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Hearing of the Gov. Efficiency and Financial Management Subcom. of the House Gov. Reform Com. on Financial Managment Problems at DOD - Transcript

Location: Washington, DC













REP. TODD RUSSELL PLATTS (R-PA): We're going to go ahead and get started. We have a number of members who are still en route over the floor from votes. But this hearing of the Subcommittee on Government Efficiency and Financial Management will come to order.

I appreciate everyone's patience. Best laid plans from a scheduling standpoint. We appreciate your patience while we've wrapped up four votes and our hope is that the next series of votes won't be hopefully for about two hours and we can get a good part of the hearing underway and completed before the next series of votes, and we'll just play that by ear.

I appreciate everyone's participation today on continuing oversight effort of this subcommittee regarding the financial management of the Department of Defense. And I cannot imagine a more important issue of financial management than how we pay our courageous men and women in uniform. I think that as we ask our fellow citizens who go into harm's way to protect the safety and security of our nation and the principles for which it stands, as well as our very own personal safety as fellow Americans, the least we can do is adequately and appropriately compensate those courageous individuals.

REP. MARSHA BLACKBURN (R-TN): I will call the committee back into order. I thank all of you, each of you for your patience, while we had run to make our votes. I do know that Chairman Davis is going to be coming our direction and he will be-okay, he will have some questions.

Let's see. Mr. Kutz, I would like to come to you first with a question if I might, please, sir. We hear from DOD that they have taken actions on several of the recommendations that you all have presented, and that they have gone beyond what GAO recommended. And what I would like to know is if you can elaborate on that and spell out for us some of the actions that DOD has taken to address the pay problems.

MR. KUTZ: Yes. With respect to the Army National Guard study we did last fall, they went back, and for the units that we looked at there, they took care of the particular problems that we had there. They also implemented many of the recommendations that we had, particularly the short-term ones that they could deal with, such as human capital issues or process issues. We had five issues that remain from that report that we reiterated those recommendations related to human capital and some short-term programming things they could do on the IT side.

With respect to the Army Reserve units, the eight units as part of this study, my understanding is that for the underpayments for all of the soldiers, that those have been paid. And, again, we haven't validated that representation. And then for the overpayments, they've established debts were relevant in our initiating collection process. Again, I would say that the representation, they've gone beyond what we've had. I believe that's probably do. They've been very proactive. They brief us quarterly or even more often on the status of what they're doing, and so I believe they're doing the best they can to make the best of a bad situation.

It's a system that is not designed to take care of today's Army Reserve and National Guard, soldiers that are mobilized for one or two-year periods. It's a system that was designed for weekend training and other types of short-term situations. So it's not designed to handle this, nor the volume that we have today.

And so short of a complete reengineering of that, as I said in my opening statement, which you weren't here for that, but we don't believe that they can completely fix this, that soldiers will still have pay problems in the Army Reserve and Guard. But we do believe that they have reduced the vulnerability and they've improved customer service, so they should be better than they were when we started this.

REP. BLACKBURN: And have you gone in and done any kind of statistical analysis by unit as to where the bulk of the pay problems exist and made any specific suggestions, or has there been any specific help applied to those?

MR. KUTZ: With respect to the particular problems that we've found for the Reserves, there were two in particular that we talked to them about. I think that they're going to try to deal with these. The combat zone tax exclusion, which some of the other individuals here at the table talked about. Everyone who was deployed was impacted by the systems problems that the department has with that. So if they can make short-term systematic fixes to that, that would be a positive for tens of thousands of soldiers. So that's one thing that impacted everyone that was deployed.

We had 303 soldiers in our cast study units that were deployed overseas.

This impacted all of them, not only from a standpoint of they didn't get paid at the front end, but many of them kept getting the benefit once they left the country and they were no longer entitled to it. So it happened on both ends of this.

The other special pay that was particularly error prone was the hardship duty pay. And they are taking some actions with respect to automating that. In the past it's been what we call a manual, where every month in theater someone has to input information into the system for a soldier to get paid. What they've done is automated that so that it automatically gets paid. That doesn't fix all the problems but that does make it better. So I would say the combat zone tax exclusion and the hardship duty pay are the most frequent errors we've found as part of this study.

REP. BLACKBURN: Thank you, sir.

At this point I will yield to our committee chairman for his statement and questions.


REP. BLACKBURN: Thank you, Mr. Chairman. I have just a couple of more questions before we finish up.

Major Riggins, you were put of the Individual Ready Reserve.


REP. BLACKBURN: And how did this situation impact your pay status? How did this impact your pay status?

MAJ. RIGGINS: I'm not sure I understand the question.

REP. BLACKBURN: Did you find it more difficult as you were activated to resolve your pay issues? Do you think it was more difficult for you to get this resolve than it was for someone who is a part of the Army Reserve or someone who is on active duty?

MAJ. RIGGINS: Absolutely. Being an Individual Ready Reservist and being called in to essentially fill a hole in an organization that exists, I didn't have a habitual relationship with any one pay office. I didn't have the means of the resources or the connections to be able to turn to folks that I had been working with over the years to have these things resolved. So it was a difficult-more difficult than I would think a normal unit that had been living and working together and had a pay office that they were habitually associated with to help in caring for them. I think it's particularly important at this time that the Individual Ready Reserve Issues be resolved as we're looking at deploying quite a few Ready Reservists here in the future.

REP. BLACKBURN: Okay I asked the question because I had a-Fort Campbell is in my district, and I had a great conversation with the gentleman that handles pay and all such for one of the units there. And the institutional knowledge seemed to be what helped to resolve so many of the situations that they felt like they faced. And for someone who is in the Individual Ready Reserve, I think not having that attachment would probably make that a bit more difficult. So the resources that you needed, were they readily available or did you have to go do all of this legwork yourself?

MAJ. RIGGINS: Well, Congresswoman Blackburn, probably four of the happiest years of my life were spent at Fort Campbell, Kentucky, serving with the 101st Airborne. And I understand exactly what you're saying, that while there in an active duty component with a rapid deployment unit, you have the resources and people that know who to talk to, the pay officers. The infrastructure is there to support those soldiers. As an Individual Ready Reservist, I was on my own to find out who I needed to send forms to, who it was that was going to care for my pay issues, because it was not readily apparent. I was assigned to FORSCOM in Georgia but then attached to the Air Force. The Air Force could not handle my pay issues, the Army wasn't sure that they could handle my pay issues, so it became an issue of tracking down the right individuals.

REP. BLACKBURN: As we look at moving forward and more deployments or activations with the Individual Ready Reserve, do you feel like DOD is on track to be able to handle the pay problems that would come from the Individual Ready Reserve?

MAJ. RIGGINS: I think that remains to be seen at this point. I personally don't have enough knowledge about what the internal changes are being made to ramp up for the recent public announcements that large numbers of Individual Ready Reservists are going to be deployed. So I don't have enough personal knowledge about what's being done to care for those soldiers to be able to honestly give you an honest answer.

REP. BLACKBURN: Mr. Kutz, one more thing for you. Your case study had 348 soldiers --

MR. KUTZ: Correct.

REP. BLACKBURN: -- that were involved in that, and you had hundreds of errors, underpayments, overpayments, late payments, a little bit of everything, in that case study. Had DOD detected any of those errors or did they go undetected till you all found where the problems were?

MR. KUTZ: For the most part they were undetected.

REP. BLACKBURN: Can you give me a percentage?

MR. KUTZ: Ninety plus percent were undetected.

REP. BLACKBURN: Right. Thank you, sir.

I want to thank each of you, Mr. Kutz, Lieutenant Colonel Campbell, Major Riggins, Sergeant DeLain. I want to thank you for your testimony. You've raised some great issues that are important to the work that the committee does, but most importantly I think that you have done a great service for other Reservists and for the Army, and your testimony really is a critical part of what we are doing as we as we look to work with the GAO, the committee, the Department of Defense to be certain that what we do is a service to the men and women who are in uniform, and we appreciate your service very much.

At this time I'd like to call the second panel. I'd like to request that each witness and anyone who might be advising you during your testimony please stand, raise your right hand and take the oath together. Do you solemnly swear that the testimony you will give before the subcommittee will be the truth, the whole truth and nothing but the truth?


REP. BLACKBURN: Thank you. We are honored to have Lieutenant General James Helmly, chief of the Army Reserve; Mr. Earnest Gregory, acting assistant secretary of the Army for Financial Management; and Mr. Patrick Shine, director of the Military and Civilian Pay Services for the Defense Finance and Accounting Service.

And, Mr. Gregory, you are there on the end. We will start with you, with your testimony. We observe the five-minute rule and of course you have the lights there in front of you. Mr. Gregory.


REP. BLACKBURN: Thank you, Mr. Gregory.

General Helmly.

REP. BLACKBURN: We thank you, sir.

Mr. Shine.

REP. BLACKBURN: Thank you, sir. Mr. Shine, I think I'll begin our questioning with you, if that is okay. So your integrated system you're looking at having ready in spring '05?

MR. SHINE: No, ma'am. I apologize. The system that we're going to put in, the interim system, is not an integrated system. It's a replacement payroll system which we call the Defense Joint Military Pay System, or DJMS. It has two components, an active component, a piece called AC, and a reserve component, a piece called RC. And as General Helmly has already said, the RC portion is really just designed to pay monthly drill pay. It was never designed to pay Reservists who are deployed for long periods of active duty. That's the real failure with the system and that needs to be fixed.

FCP, the Forward Compatible Payroll system, will fix the fact that we'll no longer have two separate and distinct payroll systems. We will be able to take care of any soldier, regardless of their component, on one payroll system. That's the good news. The bad news, unfortunately, is it will still have-it will not be integrated with the personnel system, so many of the problems that you've heard described here today that occurred because we didn't have good personnel accountability or we didn't have timely input from the personnel system will not be fixed by the interim system that will be fielded in 2005 but will be fixed when the objective system, known as DIMHRS, is fielded.

REP. BLACKBURN: Okay. So your interim system will be ready in '05. Then your DIMHRS system what is your timeline on that?

MR. SHINE: Well, the DIMHRS system is actually not being developed by DFAS, it's actually being developed by the Office of the Secretary of Defense for Personnel and Readiness, and they have a timeframe that they're going to be fielding under, and it varies by each service. And so the Army-I'll defer to Mr. Gregory on this.

REP. BLACKBURN: Mr. Gregory.

MR. GREGORY: Ma'am, as the Army customer, we have been advised that we should expect to have the Army Reserve and the Army National Guard because that's our first choice, to put the Reserve Component on first, no later than March calendar year '06.

REP. BLACKBURN: So we are developing an interim system that will go in in the spring of '05 and then the permanent system should be ready in March '06?

MR. GREGORY: Yes, ma'am. And to clarify that, as Mr. Shine said, the problems that the forward compatible pay system will solve and why it's so important, even though it's not integrated, it's going to solve a problem that Sergeant DeLain had when she mentioned to the committee that, well, I got my pays, but it comes in four different checks. Well, that ends when forward compatible pay comes in. She won't be-nobody will be getting four separate checks to figure out, what's my total pay. There'll be one.

REP. BLACKBURN: Yes, sir. We appreciate that. And one of the things we would like to have, if you all do not mind, is the cost estimate of what you think it is going to end up costing to develop and implement the system for its first year of implementation, and then the human capital and personnel needs that are required by developing and implementing the system.

MR. SHINE: And, ma'am, I'm sorry, just for clarification, what system?

REP. BLACKBURN: I want both of them, the forward compatible pay and then the DIMHRS system.

MR. SHINE: We'll be happy to provide that for the record.

REP. BLACKBURN: Thank you. I appreciate that very much.

Mr. Gregory.

MR. GREGORY: Yes, ma'am?

REP. BLACKBURN: What actions have you all taken to correct the specific pay problems that were identified in the case study, the GAO case study?

MR. GREGORY: Yes, ma'am. We have provided for your reference a copy of the work statements and the issues that we have been working with the committee on for these past eight months. And those, ma'am, are the record at-again, as I said, immediate corrective actions and by immediate means within 60 days, near term, midterm and long term. And long term, of course, the last one and the long pole in the tent there, is the Defense Integrated Military Human Resource System.

And, as we said, that's been promised us by March of '06. But, ma'am, some of the things we've concentrated on because we haven't looked at doing a lot of systems work and investments to redress the issues in this GAO report for the U.S. Army Reserve.

We concentrated on training, on process, on information and, ma'am, on page 6 of the report, you can get a feel for exactly the kind of things it includes in there. And one of the things that's included, as Mr. Shine referred to, was the fix of hardship duty pay location. That hardship duty pay location affects quite a few, 89 percent of the problem of one.

REP. BLACKBURN: Mr. Gregory, I appreciate that and I appreciate that we will have the standards a part of the record. I am asking about the specific pay problems of those 348 soldiers in that case study.

MR. GREGORY: Ma'am, every one of the pay problems that was found for the Guard and/or the Reserve-I mean, both different reports-but we handled them both the same way. We worked directly with GAO and as GAO found the problems, we worked-for the Army Reserve, we worked directly with the Army Reserve command, down at Fort McPherson, Georgia and we worked also with the unit that has been established at Fort McCoy, Wisconsin, as a centralized unit.

REP. BLACKBURN: Okay. So-and I don't understand some of your answer, sir, that you all have addressed the individual specific problem for those enlisted men and women.

MR. GREGORY: Yes, ma'am.

REP. BLACKBURN: Each one of the 348?

MR. GREGORY: Yes, ma'am.

REP. BLACKBURN: Okay. That is, we want to be certain of that. We appreciate the efforts that you are making in the aggregate. But I will say that we continue to have a certain amount of frustration that we hear we are moving forward on some financial systems, we're moving forward on addressing the pay problems for units as a whole. But it seems as if systems don't get developed as quickly as they should and timelines are not established and adhered to. So that continues to be a problem.

Major Riggins had said in his testimony that his problems had not been addressed. Are you all looking into that? Is someone going to address that?

MR. GREGORY: Yes, ma'am.


General Helmly, first of all, I like that Airborne patch on your shoulder.

GEN. HELMLY: Thank you. No partiality there from the 101st at Fort Campbell.

REP. BLACKBURN: You can be partial all you want.

GEN. HELMLY: I am partial.

REP. BLACKBURN: Absolutely. You absolutely can. We think the men and women at Fort Campbell certainly have done a wonderful work as well as all of our Reservists and our Guardsmen in Tennessee, who have been very active in this effort and you have for a couple of years. And we are very grateful to them. And if we do have individuals that have problems with pay and families that have problems with pay, that does cause us to be concerned and I appreciate the fact that you take total responsibility for the training and the goodwill of those men and women. And we share with you the frustration of modeled processes and procedures. I think that is frustrating for everyone involved.

So we do appreciate that you're placing some energy and some effort into being certain that the deployments have predictability that they have a system which is easily navigated for those families. You are responsible for what is actually overall a relatively small portion of the mobilization and pay process. And when you look at the total deployment and how would you describe your command role in resolving the pay situation that we are facing today?

GEN. HELMLY: Congresswoman, first, I think that it's necessary to reflect that, as has already been noted, in large measure, many of the pay performance problems emanate from personnel matters, that is, a failure to post record. In other cases, the authorities, sometimes in law, have not been modernized. Largely, our whole personnel, as it relates to Reserve Component, systems, authorities, et cetera, were built for a different era and our assumption was that we would mobilize virtually the entire force and bring it to Active Duty processes and systems.

I believe you are aware of the fact that, in Desert Shield/Desert Storm, we placed all mobilizing Reserve Component members on DJMS Active Component. That was a part of that view. So be it. It resulted in improved pay but disastrous process where in large numbers, as we demobilize numbers, they continue to receive Active Duty pay and we endured some absolute horror stories of overpayments, re-coupment, et cetera, et cetera, and hardships enacted on families and the members.

My responsibility begins with, if you will, prior to mobilization, disciplining the records keeping, the personnel systems and processes and the updating of databases and records. We are placing a great deal of command emphasis on that because even with FCP, forward compatible pay, are ultimately DIMHRS. We will only be as good as the input that is in a timely, accurate way. We are disciplining our employees and members throughout the field with regard to responsiveness.

You pardon me, one of the reasons that I'm drinking coffee instead of water is I'm recovering from jetlag from just returning from Iraq, Afghanistan, Uzbekistan and Kuwait. As I talked to our soldiers, one of their biggest complaints was, as they send an e-mail back, which is common means today, telephone call, or snail mail, as they call it, the regular U.S. mail, with a complaint or a question, they said, Sir, I don't get a response. I must tell you that I, let's say in kind words, energize the chain of command when I find that on specific soldiers and units and then use that as a source of command emphasis with the chain of command at large. It is my judgment, as I said, we must improve that care and concern. So it starts prior to mobilization.

Secondly, we have a policy which has had the effect, once we have mobilized Reserve Component members, telling the parent chain of command everything is now on a different chain of command. I must tell you there has been some friction because, while I don't intend to try to exert direct control, I believe that I retain ultimate responsibility because that soldier is going to return to the Army Reserve and if we want to retain them, we can't cut this off in a black and white kind of way. Plus their family is still on this end and I retain direct responsibility for ensuring their family get the proper entitlements and are cared for. So we're working all of those pieces hard.

REP. BLACKBURN: Sir, what I am understanding you to say is that, basically, this system was not updated over the past decade.

GEN. HELMLY: Yes, ma'am, that's correct.

REP. BLACKBURN: So what you have is an archaic labor intensive system that did not avail itself of developing technologies in an appropriate timeframe.

GEN. HELMLY: That is correct and it is built on a outdated system of policies. The last point I wish to make is, in some ways, in many ways, the cumbersome nature of this system has been confounded by the very overly rigid, centralized mobilization process we have used that has caused the late notice, innumerable changes at the last moment, et cetera, and all of those confound the people who are trying to input pay and personnel data.

REP. BLACKBURN: Let me ask you one more thing, Mr. Helmly. Do you need specific targeted help in addition to what you currently have to run your program until the promised technology comes online either in Spring '05 and then Spring '06?

GEN. HELMLY: I don't wish to say no. That would imply that we know exactly what's to be done.

REP. BLACKBURN: Realistically?

GEN. HELMLY: But I don't know of an area where we would require Congress' help. I think we're getting it here seriously today. This helps shared visibility, the newly named Government Accountability Office reports. While many shy of those, I do not. It's been very helpful in focusing us. I think the area where we need support is to maintain the resourcing screen and to maintain the congressional emphasis on the department's reform efforts towards pay and personnel systems and process.

REP. BLACKBURN: I can guarantee you you're going to continue to have Congress' efforts because our constituency is very concerned as are we for them about these matters.

Mr. Shine, back to you, and Mr. Gregory. And this is a simple yes or no. The deadline or the goal, the timeline for your forward pay system in '05 and then the DIMHRS system in '06, how realistic are those deadlines and what are you doing to be certain that they get met? Mr. Shine, first, please.

MR. SHINE: Specifically, as it relates to the Forward Compatible Payroll System, we've gone through all the proper milestone improvement schedules. We have a specific project development plan that includes not only the development of the system but also the testing and training and fielding of that system. We have been up- sold-this past month we've been monitoring that on a monthly basis and trying to apply resources in those areas where we didn't feel we were right on schedule.

Starting this month, we have now gone to weekly updates with that same intention in mind. If we continue to stay on schedule-and we currently are right now on schedule-some time at the end of August, we should start the initial testing of the entire integrated pieces of the system. Because of the way we're trying to field this system as quickly as we are, while it may sound like it's taking a long time, we're actually fielding this one quicker than most systems of this magnitude. We're actually retaining the existing personnel systems, input systems and everything that the payroll system today talks to.

So we're having to sort of put it-we call it integration broker, a sort of a ring, if you will, around this new commercial office sales software payroll system and making it linked to all those other systems. That seems to be the most difficult part. Today, as we speak, at this point in time, we are on schedule for March delivery to bring all the Guard, Army Guard and Reserve onto the Forward Compatible Payroll System with the mid-month pay of March of '05.

REP. BLACKBURN: Now is this system being built on the same platform that your system is going to be built on, Mr. Gregory, or are we going to go reinvent the wheel?

MR. SHINE: It is using the exact same software which is basically a PeopleSoft product?


MR. SHINE: Yes, ma'am.

REP. BLACKBURN: Okay. Mr. Gregory.

MR. GREGORY: Well, ma'am, first on Forward Compatible Pay, to your earlier question to General Helmly, the vice chief of staff of the Army went to the Defense Finance and Accounting Service and said, We need this Forward Compatible Pay as soon as we can get it. Is there something that we, the Army, as your customer, can give to you in terms of resources to help you serve our soldiers better? The answer from DFAS was we are on a very quick timeline, as Mr. Shine stated, and that we want to make sure that it's properly tested and putting money on it will not make it happen sooner. Which means that we are working with DFAS on the timeline they've established and we expect, as a customer, to have that in August. Excuse me, in March.

What we've asked DFAS to do to help them as they enter into the operational phase is to identify a battalion for OIF-3, that we could help them and be part of their operational testing, which means an early test to see, let's see how Forward Compatible Pay does in comparison to the old legacy system which is DJMS. And we're working with DFAS in partnership to help them through their operational test phase.

Ma'am, with regard to DIMHRS, I can only tell you, as a service who intends to be the first one in DOD on DIMHRS, I can only tell you-and I am not the developer-I am a customer in here. I can tell you two things. Number one, the Army has been involved with the DIMHRS effort from day one. The Army again has a fully qualified, very expert finance officer, Army finance officer, working with the Army DIMHRS office to make sure that that issue of integration of pay and personnel comes to fruition. That person is on board and working and we've done that over the years of development and there have been many. As we've been told that we would have it and to use in the U.S. Army Reserve, as General Helmly said, we've been told and updated as of this morning, ma'am, that March '06 is the date we're going to have it.

REP. BLACKBURN: Is this being developed in-house?

MR. GREGORY: Ma'am, it is using, as Mr. Shine said, PeopleSoft. The processes and the integration, ma'am, takes the people in-house to determine that. But the software itself, no, ma'am. The software itself is a commercial off-the-shelf product and it's PeopleSoft.

GEN. HELMLY: Congresswoman, may I also add one point, to make sure it's correctly understood. This is a joint system. All of the services ultimately go under this, which adds to its capabilities because, as noted in the first panel, we have soldiers, sailors, airmen and Marines who have to go with each other increasingly in joint formations. And then where we have service members who transfer who transfer from one service to another, we're able to subsequently not lose their records, pay records, promotions and all of those things in the process, as happens most frequently today.

So this is a Department of Defense initiative with the full and complete input. In our case we can speak authoritatively, Mr. Gregory and I, of the department of the Army.

REP. BLACKBURN: We appreciate that. One of the frustrations that we have here is the fact that we have heard, more than once, that DOD has over 2,300 different accounting systems, that there is truly a lack of interface that you do not have an enterprise technology-enterprise structure and a platform that all of these different financial accounting programs and personnel management programs run from. It can't. The problem with that, to those of us who maybe are not computer geniuses, and we're not a computer whiz and we're here trying to manage through these situations with our constituents, and the problem with that is we're always going back to square one and then we get into the excuses that we told you last year we were going to do this but we haven't made any progress because this system doesn't talk to another system and if we're going to build this and if we are still some months out, for goodness sake, it seems to make sense that we would plan ahead just a little bit so that things are not labor intensive, so that we do have systems that are through the different branches of the military, that can talk to one another. And that just seems to make some good common sense there and we certainly would hope that it will help with addressing the pay process.

Before I turn it, Mr. Schrock, do you have questions? I know our chairman is trying to get back here. Mr. Shine, I want to hear from you before we finish this up, if I have some of our wonderful Tennessee volunteers who are in the Guard and they are going to be activated, how many different pieces of paper, at this point in time, right now, how many different pieces of paper, how many different forms are they going to have to fill out in order to get their pay? Is it four? Is it five? How many will it be?

MR. SHINE: Ma'am, I'm sorry. I don't know exactly how many pieces of paper it would take. But I can certainly get you an answer for the record.

REP. BLACKBURN: That would be wonderful.

MR. SHINE: We actually share the mobilization process with the Army and so there are some Army forms. There are some DFAS forms and I'll get you an answer for the record.

REP. BLACKBURN: Thank you, sir. That would be helpful to us.

Mr. Shine, let me ask you this also. You are using a commercial office off-the-shelf system with PeopleSoft. How much modification are you having to do to that to have it for your Forward Compatible Pay system?

MR. SHINE: Ma'am, I'm not a technical expert but let me do the best I can, at least try to get to the spirit of your question. PeopleSoft have a version that they call North American, which is the primary payroll engine that they sell to hundreds of private companies to do their payroll operations here in the United States.

What it really means is it's configured for the normal federal tax withholding, state tax withholding, social security and the things that normally occur to most private businesses in the United States.

Unfortunately, when we actually sat down-and I apologize, I'm really talking about the DIMHRS effort, -- when I first took a look at this piece of software, there was a determination made that those specific algorithm and logic of that particular piece of software would not work for the unique requirements of the U.S. military. There are so many unique legislative entitlements that individual soldiers, sailors, airmen, Marines are entitled to that the software that was being used, called PeopleSoft North American would not work for the Department of Defense.

However, PeopleSoft also sells a product to foreign organizations. So they have another version they call PeopleSoft Global and it's really designed to work in foreign countries where, as opposed to already having an existing structure, you basically build the logic and algorithm to support the tax structure and the various withholding requirements of those foreign countries. We found that we were able to use the PeopleSoft Global software and actually build the unique legislative entitlements that accrue to the Department of Defense service members very well.

And so, as a result of that, when the DIMHRS program management office decided to engage the PeopleSoft Global software, we, in DFAS, when we got approval to develop the interim system, adopted the exact same software platform. We are using the exact same license that the Department of Defense already purchased. We did not have to purchase a new license. So the only thing we're having to do, additional to that, ma'am, is not to affect the computation of the software itself as a computer pay. But I mentioned earlier this sort of ring that we have to put around it that we call an integration broker that allows the PeopleSoft software to talk to the existing personnel systems and accounting systems that are in existence today.

With DIMHRS, that will not be necessary because it won't have to talk to an interface with a different personnel system. The HR system and the payroll system will be integrated and that's what the PeopleSoft product delivers.

REP. BLACKBURN: Now, are you doing that in-house or are you outsourcing that? Do you have a contractor doing that?

MR. SHINE: It's actually a combination of both. Most of the requirements determination is coming from government people. Most of the software development is coming from contractors who are experienced with working with this particular product.

REP. BLACKBURN: Our concern is when we hear a commercial off- the-shelf product, if it has to have an enormous amount of modification, it seems like there are problems with that and getting it up and ready to run.

Mr. Schrock, I know that you were on the original GAO study. Would you like to, since you had requested that study, ask a few questions?


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