Hill grills DHS over delay in consolidating financial systems

Two years after announcing a strategy to consolidate the financial management systems of its 22 agencies, the Homeland Security Department has yet to identify the requirements for the network, award a contract or break out the $1 billion cost of the program.

DHS officials have not conducted the analysis needed to define requirements for an enterprise financial management system that will consolidate 13 individual systems that agencies departmentwide now use, said Kay Daly, director of financial management and assurance issues at the Government Accountability Office, during a hearing of the House Subcommittee on Management, Investigations and Oversight. The department also has not assessed the extent to which commercial software can be customized to meet the needs of the agencies rather than building a custom system, she said.

"Without a comprehensive strategy and plan that consider these issues, DHS risks implementing a financial management system that will be unnecessarily costly to maintain," Kay said in submitted testimony. "DHS faces a monumental task, and I can assure you that from our review, we have certain concerns with the strategy they're taking."

"The news we've heard is not good," said subcommittee chairman Christopher Carney, D-Pa. "We're six years down the line, and we're at a place where accountability is [essential], and we're having a hard time with DHS. . . . This is the nuts-and-bolts stuff that no one pays attention to, but is as important to protecting the homeland as anything else."

DHS announced its financial management systems strategy, called the Transformation and Systems Consolidation program, in June 2007, a year and half after the department terminated a similar program. "I believe we are on track," said Peggy Sherry, acting chief financial officer at Homeland Security. "We did learn quite a bit from the initial effort, which ultimately failed from an inability to integrate" the various components of the existing financial systems.

In January, DHS issued a request for proposals for consolidation program, saying it was looking for a commercial off-the-shelf software system that would connect financial, acquisition and asset management functions. The RFP stipulated that at least one other federal agency must be using the system.

The department is evaluating the proposals it received and expects to award a contract during the second quarter of fiscal 2010, after which Homeland Security officials will conduct a more detailed analysis that weighs system requirements against existing functionality, Sherry said.

"DHS has selected a path whereby it is relying heavily on contractors to define and implement the TASC program," Kay said. "Adequate DHS oversight of key elements of the system acquisition and implementation will be critical to reducing risk."

Sherry agreed that "strong contractor oversight is paramount," and noted that DHS has created a team to monitor and evaluate aspects of the program.

Uncertainty in the program extends to cost, too. Sherry estimated the contracting cost at $450 million, which includes migrating the 13 systems to one platform, implementing the new system, and operations and maintenance. The cost does not include hardware and software. James Taylor, deputy inspector general at DHS, estimated the total cost of the program to be $1 billion.

"The financial management system itself is a small part of the cost," Taylor said. "We're concerned because the mass majority of the effort involves [addressing] business problems at the component level, so the information coming in makes sense, not just having a fancy way of computing. Any estimate of cost needs to account for weaknesses in the component organizations where this system will fall upon."

The fiscal 2010 Homeland Security appropriations bill, which the Senate passed in October and awaits President Obama's signature, provides $17.8 million for the consolidation project. According to the conference report that accompanied the spending bill, DHS must report to Congress within 60 days after the bill is signed into law, and every six months thereafter, on the progress to consolidate financial management systems.