Rising out of financial chaos

USAID pins hopes on Phoenix system

The U.S. Agency for International Development is responsible for overseeing $6 billion in U.S. foreign economic and humanitarian assistance programs each year. Yet by most measures, USAID's financial systems more closely resemble those of the developing countries it assists.

USAID has had perennial financial management problems and was one of three agencies to receive a failing grade this year on Rep. Stephen Horn's (R-Calif.) financial management report card.

The problems were typified by the agency's decision to scrap its failed New Management System in 1999. Despite a five-year effort, the agency has little to show for its $100 million investment, said Richard Nygard, acting assistant administrator for USAID's Bureau for Management, speaking before a House subcommittee recently.

The custom system was modeled on an enterprise resource planning approach designed to consolidate USAID's information systems into a single integrated network. From the start, however, the system was plagued by delays, cost overruns and error rates.

Still reeling from past mistakes, USAID officials have been methodical about the agency's new system, Phoenix.

So far at least, the agency has learned from its mistakes, according to outsiders. USAID Inspector General Everett Mosley said recently that despite significant outstanding issues, the agency "has made progress toward resolving some long-standing problems with its financial management systems."

USAID marked a milestone in December when it brought Phoenix online at its Washington, D.C., headquarters, said Steve Crabtree, USAID's Phoenix project manager. The agency is now preparing to enable its overseas bureaus to feed data into the system.

Unlike their approach with prior systems, USAID officials were determined to choose a commercial product—Phoenix uses the Momentum Financials software suite from American Management Systems Inc.

Furthermore, USAID officials declared early on that they would not change the AMS software. Instead, the agency worked at redesigning its business processes, according to Crabtree. Making software changes would only lead to another customized package that is expensive to maintain and update.

The Phoenix project also receives senior management attention. "The true focus of the organization was to make this happen," said Zip Brown, vice president of AMS' e-government solutions group. "You really need the client having a real stake in the game."

Still, USAID officials were cautious about implementing Phoenix. "There were a lot of skeptics both within the agency and outside" because of the agency's troubled history with financial management systems, Brown said.

To bring Phoenix online, USAID had to transfer data from its legacy systems. That involved converting more than 100,000 accounting items. USAID officials instituted an extensive effort to ensure that the conversion processes were accurate. Teams of contractors validated the data both from USAID and from the inspector general's office. "There were tests of the tests," Crabtree said.

Those efforts were rewarded with a less than 1 percent error rate for the data transferred to Phoenix, Crabtree said, and nearly all the rejected data has now been fixed.

"We believe the quality of the agency's financial statements will be markedly better this year," Nygard told lawmakers at the subcommittee hearing.

Despite its success in Washington, the team still faces the difficult task of enabling its extensive overseas missions to file financial data. The overseas rollout is complex, in part, because of the diverse locations and the poor technology infrastructure of many host countries, Crabtree said, citing woeful phone communications as one example.

Fortunately, AMS' Momentum, which is Web-based, has worked well in USAID's early pilot programs with missions in Egypt and El Salvador, he said. But the full rollout will take several years. In the meantime, USAID is creating an electronic interface for the field data between Phoenix and the Mission Accounting and Controls System, which stores the data.

But the controls system is not scheduled to be replaced until fiscal 2003.


The book on Phoenix

The U.S. Agency for International Development has carried out 738 audit

recommendations, many of them enacted under Phoenix.

More than 630 people overall have been trained to use the system, including:

* More than 120 finance professionals.

* More than 200 people who received training on revised performance

indicators and another 100 who attended workshops on improving program performance.

* More than 180 people who have been trained in a new course on management

accountability and control.

Source: USAID

About the Author

Christopher J. Dorobek is the co-anchor of Federal News Radio’s afternoon drive program, The Daily Debrief with Chris Dorobek and Amy Morris, and the founder, publisher and editor of the DorobekInsider.com, a leading blog for the Federal IT community.

Dorobek joined Federal News Radio in 2008 with 16 years of experience covering government issues with an emphasis on government information technology. Prior to joining Federal News Radio, Dorobek was editor-in-chief of Federal Computer Week, the leading news magazine for government IT decision-makers and the flagship of the 1105 Government Information Group portfolio of publications. As editor-in-chief, Dorobek served as a member of the senior leadership team at 1105 Government Information Group, providing daily editorial direction and management for FCW magazine, FCW.com, Government Health IT and its other editorial products.

Dorobek joined FCW in 2001 as a senior reporter and assumed increasing responsibilities, becoming managing editor and executive editor before being named editor-in-chief in 2006. Prior to joining FCW, Dorobek was a technology reporter at PlanetGov.com, one of the first online community centers for current and former government employees. He also spent five years at Government Computer News, another leading industry publication, covering a variety of federal IT-related issues.

Dorobek is a frequent speaker on issues involving the government IT industry, and has appeared as a frequent contributor to NewsChannel 8’s Federal News Today program. He began his career as a reporter at the Foster’s Daily Democrat, a daily newspaper in Dover, N.H. He is a graduate of the University of Southern California. He lives in Washington, DC.


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