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2 MANAGEMENT CHALLENGES IN MODERNIZING LOGISTICS SYSTEMS In our midterm report we said that the Logistics Systems Modernization Program (LSMP) could be the Defense Logistics Agency's (DLA's) blueprint for excellence by providing the driving force for deploying and executing its modernization plans. We continue to believe in that possibility. However, we note that the program has achieved less than expected during the course of our study. The LSMP was initiated in 1986 to modernize the agency's logistics systems by providing for data-sharing and improvements in the utility of the information provided. It was presented to us as a technology-based program that would be implemented over a number of years in a carefully reasoned and executed series of steps. We agreed with the need for the program and its underlying logic. We remain supportive of the need for such a program as part of the process by which the agency achieves its vision of how it will operate in the future. We believe that an agency's modernization should be guided by a unified concept rather than a collection of individual fix-it programs. In the past, the DLA upgraded its systems on an "as needed" basis and in a piecemeal fashion. In other cases, beneficial upgrades often were not made because of budgetary constraints or the absence of urgency. As a result, over time the agency's systems have become fragmented and outdated. Hence there are significant opportunities to improve the efficiency and effectiveness of the agency, and unless its present mode of operation is corrected, these opportunities will remain unrealized. Recently, grand designs that attempt to combine all related- requirements in a single package have become a subject of debate. Their very largeness and complexity are said, by some, to be obstacles to success (U. S. General Services Administration, 1988~. We;are not opposed to grand designs per se. In some cases they may be the only way to achieve a grand result. However, we do recognize the risks associated with grand implementations and have suggested approaches that will help the agency avoid across-the-board modernization without abandoning its view of the future. In so doing, we hoped to guide the development of the agency's modernization plans as the agency itself evolves toward moving more information and less materiel. 15

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16 RESPONSIBILITY, AUTHORITY, AND ACCOUNTABILITY A principal concern of ours has been the perceived lack of clarity and focus for such management basics as the identification of responsibility, authority, and accountability for the various actions, phases and steps associated with systems modernization. The scale and complexity of the LSMP requires strong management and organizational cooperation. We have consistently believed that the effort dictated by the LSMP requires the full attention of a management group whose sole responsibility is the successful achievement of modern, interoperable information systems. Furthermore, in order to accomplish such internal integration, this management group must have the responsibility, authority, and accountability to enforce program objectives across the diverse and autonomous organizations and activities of the DLA. In addition, the interest and attention of top management to the key initiatives of the program must permeate the entire organization. The highest levels of the DLA should be active in a planning process that scopes the LSMP for implementation by the management group discussed above. An oversight and tracking apparatus for the LSMP should be institutionalized in such a manner that the key corporate staff elements are continuously aware of staff disagreements, program delays, design failures and successes. Our Midterm View In our midterm report we supported the-DLA's creation of a program office and recommended that it be strengthened by adding staff with managerial and technical skills. We urged the DLA to move away from its traditional decentralized management approach which placed most development in field activities. Strengthening the program office and helping it exert greater and more centralized control over the tasks it delegates istunnatural in a highly matrixed-managed organization such as the DLA, but we believe that it is necessary for the success of the LSMP. While caution is advised regarding matrix management for the LSMP, we also recognize the importance of obtaining input, cooperation, and participation from the functional organizations. The program office, which reports to the Office of the Director, was authorized to a staffing level of 30 people. The program manager's responsibilities included: the administrative and implementation plan; financial and acquisition management; coordination and focal point with external agencies; management of system architecture development and installation; preparing status reports; contracting with outside consultants; prioritizing work loads and scheduling; oversight of training; and review of subprojects.

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17 However, we cautioned that while the program management office should be able to control development of systems, it would still take strong direction, attention, and support from top management to enforce the cross-functional cooperation and support needed to make LSMP work. We also cautioned the DLA on the weaknesses of its matrix management for such a program on the ground that its resources were geographically end 'organizationally spread out and lacking in accountability. We suggested assigning functional and technical people to the program office for extended periods as a way to address this problem. We were also concerned that the program office might become an island, isolated from the rest of the organization, without the resources to do the job by itself, and lacking the assurance that other organizations would enthusiastically support the program and respond to its direction. Strong Central Management This program is of great consequence and promise. However, it is sorely in need of leadership, authority, and an organizational focus to move ahead with this worthwhile work. We were recently advised that the Director, Defense Logistics Agency, has directed several significant changes in his memorandum, "Automated Data Processing (ADP) Modernization," dated 20 January 1989. In particular, the program office for the LSMP was merged into the Office of Telecommunications and Information Systems (OTIS). We believe that this move serves to consolidate what were previously two different organizations with some overlapping interests into a single entity that can be more readily held accountable for results. We applaud this change and hope that it is the first of several organizational changes that are needed to focus the DLA's automation resources and its embrace of modernization. The formation of the DLA from various military service organizations has resulted in a great deal of autonomy within the various logistic authorities. As a result, the geographically dispersed and autonomous activities within the DLA tend to have differing goals and objectives that optimize their own operations, but not necessarily those of the organization as a whole. This has manifested itself through the growth of multiple design activities and program managers located throughout the agency and working independently on local requirements, even though their functional operations may be similar to others. Central design activities with responsibility for one or more automated information systems are located at DLA facilities in Columbus, Ohio; Ogden, Utah; Battle Creek, Michigan; Memphis, Tennessee; and Philadelphia, Pennsylvania. Other design activities include the Defense Logistics Services Center, Defense Technical Information Center, Defense Fuel Supply Center, Defense Administrative Support Center, DLA Automatic Addressing Systems Office, and Defense General Supply Center. As a result there are numerous upgrades and modernizations taking place concurrently with no central design, oversight, or control of these activities. We recognize that each one is needed when viewed in

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18 isolation, but we are concerned that if this continues the DLA will severely limit what, if anything, it can achieve through the LSMP in an integrated sense. In order to ensure successful modernization, it will be appropriate and desirable to consolidate authority over the central design activities and those programs that have received approval of mission need from the Major Automated Information Systems Review Council, and to establish reporting channels for them to that authority. Responsibility, authority and accountability for program managers and their organizational alignment should be decided and put into effect quickly to avoid loss of momentum. At a minimum, the organizational elements responsible for modernization should have sign-off responsibility on system upgrades and enhancements where these involve choice of computer languages, data base management, and protocols that will assure interoperability. With such precise accountability established for program results, users and planners should confine their efforts to concepts, capabilities, directions, and requirements. Functional managers and users must participate and have a vote in the design, development, testing, and deployment process. The functional managers must maintain appropriate staff capability to define requirements, track progress, participate in test demonstrations and critique the flaws in the process. The application of independent and objective test demonstrations are critical to this process. A "test bed" environment could be useful for users to conduct "what if" experiments. Information Resources Management Industry regards the position of Chief Information Officer (CIO) as much more than just an ADP manager. CIOs have to know their company's business well enough to affect strategic decisions and to promote the design of systems that support that business. Both technical expertise and business knowledge are essential to design a technical architecture that will fit the organizational architecture. Increasingly, the trend is toward greater integration of systems, technologies, and data as a means to improve efficiency and effectiveness. In the federal government, this recognition and responsibility rests with the agency's senior Information Resources Management (IRM) official (U.S. General Services Administration, 1987a,b). In both the government and private sectors, the challenges are similar and include coping with huge investments in old technology; driving change from a position of limited responsibility; planning developments that will protect future' investments; finding ways to improve development productivity; and developing their organizations. Even though such challenges are formidable, the "reality" of urgent but short-term business needs usually take precedence and consume most of the available resources.

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19 Because the information relevant to each aspect of the operations of the Defense Logistics Agency has significant bearing upon the information relevant to every other aspect, the agency needs to expand its view of information systems beyond traditional automatic data processing and telecommunications functions by considering information as a resource and creating the organizational structures that will manage this resource. In our review of the DLA, we found this distinction between ADP and IRM lacking. Therefore, we strongly urge the agency to expand the purview of the OTIS beyond its traditional ADP and telecommunications (ADP/T) activities. The Paperwork Reduction Act of 1980 (P.L. 96-511), and the Paperwork Reduction Re-authorization Act of 1986 (P.L. 99-500) created and defined the concept of Information Resources Management ~ IRM) . Public Law 96-511 defined information as a resource and directed agencies to designate a senior official for IRM. Public Law 99-500 added telecommunications to the definition of data processing equipment. The Department of Defense appointed a senior official for IRM and so did each of the military services. The Assistant Director, OTIS, was appointed as the DLA' s IRM official in 1983. However, since IRM responsibilities do not reside in a single organization, the authority and accountability of the IRM official at the DLA is limited. The DLA needs an IRM organization that focuses on the agency's information requirements and understands the needs of its users as well as the technological tools that can be applied. The OTIS can and should develop into the DLA' s IRM organization and the agency should recognize that this implies more than just ADP/T responsibility. It requires a blending of applications knowledge and technology choices from an information perspective. DEFINING MODERNIZATION When we began our review of the LSMP, we noted that even key personnel in the agency did not have a consistent understanding of what this program was to achieve and in what time frame. To our knowledge only a small percentage of the agency's employees even knew that the program existed. We urged the agency to set forth its goals and objectives for the LSMP in a straightforward manner and to promulgate this information throughout the agency. In September 1988, the prior director released his strategic vision for logistics modernization (Defense Logistics Agency, 1988a) that served to announce the LSMP and what its implications were for the future of the DLA. We reviewed this document and felt that it served to communicate a consistent top-down view of the need for modernization, the broad changes that this would entail, and the benefits that would accrue to both the agency's employees and customers. Also in September 1988 the DLA released its strategic plan, "Supporting the Armed Forces" (Defense Logistics Agency, 1988b). We had urged and expected that this document would provide specific and direct guidance to key personnel within the agency regarding the plans for modernization. It neither attempted nor accomplished this result. In fact, it listed the LSMP as one of five

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20 modernization programs taking place within the agency. We also noted that two of these modernization programs had been previously identified as critical baseline enhancements, or short-term upgrades that were needed to maintain effective operations. We believe that this served to confuse the mission for LSMP both within and outside the agency, and obscured the accounting of costs and benefits among the various programs. It was not until the release of the conceptual functional requirements (CFR) in May 1988 that the LSMP began to be defined in terms of what it might accomplish. In the meantime, review schedules for the Major Automated Information Review Council (MAISRC) were slipped as various upgrades, modernizations, and priority developments continued outside of the LSMP umbrella. The agency went about business as usual in upgrading and modernizing its systems as the vision of LSMP grew more distant and its mission and goals became diluted by emphasis on nearer-term programs. Our midterm report warned emphatically against allowing this to happen, and suggested that close management attention was warranted to avoid losing sight of the longer-term modernization. By the Fall 1988, the LSMP languished and its program office had become what we feared -- an island. Refocusing In November 1988, a new director assumed command of the agency. At his urging, a cross-sectional group of senior DLA executives and representative from the Office of the Assistant Secretary of Defense, Systems, met off-site to resolve their differences and agree upon a course of action that all would support. There were seven specific - recommendations that the off-site management group chose to make to the director of the DLA. They are listed as follows with our comments: I. The Assistant Director, OTIS becomes the DLA's ADP czar. We believe that the term ADP is obsolete and too restrictive. We favor a senior IRM official for the DLA. 2. Merge the LSMP program office into the OTIS. We agree with this recommendation to the extent that it assures the LSMP will not be forgotten; that the program office will cease being an island; and that the OTIS will acquire accountability. 3. Central Design Activities (CDA) subordinate to the DLA's Systems Automation Center (DSAC) which in turn reports to OTIS. We agree with this recommendation because it establishes central management.

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21 4. Revise the reporting lines of program managers. Managers of significant automation programs that have received approval of mission need (MAISRC, Milestone l) should be accountable to a central organization for the technical aspects of the program. The OTIS appears to be most appropriately positioned for this role and as a minimum should set DLA-wide design guidelines. Fully adopt the conceptual functional requirements (i.e., institutionalize them). We agree with this recommendation. 6. Redefine the LSMP as a series of separate ADP projects as opposed to a single agency-wide program. We agree, but with the understanding that the program will be executed as a series of separate projects coordinated under a single broadly defined plan. One of the five major recommendations made in our midterm report was that the LSMP - best approached by looking at, and designing for, the whole agency and then decomposing the program into smaller sub-projects that can be implemented separately. 7. Establish an internal MAISRC. This appears to be a good idea for several reasons. It should better prepare the agency for the DOD MAISRC process. It should improve internal communications and coordination. It should provide agency-level visibility and approval of agency-wide automation initiatives. These recommendations have led to what the DLA has called a refocusing of the LSMP. By refocusing, the agency has recognized the futility of trying to plan and cost-justify in advance costs for equipment and services that are to be purchased significantly far in the future so that details can not be known with any reasonable degree of certainty at this time. Even so, a good deal of the motivation for refocusing is thought to be attributable to budget constraints and the anticipated unpopularity of large programs with substantial life cycle costs. The motives for refocusing and the logic behind it appear to be well founded. However, we are concerned that the elements are in place for the agency to fall back into its operating mode prior to the LSMP where systems were upgraded on a piecemeal basis with no real improvement in the overall process. The Missing Element In our opinion, there is a set of steps that organizations typically follow as they move toward the implementation of a long-term vision.

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22 These steps are accepted in industry and also fit the planning and program management structure of the Office of the Secretary of Defense (OSD). In developing the LSMP, the DLA has acknowledged each of the steps and has devoted effort at completing each one. The steps are as follows, with reference to their respective DLA action: A statement of the vision -- The Logistic Systems Modernization Program (LSMP). An analysis of the current manner in which business is conducted -- The Business Area Analysis (BAA). A model of how the enterprise will operate in the future, organized into time-related phases from the near term through the vision -- The Enterprise Model. The changes necessary to implement the model -- The Business Area Requirements (BARB) and the Conceptual Functional Requirements (CFRs). What technology is needed and how will it be used -- The information processing strategy presented in briefings to the committee in November 1988. A strategy for managing the process of transition from the present to the vision -- The Strategic Plan. Organizational arrangements and the assignment of roles and responsibilities for carrying out the strategy -- Various management directives. - Adherence to organizational oversight processes -- Recognition of the OSD requirements for program oversight through the MAISRC process and the formal Program Objective Management (POM) process. As noted above, the DLA has expended effort and resources in addressing each of the steps. However, we do not believe that this has been done with coherence of purpose or with the degree of senior management involvement that is needed to cause organizational components to pull together to make the effort productive and give it a high probability of success. It appears as though the planning staff diligently went about its tasks, checking off each of the steps but doing them in a seemingly independent fashion. This resulted in a lack of cohesiveness among the products produced. In our midterm report we acknowledged that the DLA had done a great deal of detailed bottom-up data gathering, but recommended more top-down analysis and point of view.

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23 The steps listed above involve three primary elements: information and data, organizations, and technology. We have observed a conspicuous lack of technology content in the-planning of the LSMP. This may have been the result of an overreaction by the agency to the Milestone 1 disapproval by the MAISRC, which found the proposed concept too hardware-oriented and tasked the agency to develop a more functionally-based concept. It also appears as though the DLA has received conflicting guidance from the OSD: first, to emphasize long-term functionality for one OSD group; and then afterwards to emphasize details for another. In any case, technology elements took a back seat when the DLA undertook a major effort to analyze and model its business. We supported the business analysis effort in our midterm report and we still believe in the value of such a process as long as its results are put to use. The LSMP began as a technology-based program, and it remains one. We urge the agency to see that the technology elements of the program are properly included in its plans by setting forth the technical architecture and agency-wide standards that will translate the business planning into useful implementation. Moving Forward The MAISRC approved Milestone O for the LSMP in November 1986 but withheld approval of Milestone 1 at that time. The DLA initially expected to return to the MAISRC in March 1988 but slipped that and several subsequently scheduled review dates. As of our most recent briefing in February 1989, the DLA does not yet have a firm date set for MAISRC 1 review. During the period of our review, two smaller modernizations for the logistics services center and the automatic addressing systems office have been carried forward and received approval from the MAISRC for Milestone 1 and O. respectively. In order to avoid Jeopardizing the program and reemphasize commitment to it, the agency needs to move forward with the Major Automated Information Systems Review Council for the Logistics Systems Modernization Program (LSMP) by scheduling and holding to a date for review and approval of Milestone 1, concept development for the first project under the LSMP - ~mbrella plan. In presenting projects for MAISRC approval, the DLA should not try to present plans and details that it cannot know at this stage. Conversely, the DOD should not require the DLA to present details that can reasonably be expected to be known only in future phases of the MAISRC process. Refer to Appendix D for a description of-the six phases of the MAISRC process. Instead of a single integrated program, we suggest that the DLA maintain an umbrella plan and seek MAISRC approval of subprograms to accomplish specific pieces of the CFRs in an evolutionary manner.

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24 Becaude the major benefits of modernization arise out of improvements in process, the agency's modernization should be guided by a unified concept rather than a collection of individual and uncoordinated fix-it projects, performed on an "as needed" basis, that retain the old processes. By maintaining the overall mission of the LSMP, the DLA will have based its needs on functional improvements, rather than individual fix-it programs, and received some measure of assurance that the program, and what it can achieve, will survive yearly~budget scrutiny For this reason we also suggest that the LSMP be placed on the DOD's formal Program Objective Management (POM) process because of its size and multi-year execution period. - Where to Start The DLA should concentrate its modernization investment where it is most needed and where it will produce the greatest benefits. We suggest an approach where the agency selects and defines which of its major business areas it will work on first. The CFRs need to be converted into bounded and realistic projects that can be successfully executed. Modernization subprograms need to consider and complement other major DOD programs such as the Engineering Data Management Information and Control System (EDMICS) which is part of the Computer-Aided Acquisition and Logistics Support (CALS) initiative. In this regard, the agency must make sure that its projects are achievable in the "real world." Some of the CFRs can not be implemented presently because they depend on policy decisions that are still to be made in areas such as item visibility. Because it is the largest part of the agency's mission and because its systems are most in need of modernization, we recommend that the materiel management and supply functions have priority. These functions are currently supported by the Standard Automation Materiel Management System (SAMMS). This system supports the inventory management functions at the agency's supply centers. It allows some real-time interface with other on-line systems, but primarily uses batch processing modes. SAMMS functions include distribution, requirements, supply control, financial management, accounting and billing, procurement and production, and technical cataloging. A modernized SAMMS would improve materiel visibility, reduce inventory and transportation costs, while increasing availability of supplied items. SAMMS modernization, therefore, is one of the first major subprograms that should come-forward under the LSMP umbrella plan. However, there are three major components that need to be developed under the LSMP: data bases, applications, and a technical facility. Of these three, the data base design, and the agency's transition to it, is by far the most significant undertaking, and relates directly to how

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25 the agency plans to conduct business in the future. SAMMS, like other applications, can and should be developed and operated in conjunction with an agency-wide standard data base and technical facility. We suggest, therefore, that the design and development of data base systems and acquisition of technical facilities be conducted concurrently with application development. We strongly recommend that the DLA design, develop, and acquire common technical facilities for use throughout the agency and data base architectures that will support its internal and external information needs. Given such uniform technical platforms, the agency can develop and improve its applications over time with greater assurances of long-term interoperability among systems. This will also improve the predictability and accuracy of on-going maintenance and development efforts. RESOURCES FOR THE LSMP Costs Lifecycle costs for the LSMP are currently estimated at $2.8 billion. Keeping in mind that these are lifecycle and not system costs, the cost projections for new hardware and software are not out of line with what has gone toward the modernization of other federal agency information systems, nor should they be viewed as out of line for the modernization of an agency the size and complexity of the DLA. The agency's past investment in information has been massive, and it currently averages an information management budget of about $300 million a year. Yet, underlying some internal DLA concerns with the LSMP is the thought that a $2.8 billion modernization plan is simply too large to take forward to OSD for approval. We believe that life cycle costs should not be the only factor considered in the construct and packaging of the LSMP, nor even the most important factor. The DLA needs to consider the longer-term effects of technology-based changes rather than evaluate them solely on cost savings. The agency's future operations will depend upon a sound systems architecture being in place to provide the vital infrastructure to support its mission. The LSMP's life cycle costs should also be viewed in the context of what the agency is planning to spend outside of the LSMP each year on hardware and software upgrades and modernization of its ADP and telecommunications (ADP/T) systems. For example, in Fiscal Year 1989 the DLA plans to spend about $87 million on hardware and software acquisitions for ADP/T. This amount does not include personnel costs or budgets for the LSMP. For the LSMP, the agency has budgeted only $8.9 million for Fiscal Year 1989, or 9.2 percent of the total. The DLA is urged to maintain its focus on the umbrella plan, estimate the costs for each subprogram, and present these to the OSD for MAISRC approval of Milestone 1. Concurrently, it must generate the funds needed to support both the early development work and the time-phased implementation of the discrete elements of the program.

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26 This level of budgeting and planning is necessary to assure that the MAISRC can give this program serious consideration based on its merits as well as the likely consequences of failure to act on it. The present level of LSMP funding for the next few years will do little more than allow for continued study and planning -- a strategy that will consume precious time, yield minimal results, and might even jeopardize the DLA's business and information planning investment. In Fiscal Year 1989, the LSMP has been budgeted for less than half of the amount projected. For Fiscal Year 1990, the current budget authorization is only 29 percent of the costs projected. Presently, for Fiscal Year 1991 and beyond, the budget is unidentified. During the five year period including and following Fiscal Year 1992, the total annual budget projected for the LSMP is approximately $90 million. As part of its funding strategy, the DLA should seriously consider extending the LSMP's budget years and enter it into the Program Objective Memorandum (POM) process. This will impose discipline on the costing process. The POM process would require the DLA to acknowledge its full costs to modernize while providing a vehicle for the agency to gain the OSD's long-range support. We find it difficult to understand how the LSMP can be taken as a serious program by the MAISRC without adequate budget and POM support. We believe that the some holds true for Congress, especially when the program is included in the budget submitted by the President for Congressional approval. The Role of Contractors The DLA's technical staff consists of a significant number of designers and programmers skilled on current systems. However, we are not confident that sufficient skills and depth currently exist in the DLA to successfully oversee and direct the development and acquisition of the new systems, technical facilities, and data base architectures that will be required as part of the LSMP. In our midterm report we suggested that the DLA would need to use contractors as a way to obtain the necessary expertise. We continue to hold this view. However, we do not wish to see the agency become overly dependent upon contractors. In our view, contractors can bring new ideas and a knowledge of current technologies to the agency but they cannot be expected to know the DLA's business or its strategic directions. Contractors will allow for a transfer of technology to the agency's personnel and should serve to augment rather than replace skills. We favor decreasing the DLA's reliance on outside technical knowledge over time and leveraging its contractor relationships into something more like partnerships than skill supplements. This implies the need to develop DLA's own resources, which can be best accomplished by identifying key people; investing in their training; recognizing and rewarding their achievements; challenging their skills; providing the best tools; and by cycling staff between business and technical assignments. Such a strategy will allow the DLA to retain an in-house

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27 competence in information resources management rather than seeing such competence depart when the contractor departs. For the modernization program, the agency's acquisition strategy calls for integration, design, and management by the DLA with - contractor support. We agree with this strategy, but with the understanding that the integration support contractor will be separate from the contractors who work on the discrete modernization projects. The DLA needs healthy doses of outside expertise in its integration, design, and management roles as well as contractor support in day-to-day systems maintenance activities. ISSUES IN THE DEFENSE LOGISTICS ENVIRONMENT Our midterm report identified the need for certain external policy guidance from the Office of the Secretary of Defense (OSD) regarding problems that the DLA could not resolve on its own. Chapter 3 of the midterm report, "The Defense Logistics Environment," dealt with this issue in detail. At this time, the major issues are still materiel visibility, excess inventories, and stocking policies across all the Services and the DLA. Admittedly, these are difficult and complex issues, but to the best of our knowledge, they have not yet been addressed by the OSD and no guidance has been provided. In this final report, we wish to draw attention to other issues external to the DLA's control that also warrant attention. Open Competition Versus Standards This issue involves the effect that open competition has on the ability of an agency to plan for modernization, and on the plans themselves. It applies not only to the DLA but to most federal agencies. In general, open competition is a valid and effective means of improving the value received from a procurement. However, we believe that when practiced in full and free manner it also constrains an agency's ability to develop long-range plans by introducing unknowns into the acquisition process. Furthermore, we believe existing regulations that make it quite simple to delay an acquisition through the use of protest action further exacerbates this situation. DLA is committed to open competition in acquiring new information systems. However, our advice to set standards and guidelines, and the DLA's efforts to do so, are often at odds with permitting any supplier to marginally bid what can be regarded as a functional equivalent. Accepting the lowest bid can easily lead over time to system acquisitions that are neither interchangeable nor interoperable with others. In our view, maintenance and support burden increases with the number of different system designs in operation. Open competition is certainly desirable for commodity procurements but a more disciplined application may be needed for the complex information technologies that must be acquired over a long period of

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28 time and applied to serve the unique needs of an organization. Private industry has tong recognized that standardizing on certain hardware and software was necessary to prolong the life of its systems investments; assure that information could be shared and moved to where it was needed; and hold down long-term maintenance and development costs. When and where possible, industry seeks to acquire components in a competitive environment but generally controls and specifies its requirements in a way that effectively limits responsive bids to those firms that den offer and perform what is required. Typical practice in receiving proposals is not to further evaluate bid offers if they would jeopardize existing investments or complicate operations by diverging from organization-wide standards. However, in the government sector, agency managers faced with multiple acquisitions of information technology have limited motivation and resolve to select a technical solution and stick with it. The DLA must be aware of these factors in choosing its acquisition strategy. A single integration contractor for the LSMP would serve to protect the agency from the uncertainties of multiple procurement actions but would also relinquish some control of the program. By awarding multiple competitive contracts, the DLA will increase funding flexibility and may satisfy critical needs sooner, but it must be resolute in ensuring the acquisition of a common technical facility for its various applications over a long time. In order to accomplish this, the DLA's contracting officers must be qualified to award and administer technology-based contracts and its procurement specifications must conform to DLA-wide standards. Acquisition Protests Also of concern to us are the regulations that almost seem to encourage unsuccessful bidders to protest a procurement award decision. By establishing and maintaining good communications with its bidders, the agency can help to avert protests that can arise from ignorance or misunderstanding. If protests occur, they should be settled within the BLA rather than escalating beyond the agency. This places a premium on the skills of the contracting officer and his or her technical representative, especially their technical competence and management maturity. Because so many of the DLA's procurements are routine and commodity-based, contracting officers are not presently required to possess senior management qualities and technical competence. We urge the agency to recognize this need so that its modernization acquisitions will be handled by personnel who have the knowledge, responsibility, accountability, and authority to do so. We also urge the director and the OSD to speak out on counterproductive mechanisms in the procurement process, and to initiate measures that provide ample safeguards while allowing progressive, well-planned modernization.

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29 Turnover at the Top The LSMP as presented to us involves a major long-term commitment by the DLA to modernize the way it carries out its mission. This vision needs to evolve and develop into implementing programs over time and through changes in top management. In this effort, we underscore the need for vision, perseverance, and flexibility in order to realize the full benefits that modern information systems and technology will bring to the agency now and in the years to come. The vision and work of modernization will necessarily span several changes in the agency's top management positions that are held by military officers. The modernization process must also expect that priority initiatives will need to be addressed as they arise from time to time. The agency must continue to perform its functions without disruption during the time it modernizes its systems and processes. Continuity, therefore, is a consideration that must be addressed in the conduct of this program. In addition to creating permanent positions and institutionalizing the process, the agency may also wish to consider setting up an external advisory committee, a mechanism similar to the Defense Science Board, to maintain continuity and momentum. Exporting Accomplishments During our review of the DLA's systems, we noted that the agency has accumulated considerable expertise in the systems it had developed. In addition to their development effort, the agency has continually updated and improved these systems. We feel that the agency is taking steps to manage the development and changes it is making to its hardware and software systems through documentation, code and release version control. These efforts are incorporated in a system engineering discipline known as configuration management. We stress the importance of configuration management in allowing the agency to operate its geographically dispersed data processing and design activities, and to coordinate the software and hardware used in common by the DLA's major business areas. Configuration management is a process that occurs through the systematic identification, control and audit of system characteristics. It follows the production, review, and acceptance or rejection of a product. Configuration control requires the evaluation, coordination and approval of proposed changes to an established baseline of software items. By effectively employing configuration management, the DLA will be in a position to confidently export its best systems to other DOD entities that have a similar need but less expertise. We understand that the DLA's contract administration and personnel systems can be used by other DOD entities. We support and encourage the common use and sharing of systems. In this way, the DOD can propagate its best systems and avoid needless duplication.

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30 REFERENCES Defense Logistics Agency. 1988a. Strategic Vision. Logistics Modernization. A Message from the Director. Alexandria, Virginia: Defense Logistics Agency, Cameron Station. Defense Logistics Agency. 1988b. Supporting The Armed Forces. 1988 Strategic Plan. Alexandria, Virginia: Defense Logistics Agency, Cameron Station. U.S. General Services Administration Information Resources Management Service. 1988. Washington, D.C. An Evaluation of the GRAND DESIGN Approach to Developing Computer Based Application Systems. U.S. General Services Administration, Information Resources Management Service. 1987a. Washington, D.C. The Senor Federal IRE Manager: Major Roles and Responsibilities as we move into the 1990's. U.S. General Services Administration, Information Resources Management Service. 1987b. Welcome to Information Resources Management in the Federal Government . Washington, D.C.