A Look at the Defense Agencies Initiative (DAI) ERP Program
Published: May 08, 2013
Former Defense Secretary Leon Panetta recently pushed up the date by which the DoD is supposed to be ready for full auditability from FY 2017 to September 2014. Congress then adopted this date into the National Defense Authorization Act (NDAA) for FY 2013, a development that put considerable pressure on the DoD to accelerate the pace of its ERP deployments. The date changes are beneficial for the contracting community because the DoD is unlikely to meet its updated deployment schedule. This suggests that despite the difficult fiscal climate the DoD will continue funding ERP deployments and all of the related work associated with these systems. Funding means contracts and contracts mean business opportunity.
Since Congress first mandated in 1994 that the Department of Defense achieve full auditability of its financial statements, the DoD has engaged in multiple lengthy and costly efforts to implement Enterprise Resource Planning (ERP) Systems. Former Defense Secretary Leon Panetta recently pushed up the date by which the DoD is supposed to be ready for full auditability from FY 2017 to September 2014. Congress then adopted this date into the National Defense Authorization Act (NDAA) for FY 2013, a development that put considerable pressure on the DoD to accelerate the pace of its ERP deployments. The date changes are beneficial for the contracting community because the DoD is unlikely to meet its updated deployment schedule. This suggests that despite the difficult fiscal climate the DoD will continue funding ERP deployments and all of the related work associated with these systems. Funding means contracts and contracts mean business opportunity.
One of the many systems being implemented is the Defense Agencies Initiative (DAI). Per the FY 2014 Exhibit 300 for the DAI, the program leverages the Oracle E-Business Suite, version 11i, to modernize Defense agency financial management capabilities in 7 process areas: Procure to Pay, Acquire to Retire, Order to Fulfill, Time & Attendance, Budget to Report, Cost Accounting, and Grants Accounting. The DAI is a holdover project from the Business Transformation Agency that is now under the purview of the Defense Logistics Agency. Work on the various elements of the DAI is directed by the DAI Program Management Office (J623) which resides under the Information Operations (J6) Program Executive Office (J62) at DLA.
Implementation of the DAI began at the BTA in 2006-2007 with the award of a 5 year contract to Computer Science Corporation (CSC) for the DAI Financial Business Management Solution. Since that initial award DAI implementation efforts have also commenced at the Defense Threat Reduction Agency (DTRA), TRICARE Management Agency (TMA), Defense Technology Security Administration (DTSA), Defense Prisoner of War Missing Personnel Office (DPMO), and Washington Headquarters Service (WHS). Readers should keep in mind that this list is limited to those customers for DAI which could be confirmed. According to the DAI PMO, the Defense Applied Research Project Agency (DARPA) and the Office of Economic Adjustment (OEA), Defense Security Service (DSS), and Defense Media Activity (DMA) also have been prepped for the implementation of DAI.
Assuming it is the DoD’s intention to eventually implement DAI across all of the Defense agencies, the following agencies remain potential candidates for DAI deployment, implying that further contract support may be planned.
The following contracts have been identified as related to DAI implementation efforts over the period from FY 2007 to FY 2013. As we can see, a number of these are expiring in FY 2014, 2015, and beyond, providing the potential for follow-on work to be procured, or for new contracts to be competed to perform deployment services and support for the agencies listed above. In addition, the possibility exists that more contractor support for DAI sustainment will be required.
Historical spending to date on the contracts listed above is as follows. Curiously, there is a considerable discrepancy between the reported base and all options value of these contracts. Likely this is because many of the contracts have remaining option years on them to be exercised. Also, it is possible that spending on many of the contracts remains unreported.
Lastly, the chart below depicts spending on these contracts over the period from FY 2010 to FY 2013. Obligations on these contracts began ramping up in fiscal 2010 to reach a high point in fiscal 2012. Now, in fiscal 2013 it looks as if spending is slowing, probably due to the uncertainty surrounding Sequestration.
Wrapping up, there is good news and bad news. The bad news for the DoD is that much like the challenges facing Army ERP implementations, the Defense Agencies Initiative will likely struggle to hit full deployment milestones for all of the participating agencies by the September 2014 deadline mandated in the FY 2013 NDAA. The challenge of meeting the deadline becomes even more daunting when potential cuts from Sequestration are taken into account. Should Sequestration be imposed in its current form, funding for many of the DoD’s ERP deployments would undoubtedly take a hit. This does not mean that funding will dry up. It will simply be reduced.
The good news is that in chaos there is opportunity. Given the legislative mandates, the DoD is likely to continue spending on ERP implementation. In FY 2014 the budget for DAI is $99M, out of which $52M (52%) is for development, so funding for DAI this fiscal year is not a problem, assuming an FY 2014 budget is passed. Even if the DoD is forced to operate under another Continuing Resolution at FY 2013 baseline numbers, the funding for DAI will be similar (DAI DME funding in FY 2013 is $63M). In short, DoD ERP implementations like the DAI are likely to remain excellent places in the next few years to seek out
business opportunity in trying economic times.