INFORMATION TECHNOLOGY Defense Information Systems Agency Can Improve .

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United States General Accounting Officerj. A C\Report to Congressional CommitteesMarch 2002INFORMATIONTECHNOLOGYDefense InformationSystems Agency CanImprove InvestmentPlanning andManagement ControlsDISTRIBUTION STATEMENT AApproved for Public ReleaseDistribution Unlimited20020318 098GAPAccountability Integrity * ReliabilityGAO-02-50

United States General Accounting OfficeGAP; h 2002INFORMATION TECHNOLOGYDefense Information Systems Agency CanImprove Investment Planning andManagement ControlsHighlights of GAO-02-50, a report to the Senate and House Committees on Aimed ServicesWhy GAO Did This StudyThe Defense InformationSystems Agency (DISA) spendsabout 3.5 billion annuallyproviding critical informationtechnology (IT) support to themilitary services, militarycommands, and Defenseagencies, as well as operatingand maintaining crucialcommand, control, andcommunications systems. Inresponse to a mandate in thefiscal year 2001 DefenseAuthorization Act, GAO studiedthe agency's management of its500 Day Action Plan, as well asits efforts to establish importantinstitutional managementcontrols.What GAO RecommendsTo strengthen DISA's operationalefficiency and effectiveness, GAOis making specific recommendations aimed at ensuring that DISAmakes informed decisions aboutthe many investments describedin its Action Plan, as well asensuring that DISA fullyestablishes the institutionalmanagement controls addressedin GAO's study. These recommendations include makingestablishment of each of thesecontrols an agency imperative.DOD concurred or partiallyconcurred with all of GAO'srecommendations and stated thatit is in the process ofimplementing corrective actions.What GAO FoundIn March 2001, DISA issued A 500 Day Action Plan for Supporting DoDDecision Superiority, which described 140 actions requiring theinvestment of resources to improve its customer satisfaction and itsperformance. A strength of this plan was its focus on satisfying customerneeds. However, the plan did not adequately address other importantelements, such as providing reasonable assurance that planned actionsor investments were cost-effective. In particular, DISA did not adequatelydefine the scope and content of the actions or develop associated highlevel cost, schedule, benefit, and risk estimates for each. Whendecisionmakers are faced with time and resource constraints, suchestimates are essential, providing the basis for evaluating and selectingamong competing investment options, and establishing baselines againstwhich to measure progress.To further improve its performance, DISA is also strengthening keyinstitutional management controls. In reviewing selected controlsassociated with high-performing organizations (see below), GAO foundDISA to be taking actions to establish aspects of each control area, butfound some to be still in their formative stages, while others hadprogressed much farther. In IT human capital management, for example,DISA has begun to identify requirements by establishing an inventory ofits workforce knowledge and skills; forecasting its strategic workforceneeds; and filling the gap between the two. In contrast, in enterprisearchitecture, DISA has only begun to establish a management foundationand has yet to develop an architecture. Such variability in the maturity ofcontrol areas is due to the level of executive attention, priority, andcommitment associated with each. Until each control area is fullyfunctioning, DISA will be challenged in maximizing its performance andaccountability.Selected management controls associated with high-performing organizations and the degree towhich they are largely under way at DISA.Management controlStrateqic planningIT human capital manaqementOrganizational structuremanaqementEnterprise architecturemanaqementIT investment manaqementCustomer relationsmanaqementKnowledge manaqementDefinitionEstablishing mission and vision, including corevalues and qoalsAttracting, retaining, and motivating peoplehaving the skills needed bv the organizationAligning operational responsibilities withbusiness and mission goals, and maintainingaccountabilityDeveloping, maintaining, and using an explicitblueprint for operational and technical changeSelecting and controlling investments tomaximize benefit and minimize riskFocusinq on satisfyinq customer needsCapturing, understanding, and using theinformation and intellect within an organizationto achieve objectivesLargelyunder way?YesYesYesNoNoYesNoThis is a test for developing highlights for a GAO report. The full report, including GAO's objectives, scope, methodology, and analysis, is availableat www.gao.gov/cgi-bin/getrpt7GAO-02-50. For additional information about the report, contact Randolph C. Hite (202-512-3439). To provide commentson this test highlights, contact Keith Fultz (202-512-3200) or E-mail HigMightsTest@gao.gov.

ContentsLetterl35Results in BriefBackgroundAction Plan Development Was Appropriately Focused on SatisfyingCustomers, but Not on Other Tenets of Effective PlanningDISA Has Taken Steps to Improve Management of Action PlanImplementation, but More Can Be DoneDISA Is in the Process of Establishing Important InstitutionalManagement ControlsConclusionsRecommendationsAgency Comments and Our Evaluation20394043Objectives, Scope, and Methodology45Status of DISA's Efforts to Benchmark Performance49Further Details Regarding DISA's Enterprise ArchitectureManagement and Information Technology InvestmentManagement52Comments from the Department of Defense581216AppendixesAppendix I:Appendix II:Appendix III:Appendix IV:TablesFiguresTable 1: Summary of Extent to Which 57 Actions Have NoEstablished BaselinesTable 2: Status of DISA's Enterprise Architecture (EA) ManagementProcess as of November 30, 2001Table 3: Status of DISA's IT Investment Management as ofNovember 30, 2001Figure 1: DISA's Reporting Structure and Field UnitsFigure 2: Relationships Among Management Controls, People,Processes, and TechnologyFigure 3: The Five Stages of Maturity Within IT InvestmentManagementPagei15535472232GAO-02-50 DISA Operations

age iichief information officercustomer relations managementDefense Information Systems AgencyDepartment of Defenseenterprise architectureGovernment Performance and Results Actinformation technologyinformation technology investment managementOffice of Management and BudgetGAO-02-50 DISA Operations

GAPAccountability * Integrity * ReliabilityUnited States General Accounting OfficeWashington, D.C. 20548March 15, 2002The Honorable Carl LevinChairmanThe Honorable John WarnerRanking Minority MemberCommittee on Armed ServicesUnited States SenateThe Honorable Bob StumpChairmanThe Honorable Ike SkeltonRanking Minority MemberCommittee on Armed ServicesHouse of RepresentativesThe Defense Information Systems Agency (DISA) performs a criticalinformation technology (IT) support mission for the Department of Defense(DOD) and others. On a cost reimbursable basis, DISA provides computingservices, telecommunications services, and acquisition services; in fiscalyear 2001, DISA's service reimbursements were about 2.5 billion. DISA alsooperates and maintains joint warfighting and related mission supportcommand, control, and communications systems funded by directappropriations, which in fiscal year 2001 were about 1 billion. In light of thesignificance and cost implications of DISA's mission, it is important that theagency cost-effectively invest and manage its limited resources. In March2001, DISA issued a plan, entitled A 500 Day Action Plan for SupportingDoD Decision Superiority, that contains 140 ongoing or planned actionsinvolving the investment of resources. DISA has also recently begun anumber of other institutional management improvements.Page 1GAO-02-50 DISA Operations

The fiscal year 2001 Defense Authorization Act directed us to review DISAoperational efficiency and effectiveness and to identify opportunities forimprovement.1 As agreed with your offices, our objectives were todetermine whether DISA (1) had effectively managed development of its500 Day Action Plan, (2) is effectively managing implementation of theplan, and (3) has established certain institutional management controlsneeded to effectively adjust to shifts in strategic direction. The controlareas that we agreed to address are (a) strategic planning, (b) IT humancapital management,2 (c) organizational structure management,(d) enterprise architecture management,3 (e) IT investment management,4(f) customer relations management,6 and (g) knowledge management.6Each of these areas is agencywide in scope and strategically focused; towork effectively, each depends on the proper application of organizationalresources—people, processes, and technology.7 As further agreed, ourreview of these management controls focused on whether DISA had eitherestablished or was in the process of establishing them; it did not includeevaluating the effectiveness of established controls. We briefed your officeson the results of our review in January 2002.8 Details on our objectives,scope, and methodology are in appendix I.'P.L. 106-398, Floyd D. Spence National Defense Authorization Act for Fiscal Year 2001, app.section 918.*TT human capital management is an approach to attracting, retaining, and motivating thepeople who possess the knowledge, skills, and abilities that enable an organization toaccomplish its IT mission.Enterprise architecture management is an approach to developing, maintaining, and usingan explicit blueprint for operational and technological change.4rr investment management is an approach to selecting and controlling IT spending so as tomaximize return on investment and minimize risk.5Customer relations management is an approach to focusing an organization's operations onhow to best satisfy customer needs.6Knowledge management is an approach to capturing, understanding, and using thecollective body of information and intellect within an organization to accomplish itsmission.'Other institutional controls not addressed in this report (but equally important) are budgetformulation and execution, financial management, acquisition, and security management."Briefing to the Senate Armed Services Committee on January 31, 2002; briefing to theHouse Armed Services Committee on January 23, 2002.Page 2GAO-02-50 DISA Operations

ReSUltS in Brief developingits 500 DaV Action Plan, DISA appropriately focused onunderstanding and satisfying customer concerns and needs. However,DISA did not adequately address other important elements of effective plandevelopment, such as having reasonable assurance that planned actions(investments) were cost-effective. In particular, DISA did not adequatelydefine the scope and content of the actions or develop associated high-levelcost, schedule, benefit, and risk estimates for each. When decisionmakersare faced with time and resource constraints, such estimates provide therequisite basis for evaluating and selecting among competing investmentoptions. Such estimates also provide the baselines against which tomeasure progress and determine whether the investments improveefficiency and effectiveness and advance strategic goals. According toDISA officials, developing baseline data needed to assess costeffectiveness and measuring progress and results were not consideredduring plan development, because at that time they did not view the actionsas individual projects to be planned and controlled. DISA has since begunto develop scope, schedule, and cost baselines for some planned actions.However, it has yet to begin developing benefit and risk baselines, and ithas not analyzed the cost-effectiveness of its planned actions. As a result,DISA has not adequately ensured that its action plan contains the best mixof investments for improving mission performance and achieving strategicgoals.During our review, DISA took steps intended to better manageimplementation of the 500 Day Action Plan. Specifically, although theagency did not establish baseline commitments9 in developing its actionplan, DISA has since established some, but not all, baselines and isbeginning to monitor progress against these commitments. In addition,DISA has established a process to notify customers of changes to baselines,but the process did not include justification of the costs, benefits, and risksof the investment, which would be needed for senior management approvalof the changes. Until DISA adequately measures progress in implementingplanned actions and manages changes to those actions, DISA cannotdetermine which, if any, of its planned investments are producingperformance improvements and thus warrant further investment."The baseline commitments would define what an action is intended to provide (in terms ofcapability and value), by when, at what cost, and with what associated elements of risk.These commitments are the expectations for the action that allow informed decisionmakingon whether to invest in the action and permit measurement of action progress andperformance.Page 3GAO-02-50 DISA Operations

DISA's 500 Day Action Plan is part of a larger set of management actionsthat the agency has initiated to improve mission performance. Theseactions address some, but not all, of the institutional management controlsthat can help an agency effectively adjust to shifts in strategic direction.These controls include (1) strategic planning, (2) IT human capitalmanagement, (3) organizational structure management, (4) enterprisearchitecture management, (5) IT investment management, (6) customerrelations management, and (7) knowledge management.10 DISA hasactivities under way associated with each of these institutionalmanagement controls; although some are in their formative stage, othershave progressed much farther. For its IT human capital management effort,for example, DISA has completed, ongoing, and planned steps to identifyits IT human capital requirements; establish an inventory of its workforceknowledge, skills, and abilities; forecast its strategic workforce needs; andfill the void between the two through evaluating its progress in training,retention, and hiring initiatives. In contrast, for its enterprise architecture,DISA has only begun to establish elements of the architecture managementfoundation, and it has yet to develop an architecture; for its knowledgemanagement effort, it does not yet have a defined management approachand structure. Such variability in the maturity of these controls can beattributed to the level of executive attention, priority, and commitmentassociated with each. Until each control area is fully functioning, DISA willbe challenged in responding effectively to changes in its strategic directionand maximizing its performance and accountability.To strengthen DISA's operational efficiency and effectiveness, we aremaking recommendations aimed at ensuring that DISA makes informeddecisions about investing in its 500 Day Action Plan initiatives. We arealso making recommendations to facilitate DISA's ongoing institutionalmanagement efforts by ensuring that DISA fully establishes certaincontrols.In written comments on a draft of this report, DOD stated that it concurredor partially concurred with all of our recommendations. DOD also statedthat by working closely with us during this review, DISA is either in theprocess of implementing, or has plans to implement, our recommendationsand that doing so will improve support to DISA's customers.10Other institutional controls not included in the scope of our review (but equally important)are budget formulation and execution, financial management, acquisition, and securitymanagement.Page 4GAO-02-50 DISA Operations

BackgroundDISA is a D0D comP nent agency reporting to the assistant secretary ofdefense for command, control, communications, and intelligence.11 DISAcentrally manages major portions of DOD's common global IT resources,providing services and operating and maintaining systems that support thecomputing, networking, and information needs of the national commandauthority, military services, joint military commands, and Defenseagencies.DISA's services include providing computing capabilities critical to DOD's global combatsupport operations; providing voice, data, and video telecommunications services to DODand other customers; purchasing telecommunications services on behalf of its customersfrom commercial vendors and other sources, such as voice servicesfrom the General Services Administration's Federal Technology Servicecontract; and purchasing customized IT products and services.In addition to these services, DISA also operates and maintains a number ofsystems that perform mission-critical functions. These systems include thefollowing: The Defense Information Systems Network, which is used to providetelecommunication services. The Global Combat Support System, which integrates joint combatsupport information from various databases and presents battlefieldstatus information during an engagement. The Defense Message System, which interfaces with other U.S.government agencies, allies, and contractors to provide multimediamessaging and directory services for DOD users worldwide."The assistant secretary of defense for command, control, communications, andintelligence also serves as the DOD chief information officer.Page 5GAO-02-50 DISA Operations

The Global Command and Control System, which provides a range ofinformation needed to conduct joint U.S. and allied military operations,including battlefield information, imagery, planning support, and otherintelligence information. The system operates at over 625 networkedsites worldwide. Using the Defense Information Systems Network, theGlobal Command and Control System delivers system applications, suchas the Global Combat Support System and messaging systems, used bybattlefield commanders to synchronize and coordinate widely dispersedair, land, sea, space, and special operations forces during militaryoperations.In addition, DISA manages the Information System Security Program,which is to protect DOD telecommunications and IT systems from damage,unauthorized access, or threats to their availability. The agency alsoprovides guidance and support on IT operational and technical issues toDOD components and coordinates DOD planning and policy for integrationof systems within the DOD infrastructure, including management of theJoint Technical Architecture.To accomplish its mission, DISA employs about 8,300 staff, located in itsheadquarters' Command and 10 directorate offices and at 20 field and lineorganizations worldwide. Figure 1 depicts DISA's reporting structure withinDOD and shows its field units.Page 6GAO-02-50 DISA Operations

Figure 1: DISA's Reporting Structure and Field UnitsSecretary of DefenseAssistant Secretary of Defense forCommand, Control,Communications, and Intelligence(C3i)Defense InformationSystems AgencyOffice of the Agency andDISA HeadquartersCommand Staff OfficesIDISA Directorates:Acquisition, Logistics, and FacilitiesApplication EngineeringDefenseInformation SystemNetwork ServiceCenterDefense TechnicalInformation CenterDefense ing ServicesCustomer AdvocacyInteroperabilityManpower, Personnel, and SecurityJointInteroperabilityTest CommandNetwork ServicesOperationsStrategic Plans, Programming, andPolicyTechnical Integration ServicesDISA Field Offices:DISA Central/Special OperationsCommandDISA Continental U.S.PISA European CommandDISA Fort GordonDISA U.S. Joint Forces CommandDISA Pacific CommandDISA Southern CommandPISA Space CommandDISA Strategic CommandJoint StaffSupport CenterJoint SpectrumCenterDISA Transportation CommandPage 7GAO-02-50 DISA Operations

DISA's operations generally fall into four key areas: (1) computing,(2) telecommunications, (3) acquisition services, and (4) joint combatsupport and DOD enterprise capabilities. Each of the directorate, field, andline units supports aspects of these areas. For example, the ComputingServices directorate is responsible for operating assigned DISA informationprocessing, communications, and network systems, includingmanagement, operations, and maintenance of six regional mainframeprocessing data centers within the United States. The Network Servicesdirectorate is responsible for developing network solutions for voice, data,and video transmission services and monitoring the effectiveness ofnetwork performance in meeting customer requirements. Theresponsibilities of DISA's Defense Information Technology ContractingOrganization include procuring, accounting, and paying for IT supplies andservices required by DISA and other DOD components. The JointInteroperability Test Command is responsible for performing operationaltest and evaluation of DISA and other DOD IT acquisitions. DISA also has10 field offices located at major customer locations, such as the U.S. SpaceCommand, that are responsible for handling on-site customer issues andinquiries with products and services offered.Prior Reports Have CitedWeaknesses in MeasuringCost-EffectivenessRecent reports by us and others have pointed out weaknesses in DISA'sability to know whether it is cost-effectively providing services andoperating and mamteining systems. For example, in 1998, we reported thatin providing IT services, DISA had difficulty setting prices that recoveredthe full cost of doing business; this difficulty impaired the agency's abilityto focus management attention on the full costs of carrying out operationsand managing those costs effectively.12 Specifically, in setting prices fortelecommunications services, DISA did not incorporate about 137 millionof costs incurred, so that all costs were not reflected in prices charged tocustomers and thus not recovered. Also, the agency used at least 231million of its appropriated funding, reserved for use on joint warfightingcapabilities, to support IT business activities that should have been fullyfunded by customer reimbursements for services. As a result, DISA did nothave reliable information upon which to measure the cost-effectiveness ofits services. We recommended that DISA improve its operations, price-12U.S. General Accounting Office, DOD Information Services: Improved Pricing andFinancial Management Practices Needed for Business Area, GAO/AIMD-98-182(Washington, D.C.: Sept. 15, 1998).Page 8GAO-02-50 DISA Operations

setting, and financial management practices by setting prices that includedall costs incurred and promptly collecting amounts owed by customers.Inspector general reports have also found performance weaknesses. In1999, the DOD inspector general reported that DISA's management ofDOD's long-haul telecommunications requirements was fragmented and inneed of improvement.13 In 2000, the DISA inspector general reported thatthe process for collecting and reporting performance data was alsofragmented, procedures were not established, and practices did not ensureresults as intended by DISA's performance contract, which was establishedin fiscal year 2000 between DISA and the deputy secretary of defense.14Under this contract, the agency committed to measuring quality, costeffectiveness, and timeliness of its goods and services, as well as customersatisfaction with these, and to performing benchmarking studies gaugingthe reasonableness of service cost and quality.15Director Has Initiated a 500Day Action Plan to ImproveServiceShortly after the current director assumed command of DISA in June 2000,agency customers reported on problems with slow service, unansweredtelephone calls, and inadequate network capacity. A former customerhimself, the director responded by launching an initiative to solicitcustomer input on three core questions: what DISA was doing right, what itcould do better, and what future requirements it needed to address. Thegoal of the initiative was to improve customer satisfaction with theagency's services and resulted in a 500 Day Action Plan for serviceimprovement. The plan is divided into five main sections:1. Strategic goals. DISA's strategic goals, as stated in the action plan, are "Goal 1: Provide a flexible, reliable information infrastructure, capableof supporting the evolving Global Information Grid, required by the"Management ofDoD Long-Haul Telecommunications Requirements, Report Number 99140 (Apr. 1999)."Audit of DISA's Performance Contract, Final Report 2001-01 (Oct. 2000).15Annual performance contracts were instituted by the November 1997 Defense ReformInitiative as a means to improve the cost-effectiveness and efficiency of DOD's businessprocesses and support infrastructure. Similar to the performance plan required by theGovernment Performance and Results Act of 1993, the performance contract facilitatesefforts to manage resources better and link program results to budget.Page 9GAO-02-50 DISA Operations

warfighter and others to achieve the highest level of effectiveness injoint and combined operations. "Goal 2: Easy sharing of high quality information supportinginteroperability among U.S. Forces and Allies. "Goal 3: Defense information resources are secure. "Goal 4: DISA is a sought after employer. Personnel are available, wellqualified, and able to improve their professional skills and advancementpotential. "Goal 5: Information technology in support of business evolution will beused to the maximum advantage to satisfy customers."This section of the plan also includes statements of mission and visionand descriptions of nine key initiatives that are designated as critical toachieving the above goals: (1) the Defense Information SystemNetwork, (2) the Global Command and Control System, (3) the GlobalCombat Support System, (4) information assurance, (5) the DefenseMessage System, (6) assured computing, (7) customer accountmanagement, (8) electronic commerce/electronic business, and(9) interoperability activities.2. Customer-requested activities. The plan includes 109 customerrequested actions, grouped by customer. Each action includes a briefstatement of need and importance, designation of the office of primaryresponsibility, the start date, the completion date, and key terms andconditions related to the action.163. Global network actions. The plan describes 32 actions that assistDISA in providing a flexible, reliable, affordable, integrated informationnetwork infrastructure. (Of these 32, 17 are also included among thecustomer-requested actions.)4. Operational improvements. The plan proposes 16 actions to improveDISA's internal organizational and workforce operations.16We give no specific examples here because DISA's position is that the military sensitivity ofthe actions makes them unsuitable for public disclosure.Page 10GAO-02-50 DISA Operations

5. Master schedule. The plan includes a summary schedule for all 140actions (109 customer actions, 15 global network actions not includedin the 109 customer-requested actions, and 16 actions internal to DISAmanagement), spanning a time frame from before January 2001 toabout August 2002.Each of these 140 actions involves, to varying levels, the investment of ITresources to achieve a specific end result. DISA officials grouped theactions into three types: projects, mission-based services, and processes, asfollows.1. Projects were defined as actions to enhance "a capability to meet acustomer need" and "subject to intensive oversight and supported byformal documentation and/or a formal oversight process."2. Mission-based services were defined as "human capital being appliedto a key, critical problem, [such as establishing] standards, engineering,test and evaluation, or [military command] support."3. Processes were described as "[starting] with a determination aboutwhat needs to be improved to reach a goal or end-state, [for which]solutions may be material, nonmaterial, or both [and involve]significant investment amounts."Of the 140 actions in the 500 Day Action Plan, DISA categorized 44 asprojects, 44 as mission-based services, and 52 as processes.Effective IT InvestmentPlanning Is Critical toInformed InvestmentSelection andDecisionmakingFederal law and guidance17 and industry best practices recognize ITinvestment planning as critically important, as it results in an IT investmentplan that should be used to implement budget priorities for the year inaccordance with strategic goals and the enterprise architecture. Our ITinvestment management framework, which is based on industry bestpractices, establishes a systematic process for investment planning andmanagement, including processes for selecting, controlling, and evaluatinginvestment options to maximize the value of the investments and to1740 U.S.C. § 1422; Management of Federal Information Resources, Office of Managementand Budget (OMB) Circular A-130 (Nov. 28, 2000).Page 11GAO-02-50 DISA Operations

minimize their risks.18 This process requires the development of life-cyclecost, schedule, benefit, and risk estimates and the use of these estimates incomparing the relative merits of competing investment options. Such aprocess allows decisionmakers to select those initiatives that best meet theagency's strategic goals and prioritize the selected initiatives for allocationof IT resources. The results of these informed decisions can then becaptured in an IT investment plan. This plan, like DISA's 500 Day ActionPlan, is intended to identify those initiatives in which the agency intends toinvest time, money, and effort to produce a result with value commensuratewith cost.Action PlanDevelopment WasAppropriately Focusedon SatisfyingCustomers, but Not onOther Tenets ofEffective PlanningAs described in our IT investment management framework, effective ITinvestment planning requires, among other things, that organizationsprovide for satisfaction of customer needs and evaluate competinginvestment choices in light of each investment's estimated

INFORMATION TECHNOLOGY Defense Information Systems Agency Can Improve Investment Planning and Management Controls Highlights of GAO-02-50, a report to the Senate and House Committees on Aimed Services Why GAO Did This Study The Defense InInformation Systems Agency (DISA) spends about 3.5 billion annually providing critical information

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