GAO: Impact of NMCI cost needs to be resolved

The Navy-Marine Corps Intranet project is beginning to hamper the ability of some Navy installations to plan and budget for their information technology costs, according to a new report by the General Accounting Office.

NMCI is the eight-year, $7 billion program to completely overhaul the two services' desktop and intranet systems. It is being carried out by Electronic Data Systems Corp. of Plano, Texas. When completed, the program will include more than 416,000 desktops.

In a report issued Oct. 31, the GAO said that estimated NMCI costs, which are considered overhead, are increasing as a share of IT costs to about 38 percent at shipyards and 31 percent at air depots in fiscal 2003.

Officials at the facilities said they plan to cover the increased costs by reducing budgets in other overhead accounts, such as travel, training and property maintenance, rather than increasing rates they charge customers, at least for this year.

GAO said the delay in rolling out NMCI and failure to identify how some transition costs would be covered are making it difficult for the air depots and shipyards to develop plans and budgets beyond the current fiscal year.

The problem is exacerbated, the GAO said, because "NMCI implementation plans did not provide for resolving [these issues], because responsibility for doing so had not been clearly assigned, and the Navy did not have an explicit issue identification and resolution process."

The governmental watchdog agency recommended that an issue management process be created to address these and future issues, and that it include the participation of appropriate shipyard and air depot officials, a method for identifying implementation issues and tracking of and reporting on issue resolution.

The GAO reported that, while the Defense Department agreed with the agency's findings, NMCI program officials said the recommendations should be directed to the shipyard and air depot parent commands, which, the NMCI representatives said, "have all the information and authority necessary to resolve the issues discussed."

This disagreement over where to direct the recommendations, said the GAO, reinforced the need for NMCI players to take responsibility for resolving issues as they arise.

The report, "Information Technology: Issues Affecting Cost Impact of Navy Marine Corps Intranet Need to be Resolved," was prepared following briefings on the issue given to the House and Senate Armed Services committees in August and September.