.
                                   closing data centers and workload
                                   realignment as well as the communications
                                   architecture.
                                   High-level implementation approach                A high-level implementation approach was
                                   identifying major consolidation tasks and         submitted to OMB. Resources, but not
                                   presenting a schedule, milestones, and            schedules and milestones, were submitted
                                   resources.                                        for major consolidation tasks.
                                   Funding plan identifying and forecasting          A funding plan was not submitted, but
                                   costs associated with the consolidation           Army plans to chargeback costs to
                                   process and funding requirements for all          customers.
                                   major tasks associated with the
                                   consolidation.
                                   Exceptions that could not be included in the Exceptions identified for areas such as
                                   consolidation plan.                          National Guard, civil works, intelligence,
                                                                                command and control, research and
                                                                                development, and wargaming. Centers not
                                                                                analyzed for consolidation were reported
                                                                                as centers that support networks or
                                                                                systems in a “distributed environment.”
                                   Source: Army consolidation strategies, dated May 3, 1996, and August 2, 1996; further analyses
                                   provided for the Single Agency Manager and the personnel centers in July 1996.




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Table IV.4: Navy’s Consolidation
Strategy                           OMB requirement                                    Agency response to OMB
                                   Alternatives analysis reflecting the technical     Each of 10 Navy commands reported a
                                   feasibility and cost-effectiveness of              consolidation strategy for its centers that
                                   alternatives—including outsourcing.                Navy believed met OMB’s criteria for
                                                                                      consolidation. Two of these commands,
                                                                                      the Bureau of Naval Personnel and the
                                                                                      Naval Supply Systems Command,
                                                                                      reported that DISA megacenters already
                                                                                      processed their information. The Naval Air
                                                                                      Systems Command and the Navy Facilities
                                                                                      Engineering Command also described
                                                                                      plans for DISA to process their information.
                                                                                      Two other commands, the Naval Sea
                                                                                      Systems Command and the Bureau of
                                                                                      Medicine and Surgery, provided
                                                                                      alternative analyses supporting their
                                                                                      decision to continue to process their
                                                                                      information in-house. The remaining four
                                                                                      commands did not provide alternative
                                                                                      analyses to OMB.a
                                   Architecture design, or technical solution,    Architectural designs were submitted but
                                   based on selected data center consolidation were not based on alternatives analyses
                                   alternative, and identifying the receiving and for four commands.
                                   closing data centers and workload
                                   realignment as well as the communications
                                   architecture.
                                   High-level implementation approach                 Completion dates were provided, but
                                   identifying major consolidation tasks and          schedules of major consolidation tasks or
                                   presenting a schedule, milestones, and             resource needs were not provided.
                                   resources.
                                   Funding plan identifying and forecasting           A funding plan was not provided to OMB,
                                   costs associated with the consolidation            but Navy plans to fund its modernization
                                   process and funding requirements for all           efforts through its information technology
                                   major tasks associated with the                    budget.
                                   consolidation.
                                   Exceptions that could not be included in the Not applicable.
                                   consolidation plan.
                                   a
                                     In subsequent discussions, a Navy official explained that an eleventh command, the Atlantic
                                   Fleet, operated four of the Navy’s computer centers reported in table 2. This command’s plan to
                                   transfer its centers—all on the Base Realignment and Closure (BRAC) list—to DISA had
                                   inadvertently been omitted from the Navy’s strategy. Also omitted was the Navy Sea System
                                   Command’s plans to transfer the processing of its Dahlgren Center to DISA in fiscal year 1998.

                                   Source: Navy consolidation strategy, dated May 22, 1996; addendum provided on August 8,
                                   1996.




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Table IV.5: Defense Commissary
Agency’s Consolidation Strategy   OMB requirement                                    Agency response to OMB
                                  Alternatives analysis reflecting the technical     The agency has decided to move to a
                                  feasibility and cost-effectiveness of              client/server architecture. No consolidation
                                  alternatives—including outsourcing.                strategy was submitted for this move.a
                                  Architecture design, or technical solution,    None submitted.
                                  based on selected data center consolidation
                                  alternative, and identifying the receiving and
                                  closing data centers and workload
                                  realignment as well as the communications
                                  architecture.
                                  High-level implementation approach                 None submitted.
                                  identifying major consolidation tasks and
                                  presenting a schedule, milestones, and
                                  resources.
                                  Funding plan identifying and forecasting           None submitted.
                                  costs associated with the consolidation
                                  process and funding requirements for all
                                  major tasks associated with the
                                  consolidation.
                                  Exceptions that could not be included in the No exemptions requested.
                                  consolidation plan.
                                  a
                                    According to DOD officials, the Defense Commissary Agency did not believe it had to submit a
                                  consolidation strategy because it only has mid-tier computers.

                                  Source: Defense Commissary Agency consolidation strategy, dated February 14, 1996; mission
                                  needs statement for the Agency’s Point of Sale Modernization Program, dated May 6, 1994.




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Table IV.6: Defense Intelligence
Agency’s Consolidation Strategy    OMB requirement                                   Agency response to OMB
                                   Alternatives analysis reflecting the technical    The agency reported that it met the OMB
                                   feasibility and cost-effectiveness of             target MIPS for a minimum size computer
                                   alternatives—including outsourcing.               center at both of its computer centers.
                                   Architecture design, or technical solution,    See above.
                                   based on selected data center consolidation
                                   alternative, and identifying the receiving and
                                   closing data centers and workload
                                   realignment as well as the communications
                                   architecture.
                                   High-level implementation approach                See above.
                                   identifying major consolidation tasks and
                                   presenting a schedule, milestones, and
                                   resources.
                                   Funding plan identifying and forecasting          See above.
                                   costs associated with the consolidation
                                   process and funding requirements for all
                                   major tasks associated with the
                                   consolidation.
                                   Exceptions that could not be included in the See above.
                                   consolidation plan.
                                   Source: Defense Intelligence Agency consolidation strategy, dated May 7, 1996.




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Table IV.7: Defense Investigative
Service’s Consolidation Strategy    OMB requirement                                   Agency response to OMB
                                    Alternatives analysis reflecting the technical    Although the agency meets the minimum
                                    feasibility and cost-effectiveness of             target size criteria, it still provided
                                    alternatives—including outsourcing.               alternatives analyses supporting (1) move
                                                                                      from traditional data center to client/server
                                                                                      architecture and (2) continuing to process
                                                                                      in-house
                                    Architecture design, or technical solution,    Not applicable.
                                    based on selected data center consolidation
                                    alternative, and identifying the receiving and
                                    closing data centers and workload
                                    realignment as well as the communications
                                    architecture.
                                    High-level implementation approach                Not applicable.
                                    identifying major consolidation tasks and
                                    presenting a schedule, milestones, and
                                    resources.
                                    Funding plan identifying and forecasting          Not applicable.
                                    costs associated with the consolidation
                                    process and funding requirements for all
                                    major tasks associated with the
                                    consolidation.
                                    Exceptions that could not be included in the Requested exemption because the
                                    consolidation plan.                          Service’s computer center meets the
                                                                                 minimum target size for computer centers.
                                    Source: Defense Investigative Service consolidation strategy, dated May 30, 1996, and
                                    Implementation Plan dated August 31, 1996.




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Table IV.8: Defense Logistics Agency’s
Consolidation Strategy                   OMB requirement                                    Agency response to OMB
                                         Alternatives analysis reflecting the technical     Alternatives analyses were submitted for 3
                                         feasibility and cost-effectiveness of              of the agency’s 12 computer centers, with
                                         alternatives—including outsourcing.                selection of option to consolidate in-house
                                                                                            operations. Two of the agency’s computer
                                                                                            centers were exempt (see below) and
                                                                                            another two were designated for BRAC.
                                                                                            Alternative analyses were not submitted for
                                                                                            the remaining 5 computer centers, which
                                                                                            will support the agency’s planned
                                                                                            Distribution Standard System.
                                         Architecture design, or technical solution,        Not submitted for centers that will support
                                         based on selected data center consolidation        the Distribution Standard System because
                                         alternative, and identifying the receiving and     the agency believed these requirements
                                         closing data centers and workload                  were not applicable to its overall strategy.
                                         realignment as well as the communications
                                         architecture.
                                         High-level implementation approach                 Not submitted for centers that will support
                                         identifying major consolidation tasks and          the Distribution Standard System because
                                         presenting a schedule, milestones, and             the agency believed these requirements
                                         resources.                                         were not applicable to its overall strategy.
                                         Funding plan identifying and forecasting           Not submitted for centers that will support
                                         costs associated with the consolidation            the Distribution Standard System because
                                         process and funding requirements for all           the agency believed these requirements
                                         major tasks associated with the                    were not applicable to its overall strategy.
                                         consolidation.
                                         Exceptions that could not be included in the Two of the agency’s computer centers
                                         consolidation plan.                          meet OMB’s target size for computer
                                                                                      centers.
                                         Source: Defense Logistics Agency’s consolidation strategy, dated July 1, 1996.




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Table IV.9: National Imagery and
Mapping Agency’s Consolidation     OMB requirement                                  Agency response to OMB
Strategy                           Alternatives analysis reflecting the technical   Alternatives analyses were not submitted,
                                   feasibility and cost-effectiveness of            but the agency plans to transition
                                   alternatives—including outsourcing.              processing from remaining agency
                                                                                    computer centers to DISA megacenters by
                                                                                    the middle of fiscal year 1998.
                                   Architecture design, or technical solution,    See above.
                                   based on selected data center consolidation
                                   alternative, and identifying the receiving and
                                   closing data centers and workload
                                   realignment as well as the communications
                                   architecture.
                                   High-level implementation approach               Broad milestones for transition were
                                   identifying major consolidation tasks and        provided, but no additional information.
                                   presenting a schedule, milestones, and
                                   resources.
                                   Funding plan identifying and forecasting         A funding plan was not provided to OMB.
                                   costs associated with the consolidation          The agency plans to provide OMB with a
                                   process and funding requirements for all         funding plan if DISA can process its
                                   major tasks associated with the                  applications.
                                   consolidation.
                                   Exceptions that could not be included in the None requested.
                                   consolidation plan.
                                   Source: National Imagery and Mapping Agency’s consolidation strategy, dated May 3, 1996, and
                                   the agency’s implementation plan (not dated).




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Table IV.10: Defense Special Weapons
Agency’s Consolidation Strategy        OMB requirement                                  Agency response to OMB
                                       Alternatives analysis reflecting the technical   Agency conducted an alternatives analysis
                                       feasibility and cost-effectiveness of            to support the consolidation of its
                                       alternatives—including outsourcing.              information processing in-house.
                                                                                        Alternatives such as commercial
                                                                                        outsourcing were not considered because
                                                                                        of the agency’s command, mission, and
                                                                                        security considerations.
                                       Architecture design, or technical solution,    A complete architectural design was
                                       based on selected data center consolidation provided.
                                       alternative, and identifying the receiving and
                                       closing data centers and workload
                                       realignment as well as the communications
                                       architecture.
                                       High-level implementation approach               A complete high-level response was
                                       identifying major consolidation tasks and        provided.
                                       presenting a schedule, milestones, and
                                       resources.
                                       Funding plan identifying and forecasting         A complete funding plan was provided.
                                       costs associated with the consolidation
                                       process and funding requirements for all
                                       major tasks associated with the
                                       consolidation.
                                       Exceptions that could not be included in the None requested.
                                       consolidation plan.
                                       Source: Defense Special Weapons Agency’s consolidation strategy, dated August 16, 1996.




                                       Page 47                                                        GAO/AIMD-97-39 Defense IRM
Appendix V

Major Contributors to This Report


                        William D. Hadesty, Technical Director
Accounting and          Robert C. Sorgen, Evaluator-in-Charge
Information             Danny R. Latta, Technical Advisor
Management Division,    Cristina T. Chaplain, Communications Analyst

Washington, D.C.
                        Frank Maguire, Senior Attorney
Office of the General
Counsel
                        Harold J. Brumm, Jr., Senior Economist
Office of the Chief
Economist
                        Karl G. Neybert, Evaluator
Kansas City Regional
Office




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