DHS' financial system consolidation needs better oversight, officials say

The Homeland Security Department relies too much on contractors and didn't set up right terms in the proposed contractor oversight as it consolidates its financial management systems into a single system, according to testimony from two senior officials from the Government Accountability Office.

DHS has taken a few steps toward fulfilling the six recommendations made in 2007 to carry out the Transformation and System Consolidation (TASC) information technology project, but none of the goals is fully implemented, GAO officials Kay Daly, director of financial management and assurance, and Nabajyoti Barkakati, chief technologist, told a House panel today.

GAO recognizes that all six recommendations can't be attained without awarding the contract, which is scheduled for January 2010, they said, adding that two new problems came up in a recent evaluation.

“GAO’s preliminary analysis during this review also identified two issues that pose challenges to the TASC program — DHS’ significant risks related to the reliance on contractors to define and implement the new system and the lack of independence of the contractor hired to perform the verification and validation function for TASC,” Daly and Barkakati said in a statement .

“DHS faces a monumental challenge in consolidating and modernizing its financial management systems. Failure to minimize the risks associated with this challenge could lead to acquiring a system that does not meet cost, schedule and performance goals,” Daly and Barkakati told the House Homeland Security Committee’s Management, Investigation and Oversight Subcommittee.

To respond to those concerns, DHS officials said Oct. 21 that they had restructured the verification and validation contract by changing the reporting relationships and organization responsible for managing the contract.

Peggy Sherry, acting chief financial officer at DHS, told the subcommittee that the financial systems consolidation is proceeding and a “strong program management office” is in place for its oversight and integration.

She described the system consolidation program as critical to improving DHS' financial management. The number of material weaknesses in financial reporting have decreased from 10 in fiscal 2006 to six in fiscal 2008, Sherry said.

The financial consolidation project started in 2006 after the cancellation of the Electronically Managing Enterprise Resources for Government Effectiveness and Efficiency program. The value of the consolidation contract was estimated at $400 million in 2008.