U.S. Air Force Blows $1 Billion on Failed ERP Project

The U.S. Department of Defense latest strategy for putting lipstick on a pig, when faced with a major project debacle, has been to say, “Well, it’s not a total waste because the effort creates an opportunity to harvest technologies and lessons learned.” I expect to see the same lipstick strategy, maybe in a new shade, from the U.S. Air Force regarding its Expeditionary Combat Support System (ECSS), which it finally decided to scrap after blowing through a billion dollars over seven years of development to produce a system which it admits as having no “significant military capability,” Defense World reported late last week.

The ECSS project (pdf) began in 2004 as an ambitious and risky effort to replace 240 outdated Air Force computer systems with a single integrated system so that the Air Force could finally come up with an auditable set of financial records, something I don’t think it has been ever able to do since its creation as a separate branch of the military in 1947. The decision to trash the ECSS system is of no great surprise, except for why it took so long.

Back in April, the Air Force's comptroller, Jamie Morin, told the Senate Armed Services Committee's Subcommittee on Readiness and Management Support that, “We're now approaching seven years since funds were first expended on this system. The total cost is now over US $1 billion. I'm personally appalled at the limited capabilities that program has produced relative to that amount of investment.”

Morin went on to explain to the Senate what the Air Force was going to do next in regard to ECSS and how it was going to achieve the objective of having auditable financials by 2017. This was going to be a challenge since in March, the Air Force had terminated the ECSS contract with prime contractor CSC for performance reasons. This followed on from a stop work order that had been issued to CSC in September of last year for a lack of progress. Since then, the Air Force has been trying to figure out how to once again restructure the project (it had been restructured at least twice before) in hopes of finding that elusive path to success.

Apparently, however, after a thorough analysis, the Air Force determined that there wasn't a feasible or affordable path to success available. Continuing the program, it determined, “would have cost an estimated $1.1 billion for about one-quarter of the original scope, with fielding delayed until 2020,” Defense World said.

Why, you might ask, didn’t the U.S. Air Force leadership take action to keep ECSS from turning into a billion dollar debacle? The reasons are explained well in a 2011 Institute for Defense Analysis report (pdf) on why DoD ERP projects are routinely “over budget, behind schedule, and have not met performance expectations.”

In the report, IDA states that on these projects, “Program managers are unable to deliver a completely factual version of their status to leadership if it contains any element that could be considered significantly negative. To do so is perceived as weakness in execution even though the root causes may be out of the control of the program manager. Program managers fear that an honest delivery of program status will result in cancellation. As a result of this, leadership is unable to be effective in removing obstacles to program success.”

In short, no one in the DoD leadership chain wants to hear bad news. The IDA report further noted that bringing up bad news required “courage,” which apparently is in short supply in DoD ERP projects in particular and, from my experience, DoD programs in general.

Avantor Sues IBM, Claims Fraud

In another ERP-related debacle story this week, Avantor Performance Materials, a global manufacturer of high-performance chemistries and materials, announced in a press release that it was filing suit against IBM for a failed SAP software implementation. Avantor alleges that IBM, which was retained by Avantor to upgrade its global computer systems to an SAP platform," fraudulently misrepresented the capabilities of its proprietary software solution and engaged in other misconduct leading to a failed implementation in Avantor’s U.S. locations."

The press release quotes John Steitz, President and CEO of Avantor, as saying, “IBM representatives assured us that its Express Life Sciences Solution, a prepackaged software solution, was suitable to run Avantor’s core business processes. In fact, the solution—and the service and support offered by IBM throughout the implementation—proved to be woefully misaligned with the unique needs of our company and our customers.”

The company claims that it has spent the last seven months recovering from the effects of the failed SAP implementation, and wants tens of millions of dollars in damages from IBM as a result.

A Reuters story says that IBM was surprised by the lawsuit, and that the complaints “are exaggerated and misguided.” It went on to say that IBM claimed that it had “met its contractual obligations and delivered a solution that Avantor continued to use in its operations,” a claim that the Avantor press release seems to contradict.

At least the IBM failed implementation failed quickly.

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Willie D. Jones
 
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