IT Integration: The Army's Pay Misstep

By Elizabeth Bennett  |  Posted 2006-05-06

Army reserve staff Sgt. Ryan Kelly was still recovering from his Iraq War wound—an amputated lower right leg—in Abilene, Texas, when he received a disturbing note with his pay stub: The Army said it had overpaid the 23-year-old soldier 22 days' salary, and that he owed the Army $2,231. That's because even though he was medically retired in early August 2004, the Army recognized him as an active duty soldier for all of August, according to Kelly, and deposited the usual monthly pay into his bank account.

For the next year and a half, Kelly, a civil affairs specialist with the Army Reserve, and his wife, Lindsey, a second lieutenant with the Army, navigated their employer's labyrinthine bureaucracy in an attempt to make good on the debt. Kelly, who spoke to Baseline from his home in Prescott Valley, Ariz., says that the experience was "a big stress."

The Army, which acknowledges its pay problems, says it does not know how many soldiers in its ranks have had similar experiences. But a fall 2005 Army audit estimated that of 24,000 regular Army, Reserve and National Guard soldiers wounded in action or evacuated for medical reasons in Iraq and Afghanistan, 14% were mistakenly overpaid or underpaid, or their cases required further research to determine if their pay was inaccurate. Many overpaid soldiers, like Kelly, were not aware of the pay mistakes until they received debt notices or stopped receiving their salaries altogether, according to the Government Accountability Office (GAO).

As of Sept. 30, 2005, the Army claimed $1.5 million in overpayments to 1,300 soldiers killed or injured while fighting in Iraq and Afghanistan, according to a late April GAO report. Soldiers were erroneously overpaid due to mix of human and information systems errors, the report found.

Kelly's pay problems, as with many of his wounded comrades, arose when information in the pay systems lagged behind actual events.

Stories of injured soldiers with pay problems have made headlines, but they represent a subset of a more expansive set of problems that have affected an unknown number of non-injured soldiers. Those men and women have been overpaid and underpaid at each stage of the combat deployment and redeployment process for dozens of reasons, says the GAO.

"It's a terrible injustice," says Rep. Todd Russell Platts (R-Pa.), chairman of the House Subcommittee on Government Management, Finance and Accountability, which holds regular hearings to review findings and recommendations published by the GAO. "These soldiers are truly going into harm's way in defense of our nation and of our citizens," he says.

The Army's pay missteps will sound familiar to many information-technology executives who have faced the problem of integrating legacy information systems.

While the complications stretch across at least a dozen payroll and personnel systems maintained by the Army, the problems experienced by the Reserve have been the most scrutinized by the GAO.

The Army has been working for five years to make two key systems— payroll management and personnel— communicate so it can pay reservists called up for combat duty.

The payroll application, called the Defense Joint Military Pay System-Reserve Component, generates the salaries and other financial allowances and benefits for 200,000 current reservists. The Army adapted the custom-built mainframe application in the early 1990s from a payroll application the Air Force developed in the 1970s.

The personnel system, called the Regional Level Application Software system, keeps track of the personal and professional information of reservists—when they participate in required weekend and annual drills, and the skills they acquire. The Web-based system is also used to see where and for how long soldiers are activated for combat service.

The systems need to communicate because the pay transactions processed in the payroll system are based on soldier deployment, marital status and other information that is initially entered into the personnel system.

But the two systems have never been completely integrated. And while the Army has made improvements, some problems persist.

The Army is now looking to a new integrated armed forces system, called the Defense Integrated Military Human Resources System. However, that system, in which the Defense Department has invested more than $300 million since 1998, is three years behind schedule due to, among other reasons, being managed by multiple agencies and a lack of consistent senior management support, says Paul Brinkley, Deputy Undersecretary of Defense for Business Transformation.

"The turnover in leadership created a lack of awareness and understanding of the goals of the program," Brinkley says. His agency operates under the Defense Department and is charged with creating the organizational and business conditions to implement technology effectively.

The new system, which will share information with 500 other defense applications, is supposed to be a single, fully integrated program that handles all personnel and pay functions, according to Kent Schneider, president of Northrop Grumman's defense consulting group, the project developer and integrator. The government selected Oracle/PeopleSoft software as the foundation of the unifying application, which will replace 79 legacy systems across the military. "The goal is to ensure changes are processed as quickly and as error-free as possible," Schneider says. "All this complexity means opportunities for errors. We want to make sure the system is as simple and easy to use as possible."

Attacking the Problem

The problem with the systems became apparent in the fall of 2001 when Reserve soldiers were activated by the thousands, first domestically following the terrorist attacks of Sept. 11, and then to international military operations in Afghanistan and, eventually, Iraq. It is the largest Reserve mobilization for combat since World War II; 150,000 reservists have been deployed for combat operations, according to the Defense Finance and Accounting Service, a Defense Department agency that pays all 5.9 million officers, civilians and retirees.

At the time, payroll systems could adjust pay-related information for an entire unit during a typical deployment—say, for two weeks' training—using a processing feature called a "mass update." But it could not automatically process certain pay entitlements because it was not programmed to accommodate newly adopted pay increases for more than 30 days at a time, according to Eric Reid, director of the Army Finance Command. For example, based on an act of Congress, men and women who were performing duties in particularly arduous locations in Iraq for more than 30 days were entitled to hazardous-duty pay of about $100 per month, but were "dropped off" the system at the end of each month, Reid says.

To circumvent the problem in Iraq, workers at a finance office in Kuwait input the names of soldiers who remained on hazardous-duty status—63,000 at one point—into a Microsoft Access database each month, Reid explains. This data was uploaded to the pay system in Fort McCoy, Wis., and records were updated on a mass scale, he says.

However, some soldiers continued to receive the entitlement for up to three months after being redeployed from hazardous duty because of delays in simply getting pay data from unit commanders in the combat zone into the payroll system, according to Reid. And that's when overpayments accrued.

And just as the pay system wasn't set up to quickly automate new pay entitlements, the personnel system couldn't communicate a reservist's initial mobilization for combat into the payroll system. As a result, when reservists were officially ordered into combat by the regular Army, administrators in Reserve field offices would print out paper copies of each soldier's official mobilization order from the personnel system and ship them to the pay center in Fort McCoy, where finance workers keyed each soldier's pay and entitlements into the payroll application.

But the duplicate data entry system was error prone, according to Norma St. Claire, director of information management for the Defense Department's Office of Personnel and Readiness, which has general oversight of human-resources systems. "You have all of this multiple data entry—delays and gaps when things are entered, and manual reconciliations when things don't sync up—and that causes, obviously, the most visible problems with the pay systems," she says.

'A Lot of Patches'

The Army updated both the payroll and personnel systems in 2004. In the spring of that year, the Defense Finance and Accounting Service recoded the hazardous-duty pay field in the decades-old payroll application so it would recognize soldiers with the entitlement until they were no longer eligible for the extra pay.

It took the Army so long to get around to making the fix to the payroll system, Reid points out, "because of the age of the payroll system and the status of documentation. There are a lot of patches. You have to be very careful. It's not just an issue of money and consultants."

The payroll system, which consists of millions of lines of code, is not fully documented, he adds. Any change in the software involved minimizing the risk of breaking some other part of the system. To complicate matters, there are more than 1,000 pay grades, entitlements and allowances for which a soldier could be eligible.

The shortcomings of the pay process still crop up when active-duty soldiers are separated from their units, according to Patrick Shine, deputy director for operations at the Defense Finance and Accounting Service.

When a soldier is evacuated for medical or emergency leave, far more human intervention—such as to record the length of a hospital stay—is required and that often means additional data-entry errors, Shine says. And the more records adjusted, the greater the margin of error, he adds.

As for the fix to the personnel system, the Reserve implemented an automated process for soldiers mobilized for combat that eliminated duplicate data entry, according to the Army.

With the automated process for mobilization, a Reserve unit pay administrator retrieves a unit mobilization order from the personnel system through an ActiveX software component embedded in a Web page that allows technicians in the field to view and edit files in the personnel database. When he retrieves the order, the application instructs him to answer a series of questions related to the order, such as how each soldier will get to the mobilization station and his start and end dates of deployment. The program then automatically determines a reservist's base pay and entitlements.

Once a printout of the order is approved and signed by the unit commander, the soldier's data, along with the data of all other soldiers processed that day, is sent at night in a batch to a Microsoft SQL Server 2000 database at Reserve headquarters in Fort McPherson, Ga. That server consolidates and reformats the pay-related data, such as date of mobilization and basic pay entitlements, into a column format that the Reserve payroll system can recognize.

When the data is properly formatted, finance workers at the Reserve pay center in Fort McCoy can view a flat file of the order roster via a browser-based application that runs an ActiveX control, and then upload it to a local file server. From there, a worker exports the file to the Reserve payroll system for processing.

According to the Army's Reid, 97% of soldiers are now paid correctly within the first month of deployment. Why not 100%? The payroll system might reject a pay input if it conflicts with an existing pay status, or human error might lead to a delay in recording a soldier's new orders, Reid says.

Just as there were several reasons for the delay in upgrading the payroll systems, there are multiple reasons why it took so long to fix the personnel system.

First, from a technical standpoint, the business rules of war deployments are very difficult to automate because entitlements can change from month to month depending on troop movements, says Tom Willson, a Reserve subcontractor for Anteon, a Fairfax, Va., systems integrator. Willson helped build the personnel system and is currently responsible for developing and writing add-ons for the application.

For example, a unit is entitled to hostile-fire pay (approximately $225 per month) for 30 days following an attack or if it is operating within a certain distance of an attack. If Congress passes legislation that gives soldiers additional entitlements, the records of all soldiers would have to be amended. "There are twists and turns on entitlements," Willson says, and changes have to be submitted from a field officer to the pay office during the month in which a soldier is eligible for them, not before.

Another reason the system was not upgraded sooner, according to Shine, is because the Army and the Defense Finance and Accounting Service believed that the new integrated pay and personnel system was "just around the corner."

A New Magic Bullet?

The fixes made to the pay and personnel systems in 2004 were never meant to be long-term. The Army has been awaiting the implementation of a single integrated pay and personnel system that it says will eliminate more than 30 legacy Army applications as well as the systems of the other armed services. The Defense Integrated Military Human Resources System, which has been in the works for eight years and is now on hold for a business requirements assessment, is one component of a massive business systems modernization project managed by the Defense Department.

The integrated Oracle/PeopleSoft human-resources management application is supposed to be deployed in 2008, three years later than the originally scheduled implementation, says Deputy Undersecretary Brinkley. He attributes the project delays to an administration change and eight years of turnover in the program's senior management. "There was conflict over how to best implement the system," he says. The program has been restructured, he says, under the leadership of Deputy Secretary of Defense Gordon England.

It is to be the largest human-resources software deployment in the world, according to Brinkley, keeping track of and paying 3 million uniformed and civilian workers in all branches of the military. In 2003, the Defense Department awarded Northrop Grumman $281 million to serve as the primary systems integrator for the project until 2013.

Brinkley says the integrated system will greatly simplify the pay and personnel management process: "It will be vastly more oriented toward mistake avoidance."

But that's cold comfort to Staff Sgt. Kelly and the thousands of soldiers who already returned from the war front to withheld or docked pay. "The fact that it was allowed to get to the point it's at now—it's unconscionable," he says. "You shouldn't send an army to war if you can't pay it."

U.S. Army Reserve Base Case

Command Headquarters: 1401 Deshler St. S.W., Fort McPherson, GA 30330
Phone: (404) 464-8500
Function: Supports the Regular Army by providing trained soldiers during peacetime, contingencies and war.
Challenge: Integrate disparate, aging pay and personnel systems.


  • Reduce number of inaccurate payments to wounded soldiers, currently at 14%, to zero by 2008.
  • Reduce number of Army personnel and pay systems from 30 to 1 by 2008.

A History of Pay Troubles

Military leadership has been trying, with limited success, to fix the Army's pay problems for more than a decade.

Early 1990s
The Army's Department of Finance and Accounting adopts custom pay processing application from Air Force system developed in the 1970s.

A Department of Defense Task Force on Military Personnel Information Management recommends that the Department of Defense develop a single integrated military personnel and pay system for all military services.

PeopleSoft selected as the foundation software application for a single unified payroll and personnel system, called the Defense Integrated Military Human Resources System (DIMHRS).

Army Reserve implements new Web-based system to replace five existing DOS-based personnel systems that are not Year 2000-compliant. The system has limited integration with the Army Reserve payroll system and no new functionality.

Reservists mobilized by the tens of thousands to assist with military operations in Afghanistan. Mobilization orders have to be keyed in by hand to the Reserve pay system.

Northrop Grumman selected as systems integrator to unify the Department of Defense's personnel and payroll system with a $281 million contract.

GAO report details significant pay problems experienced by Reserve soldiers mobilized for active duty.
Reserve automates mobilization process for reservists called up to active duty.

GAO report details pay problems experienced by injured Army National Guard and Reserve soldiers.
Army audit estimates 5,500 soldiers wounded in action experienced some type of pay problem.

Unified personnel and payroll system project put on hold in January while business requirements are reevaluated. Work resumes in

GAO publishes report detailing the pay struggles of battle-injured soldiers.