OMB to review 20 financial system modernization projects

Even well-run modernization projects to face closer scrutiny

Obama administration officials said today they plan to freeze financial systems going through a modernization effort even if the projects are well-managed to make sure they are in sync with a new policy of getting the systems launched faster and hitting the critical needs.

“We believe the way projects have been constructed and thought of over the past decade is not an optimal efficiency point,” said Danny Werfel, controller of the Office of Federal Financial Management in the Office of the Management and Budget.


Related story:  OMB puts brakes on financial systems modernization


OMB officials expect to review roughly 30 financial systems projects, and they have confirmed 20 programs, including the:

  • Agriculture Department’s Financial Management Modernization Initiative
  • Commerce Department’s Commerce Business Systems
  • Education Department’s Financial Management Support System
  • Energy Department’s CFiManage
  • Environmental Protection Agency’s Financial Replacement System
  • Health and Human Services Department’s NIH Business System
  • Health and Human Services Department’s Healthcare Integrated General Ledger Accounting System
  • Homeland Security Department’s Transformation and System Consolidation
  • Housing and Urban Development Department’s Integrated Financial Management Improvement Project
  • Interior Department’s Financial and Business Management System
  • Justice Department’s Unified Financial Management System
  • Labor Department’s New Core Financial Management System
  • State Department’s Joint Financial Management System
  • Transportation Department’s Delphi
  • The Internal Revenue Service’s Integrated Financial System/CORE Financial System
  • The Bureau of Public Debit’s Oracle e-Business Suite
  • Veterans Affairs Department’s Financial and Logistics Integrated Technology Enterprise
  • National Science Foundation’s Financial Accounting System
  • Office of Personnel Management’s Consolidated Business Information System and
  • Small Business Administration’s Oracle Administrative Accounting.

Werfel said agencies may be managing their projects well as they keep them on time and within cost, but OMB officials said  there likely are areas where they can still save money.

"Just because you are on cost and schedule with building a certain thing you're building doesn't mean that there's not an opportunity to rethink that and to save money and cut costs,” Werfel said.

In June, the administration froze modernization projects on agencies’ financial systems, so OMB officials could review them. Officials said today’s projects are too large and too complex. They also have such broad scopes that continue to grow when, instead, the projects should center around essential business needs, officials have said.

“One of the challenges we see when it comes to the complexity of the federal IT ecosystem is everything ends up being over-engineered, whether it has to do with longer procurement cycles,” said Vivek Kundra, the federal chief information officer. “Therefore, agencies end up creating these monolithic requirements that are hundreds of pages long.” The projects then face the budgeting process, often in the form of continuing resolutions, Kundra said. The result is unmet requirements and technology that is not set up.

“This monolithic approach to deploying federal IT is not working,” Kundra said.

Officials want projects that are focused on a smaller set of critical needs, that deploy more quickly, and have vigorous management of the program.

OMB officials have said agencies likely would spend a total of $20 billion over the life of the projects, with an addition $3 billion spent annually to maintain them.

Financial systems that are not undergoing modernization aren't be affected by the new directive. OMB instead wants to review modernization projects to financial systems.

 

About the Author

Matthew Weigelt is a freelance journalist who writes about acquisition and procurement.

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Reader comments

Thu, Jul 15, 2010 Robert Donelson Washington DC

Vivek is on point about Federal Systems being over-engineered. During my career, we would spend years in the requirements development phase and in one case we built out the system and delivered it the same day the requirements were finalized working with out operation and maintenance system staff. That systems served our Department for about a decade until turned over to a major modernization effort which destroyed most of the functionality. The modernization project ran well over budget is very costly to operate and maintain and has fewer end to end processes which makes it less functional than the systems replaced. IT by it's very nature should improve process and business performance not decrease performance by eating deeper into Agencies Budgets.

Wed, Jul 14, 2010 Dave

It doesn't matter what OMB does, the Federal Government won't be able to build or buy decent financial management systems until it is forced to follow the Generally Accepted Accounting Principles used by everyone else. A previous comment was made that "Every time a Government employees move from on agency to another they have to waste time learning new systems (assuming the agency even has one)." This isn't because the SOFTWARE is different, it's because the UNDERLYING system of accounting is different. This is why the gov can't buy OTS financial software...

Mon, Jul 12, 2010

Are the "roughly" other 10 programs within DoD? These are all civilian programs (systems).

Mon, Jul 12, 2010 Christopher Hanks

Government agencies, which run on budgets, must be able to do basic budgetary accounting, which would include the ability to pass audits verifying that obligations have been made in accordance with annual authorization and appropriations laws. Government agencies are not businesses, however, so it is not clear why they must also be able to do basic financial accounting (i.e., produce balance sheets and income statements each year that can pass audits) as required by the CFO and GMRA laws. It is arguably the latter requirement that has led to the "over-engineering" that Mr. Kundra is worried about. OMB could do a real service for the Executive Branch, and save the taxpayers a great deal of money in the bargain, by convincing the Congress to revisit the the CFO and GMRA laws and revise them appropriately, so that they support rather than interfere with the pursuit of more effectiveness and efficiency in government.

Mon, Jul 12, 2010 Mike Carrick San Francisco

The VA will need work hard to change its decentralized culture before adopting any Enterprise level logistical system. Buying expensive and complex systems without unifying VA policy within the underlying 23 VISN fiefdoms(i.e. the discrete Veterans Integrated Service Networks) and their VBA and NCA branches means that the software requirements will never be clear or unambiguous and the scope of efforts in the VA will remain wildly out of control. Enterprise tools require uniformity and consistency in operations, practice, and terminology. The VA should establish that BEFORE embarking on this path again.

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