DHS looks for new financial management plan

Following collapse of EMERGE2, department needs a new strategy, officials say

After scrapping a multimillion-dollar initiative for an enterprise financial management system in December 2005, Homeland Security Department officials are trying to develop an alternative plan by this summer.

Eugene Schied, the department’s acting chief financial officer, told lawmakers last week that the department is considering several options to replace the failed Electronically Managing Enterprise Resources for Government Efficiency and Effectiveness (EMERGE2) initiative.

At a March 29 joint hearing of subcommittees from the Government Reform and Homeland Security committees, Schied said DHS will not invite new bids for EMERGE2.

DHS allowed several agencies, including Customs and Border Protection and the Coast Guard, to upgrade resource management systems while the EMERGE2 project was in development. Schied said those systems have matured.

In the Coast Guard’s case, the agency became a service provider to the Transportation Security Administration, which shifted its management system from the Transportation Department last year. The Office of Management and Budget’s Financial Management Line of Business Center of Excellence offered alternatives, too, he added, all of which makes the original EMERGE2 vision less applicable.

The department expects to present a new plan to its Investment Review Board by May or June, he said.

BearingPoint was awarded the EMERGE2 blanket purchase agreement, potentially worth as much as $229 million, in September 2004. A review in 2005 showed the project wasn’t going as planned and was too risky to continue.

But DHS spent another $18 million before it officially pulled the plug four months ago.

DHS still came away with something. Scott Charbo, the department’s chief information officer, said the requirements developed for the EMERGE2 project could be a useful reference model to determine gaps in existing systems and how to close them.

Schied told lawmakers that any new plan for a financial system would likely cost $150 million to $200 million because certain features planned for EMERGE2, including cleansing data and creating a data warehouse, would remain part of any alternative system.

House members were unhappy that DHS spent so much money on EMERGE2 before nixing the initiative, saying that it is a national security issue and one of financial stewardship.

“I am just shocked about the repetitiveness that just keeps coming up about expenditures,” said Rep. Sheila Jackson Lee (D-Texas). “I know this is just one particular area.”

They also questioned whether the exodus of top managers and others in the department has led to problems dealing with such projects, but DHS officials said it has not.

At the same hearing, Randolph Hite, director of the Government Accountability Office’s information technology architecture and systems issues, said DHS is generally working to institutionalize IT management controls and disciplines, such as having an enterprise architecture. But those efforts are not yet mature.

Emerging history

The Electronically Managing Enterprise Resources for Government Efficiency and Effectiveness (EMERGE2) initiative was supposed to be the Homeland Security Department’s enterprise financial and asset management system.

The department started the initiative because the resource management systems of several of the agencies that formed DHS in 2003 failed to meet all the requirements of a government financial standards board. In addition, some of the newly formed agencies within DHS had no such systems at all.

BearingPoint was awarded the blanket purchase agreement that DHS officials planned to use to develop a suitable system. The BPA was potentially worth as much as $229 million.

Two task orders were issued, one for solution development and conference room testing and a second for examining component systems in greater detail, according to DHS testimony presented to lawmakers last week.

But a review initiated in February 2005 showed that the project wasn’t moving forward smoothly. Officials judged that continuing it would be too risky and officially ended the initiative in December. Testimony from DHS officials also indicated that the department’s own “organizational maturity issues” made the project a high risk.

DHS officials said $9.4 million was spent during the requirements phase and $8.9 million was spent under the contract for a total of $18.3 million.

DHS has about $48.4 million available for the EMERGE2 project this fiscal year, and officials have requested an additional $18 million in the proposed fiscal 2007 budget. They said the money would be used for any alternative plan approved by the department.

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