The Pentagon is under scrutiny after terminating a contract for a cloud-based HR system that ballooned to $280 million over budget and was seven years behind schedule. The American Accountability Foundation has requested an investigation into the project's failure and excessive costs.
terminated the contract last year, saying at the time in a memo that further investment into the program “would be throwing more good taxpayer money after bad.” Pentagon announces deals aimed at boosting production of weaponry expended in Iran warThe American Accountability Foundation has sent a letter this week to the inspector general seeking a financial audit and investigation into why the project failed, though it’s unclear whether the oversight body will heed the request.
The office operates a tip line that allows people to report waste, fraud, abuse, and other violations of the law or policies. The contract was initially supposed to be a one-year effort for $36 million to implement an off-the-shelf cloud-based HR system, but it ultimately came in at $280 million over budget — a more than 700% increase — and was seven years behind schedule. “Upon reviewing the absolute catastrophe that was Oracle’s $36 million dollar contract with the Department of War, our organization felt taxpayers had not been given adequate answers regarding what happened and how the costs were able to balloon over 700%,” AAF President Tom Jones said in a statement to the. “We have respectfully requested to the Department of War’s Inspector General that a forensic audit be conducted.” Hegseth announced the termination of the program — as a part of the whole-of-government effort in 2025 to reduce government spending — in a memo dated March 20, 2025. In a prerecorded video posted on social media, Hegseth said this expenditure and others he nixed at the time “are not a good use of taxpayer dollars … ultimately, that’s who funds us.”“Oracle has a proven track record of helping the U.S. government succeed in its most important missions. For example, our longstanding deployment at the United States Marine Corp helped them achieve the first clean audit for any Department of War agency. Our deployment at is also providing exemplary results,” Egbert told the“Oracle’s nearly 50-year history of successful partnerships across federal agencies, combined with our secure, high-performance cloud and technology, is why we continue to secure competitive deals, such as recent wins at the United States Department of Air Force and the Centers for Medicare and Medicaid for Oracle Cloud Infrastructure.”AAF has sent another letter to the Office of Personnel Management regarding Oracle’s track record of delivering on government information technology projects, as OPM seeks proposals for consolidating 119 separate federal HR management systems into a single government-wide platform.was last October, and the agency is seeking a 10-year contract that could be worth more than a billion dollars. It has not yet announced the winning bid.In addition to the DCHRMS contract, AAF noted that Oracle was also involved in a Department of Veterans Affairs’ modernization effort, an Air Force Expeditionary Combat Support System, and the Pentagon’s Defense Integrated Military Human Resources System, all of which led to disappointing results and high costs. “Additionally, we have reached out to OPM expressing our deep concern regarding Oracle’s history with these large contracts and the potential catastrophe that could ensue should they be tasked with executing a similiar contract across the entire federal government,” Jones added.Last week, OPM announced a new opportunity for agencies to partner with it to use “vetted” IT tools designed to streamline human capital management capabilities. “For decades, a decentralized approach to HR service delivery in the federal government has led to suboptimal service, costly and duplicative systems, and inconsistent application of policies,” OPM Director Scott Kupor wrote in the March 17 memo on the subject.
Pentagon Contract HR System Overbudget Investigation Government Spending Auditing
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