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Army Did Not Support Business Case Analysis Recommending Transition of Human Immunodeficiency Virus Testing (Redacted) DODIG-2017-066

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Objective

We determined whether the Army supported its decision to transition Human Immunodeficiency Virus (HIV) testing from a contracted service to an in-house capability.1 In addition, we reviewed the Navy’s testing plans.

The House Committee on Appropriations requested that we review the Army’s business case analysis to transition HIV testing from a contracted service to an in-house capability.  In addition, House Report 114-577, to accompany the House Report 5293, “Department of Defense Appropriations Act, 2017,” expressed concern with the decisions by the Army and Navy to transition HIV testing from a contracted service to an in-house capability.  The report directed the DoD Office of Inspector General to examine the business case analyses and provide a report on its findings to the congressional defense committees.

Finding

We determined that Walter Reed Army Institute of Research personnel did not adequately support or document their business case analysis for bringing HIV testing in-house.  This occurred because Walter Reed Army Institute of Research personnel did not follow DoD and Service guidance for preparing a business case analysis.  Specifically they:

  • developed the business case analysis around co-locating and moving the entire HIV Diagnostics and Reference Laboratory and other non-HIV testing elements to a leased facility.  Specifically, WRAIR personnel included non-HIV testing elements in their analysis, which were not related to the problem statement;
  • based the premise of the business case analysis on a research cooperative agreement that could not be used;
  • did not consider three or more courses of action;
  • did not consistently use total costs in their analysis; and
  • used flawed selection criteria in the decision matrix analysis.

As a result, U.S. Army Medical Command personnel cannot ensure that they made the best decision transferring HIV testing from the contractor to the HIV Diagnostics and Reference Laboratory, and may increase costs by moving the laboratory and the other non-HIV mission elements into leased space. However, we determined that the Navy’s plans to transfer Navy HIV testing from a contractor to the Air Force appeared reasonable because using the Air Force for HIV testing instead of the Navy’s current contractor could save the Navy approximately $3.58 million per year.2

Recommendations

We recommend that the Chief of Staff, U.S. Army Medical Command, re-perform the business case analysis for HIV testing and ensure the analysis:

  • includes only the scope cited in the problem statement;
  • uses accurate assumptions and current information and costs;
  • includes three or more courses of actions and alternatives;
  • consistently uses total costs associated with the project;
  • uses well-defined and measurable alternative selection criteria; and
  • is adequately documented and supported.

Additionally, we recommend that the Chief of Staff, U.S. Army Medical Command, not enter into any leases to move Army laboratories until the business case analysis is re-performed.  

Management Comments and Our Response

The Chief of Staff, U.S. Army Medical Command, agreed with our recommendations and addressed all the specifics of the recommendations.  The Chief of Staff agreed to revise the business case analysis to incorporate the elements in the recommendation.  The Chief of Staff expects to complete the revised business case analysis by June 30, 2017.  In addition, the Chief of Staff agreed not to enter into any new leases until the business case analysis is re-performed.  Therefore, the recommendations are resolved but remain open.  We will close the recommendations once we receive and analyze the revised business case analysis to ensure it contains all elements of our recommendation, and verify that the U.S. Army Medical Command has not entered into any new leases to move Army laboratories.  


1    The Army considers in-house testing as testing performed at the HIV Diagnostics and Reference Laboratory.

2    We calculated the $3.58 million in yearly savings by multiplying the number of planned tests by the difference in the cost per test charged by the contractor and the proposed cost per test charged by the Air Force.  

This report is a result of Project No. D2016-D000CJ-0159.000.