IG raises red flags over DHS plan to consolidate management systems

Homeland Security's latest attempt to consolidate key financial management systems is running into serious problems, according to the department's inspector general.

In a report released Friday, DHS Inspector General Richard Skinner said department officials have not developed appropriate planning documents for the complex effort that would integrate financial, acquisition and asset management technology, nor have they fully accounted for life-cycle cost estimates or staffing requirements.

"Additionally, DHS' Office of the Chief Information Officer has had limited involvement with the overall initiative, which increases the risk that the DHS enterprise architecture and security requirements may not be incorporated into the new system," the report said.

Since its creation seven years ago, Homeland Security has tried three times to consolidate the disparate financial systems of its agencies. The first effort was canceled in late 2005 due to technical reasons. A second attempt to create an enterprise architecture in 2007 failed when no companies bid on the contract. The third attempt was scuttled in March 2008 after a federal judge determined DHS violated the 1984 Competition in Contracting Act when making a sole source contract award.

The latest effort dates to May 2008, when department leaders revised the transformation and systems consolidation initiative to acquire an integrated financial, acquisition and asset management solution -- a more complex undertaking than their previous efforts.

The program office issued a request for proposal in January 2009 and is currently evaluating proposals from several vendors. The $450 million departmentwide initiative, which is sponsored by the undersecretary of management and the chief financial officer, will have a five-year base period with five one-year options.

While the IG noted some progress toward implementing the initiative, five main challenges jeopardize the program:

Peggy Sherry, deputy chief financial officer at DHS, generally agreed with the IG's findings and said in a letter responding to the report the department is taking steps to resolve the issues.