A leaked Pentagon report said Lockheed Martin, the world’s largest defense contractor, failed to "provide the requisite definition and discipline to properly plan and control complex, multi-billion dollar weapon systems acquisition programs." This allegation casts doubt on Lockheed's ability to manage large programs, including major IT initiatives, successfully.
The Defense Contract Management Agency found Lockheed "to be non-compliant in 19 of 32 industry guidelines" related to the Earned Value Management System (EVMS), a method for managing government projects. As fellow ZDNet colleague, Richard Koman, reported, the Office of Management and Budget (OMB) has mandated EVM for large IT projects.
From the report:
Significant findings, resulting in lack of planning and control disciplines include:
- Using vague and confusing EVMS documentation;
- Lack of clearly delineated roles and responsibilities; Using management reserve to alter internal and subcontract performance levels and overruns;
- Work authorization and change control processes that do not extend to appropriate levels;
- Cost and schedule integration problems that undermine the validity of data;
- Inappropriate earned value techniques used for the assessment of material, subcontracts, and rework; and
- The inability of LM-Aero CAMs to demonstrate a working level understanding of key EVMS processes including the definition and use of a program critical path, situational awareness of cost and schedule variances for course correction, and the substantiation of completion cost estimates.
The Wall Street Journal added:
The Pentagon's Defense Contract Management Agency, according to part of a report obtained by watchdog group Project On Government Oversight, found problems with how Lockheed used software to manage supplier costs on its fighter contracts, which hurt the ability to foresee overruns. "We have worked closely with the DCMA team since November, resulting in an approved corrective action plan," Lockheed said in a statement.
In an email exchange with the Journal's reporter, August Cole, he clarified the article: "the report describes problems with how the EVMS was used, not implementation or technical issues."
THE PROJECT FAILURES ANALYSIS
Earned Value Management is an important tool for controlling costs and managing work on large projects. I asked Gil Digioia and Jose Mora, project portfolio management (PPM) folks from CA, about the importance of the EVMS in federal IT:
Earned value management, which the OMB mandates, is a solid and rigorous project management technique. It captures the fundamentals for evaluating a portfolio, including analysis of baseline costs, performance data, schedules, resources and skill sets, outcome measurement, and examining reporting requirements. All these provide a solid foundation for evaluating one project versus another.
It's inexcusable for a large contractor such as Lockheed to fail on so many dimensions of program management. Nick Schwellenbach, national security investigator for the Project on Government Oversight, which obtained the document, remarked:
We can’t continue to trust Lockheed with billions of taxpayer dollars or we’ll end up with less bang for more bucks. Affecting Lockheed's bottom-line is the only thing that can cause them to clean up their act.
This sentiment absolutely has the ring of truth. With vast resources at its disposal, Lockheed should be the poster child for careful project management rather than a symbol of incompetence, greed, and waste. It's time for a government inquiry to uncover the truth.