Treasury service outsources financial management for debt collection

The federal government's collection agency recently hired the Interior Department's National Business Center to develop and host the agency's financial management system, a move that is part of the Bush administration's initiative to standardize financial processes.

Comment on this article in The Forum.The Debt Management Service, which is part of the Treasury Department's Financial Management Service division, entered into an agreement with the National Business Center to develop and operate a system for debt collection payments, said Rita Bratcher, assistant commissioner for DMS. The agency wanted to simplify its accounting procedures and standardize the division's enterprise architecture, she said.

DMS chose the center, which is expected to begin hosting the system on Oct. 1, because it's "a proven commodity in the federal government and part of the federal government's efforts to provide standardized accounting systems and solutions," Bratcher said.

Creating a standardized accounting system for government is part of the Office of Management and Budget's Financial Management Lines of Business initiative, in which agencies migrate financial services to a public shared services center (such as the National Business Center) or qualified private sector provider. With it, OMB expects to lower the cost of operating financial management systems and to improve the accuracy of agencies' financial statements.

The goal is "to save the government money and make it operate more efficiently," said Ray Bjorklund, senior vice president and chief knowledge officer for FedSources, a federal consulting firm in McLean, Va. The original concept for the line of business was for the government to take advantage of economies of scale, resulting in fewer systems to manage and making it easier to ensure that they could interact with each other and make it easier to track spending and produce clean books.

DMS, which functions in part as a collection agency for the government, plans for the new system to simplify the procedures it uses for debt collections. Agencies that have debts owed to them that exceed 180 days are required to transfer those debts to DMS, which enters them into a database and begins to track collecting the payment of the debts. If the debtor has a federal contract, DMS will track the payments the government pays to the company and may use those monies to offset the debt. In other cases, DMS or one of its private collection agency partners will attempt to collect the debt.

Currently, some of the debt collection work is managed manually and spread among several locations. The new system will automate and centralize those operations in one location, said Barb Walters, division chief for the finance and procurements systems division at the center. The system also will make it easier for DMS to pass collections back to agencies.

"The NBC has been providing services to other federal agencies for over 30 years, and the NBC's financial management line of business, which Treasury is using, has been providing financial systems and services for over 20 years," said Donald Swain, chief of staff for the center, responding to an e-mail request for comment.

Swain said the center has hosted the specific application Treasury uses for more than six years and has 11 customers using its services, including the Federal Trade Commission, the Selective Service System and the Federal Labor Relations Authority.

"We've done so many implementations that we know how to look at existing requirements and translate them into a financial system," Walters said. "A lot of the setup when you do new installation of financial application is very repetitive. We know the approval process for a payment; we know it will pass audit. We know proven ways to set up your systems and use those same proven ways over and over again."

DMS officials declined to estimate the cost of the contract with the center or how much it would save, saying the contract was in the early stage of development. Bratcher said the potential benefits, in addition to saving money, was "providing automated interfaces to our various collections and central accounting systems. If we can speed up that process, we can free people to do other things."