Congress fired a warning rocket across the bow of the Department of Defense in 1990 with a demand that the federal agency get its bookkeeping in order.
Huntsville-based government contractor Thompson Gray is making its “bread and butter” as one of the businesses helping the DOD with this massive effort.
“Thompson Gray is a provider of professional services to the federal government,” explains Todd Johnston, Thompson Gray vice president of strategy and operations. “We primarily focus on the areas of financial management, financial management systems and business process improvement-type initiatives.”
Unlike most government agencies, the DOD has never been thoroughly audited.
“The Department of Defense, believe it or not, has never passed third-party financial audits,” Johnston says.
“In 2010 they had a National Defense Authorization Act, which essentially said for the first time, ‘You guys have to comply with the 1990 CFO Act. We have to draw a line in the sand, so we’re going to draw that line in the sand at 2018 and then we’ll start through audits from 2018 on.’”
That 1990 Chief Financial Officers Act gave the White House Office of Management and Budget added authority to direct federal financial management, modernize government financial management systems and strengthen reporting requirements for the Defense Department.
As a result, Thompson Gray “has thrived during that period because we understand how these financial management systems need to think, work and operate, coupled with our understanding of the audit piece and how business processes need to be set up and structured and aligned,” says Johnston.
“That is where we have made our bread and butter,” he adds.
Such an enormous scope of work makes a lot of toast. Thompson Gray’s revenue alone is more than $50 million.
The federal demand for better accounting practices has been significant because of DOD’s gargantuan reach and budget — this year topping $841 billion. The department employs more than 3 million people, plus contractors.
“This is unprecedented,” Johnston says. “There’s no other organization in the history of mankind that has gotten to this size, scale, scope and complexity without passing a financial audit for a variety of reasons.”
DOD’s financial management has been on the Government Accountability Office’s high-risk list since 1995, in part because records are so complex that it’s hard to track the funding.
Pentagon officials admitted that flawed business systems and practices are common within the agency but said it would take decades to get all of the agency accounts in order, and the DOD has established its own internal goal to modernize its systems environment by 2028.
In January 2024, Inspector General Robert P. Storch announced that the DOD Office of Inspector General would issue the “Audit of the DOD’s Plans to Address Longstanding Issues with Outdated Financial Management Systems.”
That has created huge opportunities for a company like Thompson Gray that can help the department comply.
The impact of more stringent financial reporting requirements has been “massive” for the DOD, Johnston says. After all, the agency can’t bring military maneuvers to a halt around the globe while they focus on their bookkeeping.
“It’s just hard when you have an organization that’s been around for that long and really was never designed to pass a financial audit, then reengineer processes and systems to achieve that effect without interrupting ongoing operations,” Johnston says. “It’s quite the balance.”
Thompson Gray, he says, comprehends the complexity of working through these issues while mission operations are ongoing.
“We have an understanding of the operating environments within the DOD,” Johnston says. “We’re doing a lot of financial management business process-type support while still knowing that systems piece, making sure those things stay married together.”
The company’s approach to all this has two parts, Johnston says. Their tactical side provides consultant work to help with guidance and policy. In the area of strategy, Thompson Gray assists financial analysts in understanding invoicing programs pushed out by the Treasury Department, for example.
“Most companies do one of those things,” he says.
Their employees in Northern Virginia “do a lot of what I call tactical consultant work where we’re helping them with guidance and policy to help address a lot of these things.”
As the Department of Defense continues addressing these operational challenges, Thompson Gray helps with modernizing financial processes, systems and tools to comply with audit mandates. Areas of expertise include enterprise resource planning systems, robotic process automation, data visualization and modeling, audit readiness and program management.
Lyndsey Shelton, Thompson Gray executive vice president of business solutions, explains that part of their work involves helping DOD employees stay up to date on procedures.
“Anything the government goes out there and puts money into, we’re out there supporting those budget analysts and financial analysts and auditors in those functions,” Shelton says, “not only in the day-to-day transactions in the system, training them how to use it, but federal policies and procedures that the Army is developing.”
Thompson Gray isn’t allowed to prescribe fixes directly, Johnston says, but can provide very high-level guidance.
There’s still plenty of work to be done in straightening out the accountability of the nation’s largest and most critical federal agency.
As a company news release puts it, “Thompson Gray empowers DOD agencies to continue to compete, fight and win, without sacrificing the financial transparency the American people expect.”
Ron Gray is now CEO and president of Thompson Gray. He took over from Richard Manley, who retired in September.
Sheila Thompson founded the forerunner of Thompson Gray — Thompson Programmatic Services Inc. — in 2008.
A former civil servant, she understood that the Army financial management community would need help navigating the General Fund Enterprise Business System. She sold the company to Huntsville couple Ron and Cindy Gray in 2013. Thompson passed away unexpectedly in 2018.
In July 2023, the company transitioned to a 100% employee-owned operation, or ESOP. The Huntsville-Madison County Chamber of Commerce has repeatedly named it one of the Best Places to Work in Huntsville. The company’s philanthropic efforts have contributed significantly to the community.
Thompson Gray currently has a staff of more than 250 and offices in Huntsville and Northern Virginia, as well as a presence — but no office yet — in Orlando.
Their roster of clients includes the Assistant Secretary of the Army Financial Management and Comptroller office, the Army Installation Management Command, Army Materiel Command, Army Armament Research, Development and Engineering Center and Program Executive Office Aviation.
Deborah Storey is a Huntsville-based freelance contributor to Business Alabama.
This article appears in the December 2024 issue of Business Alabama.
