DHS ditches unified financial management system

Homeland Security plans to abandon construction of a combined finance, acquisition and asset management system at a departmentwide data center and instead bridge several systems, according to an internal e-mail obtained by Nextgov. The decision follows contract protests by incumbent vendors and a Web-based service provider.

In March, federal auditors upheld one of the complaints, filed by Global Computer Enterprises, which sells online financial reporting and accounting services in a cloud-like environment.

The Government Accountability Office ruled that DHS wrongly awarded CACI a $450 million contract for the work because the department changed system requirements in the middle of the vendor selection process without letting companies submit revised proposals, according to the GAO auditors' decision.

The information technology program, known as Transformation and Systems Consolidation, or TASC, was supposed to connect financial management systems across Homeland Security agencies to a central tool. Mid-competition, the Office of Management and Budget halted all agency financial system projects -- a categorically risky kind of IT endeavor -- to require that agencies either pare back each system's objectives or pull the plug.

DHS then narrowed the scope of TASC, originally projected to cost $1 billion, and opted only to transition the Federal Emergency Management Agency -- just 3 percent of the system's intended userbase -- to the new application during the first two years of the potentially 10-year project. The initial request for vendor proposals required transferring 20 percent of Homeland Security users during that first phase. Another departure from the first solicitation: DHS asked suppliers for a unified finance, acquisition and asset management model currently operational elsewhere in the government, but CACI had no integrated system up and running in another agency.

Global Computer Enterprises argued that, had Homeland Security allowed the company to submit a bid with the relaxed requirements, its offer would have come in at a different price-point and proposed a different technical approach.

GCE had once provided online financial management services to DHS' Transportation Security Administration and the U.S. Coast Guard and currently supports the Labor Department with a Web-based system that, unlike most cloud computing technology, is not available on a pay-per-use basis, but is as quick and easy to roll out, the company says.

The Obama administration is trying to shed 800 of the federal government's more than 2,000 expensive, energy-sapping data centers and outsource the computing to Web services companies. Homeland Security is slated to shutter 22 of its 24 server facilities by 2015, according to fiscal 2012 budget materials. Out of all the major agencies, DHS is expected to spend the most on cloud computing, potentially more than $2.4 billion over the next several years.

In overturning the CACI contract, GAO officials recommended that Homeland Security change its request for proposals to reflect the new system requirements and collect revised proposals from vendors. Besides CACI, Global Computer Enterprises was, perhaps, the only other viable bidder.

"In re-evaluating the solicitation, DHS has concluded . . . housing the system solution in the DHS enterprise data center is no longer a requirement," DHS Acting Chief Financial Officer Peggy Sherry wrote in an email to members of the federal CFO Council on Wednesday. "DHS no longer seeks an enterprise-wide or department-wide solution to be implemented through a single acquisition over a period of five to ten years. The department has determined that an already integrated finance, acquisition and asset management solution is no longer an absolute requirement."

Homeland Security officials were not immediately available to verify the e-mail's veracity.

Sherry's message continued, "There is still a critical need for a core financial system; therefore, the department is considering strategies that offer a core financial system and alternative means to integrate the remaining management systems for acquisitions and assets."

Sherry is scheduled to testify Friday before the House Oversight and Government Reform Subcommittee on Government Organization, Efficiency and Financial Management.

In response to reports that Homeland Security had killed TASC, committee chairman Rep. Todd Platts, R-Pa., issued a statement recalling the department's past failed effort to launch a comprehensive financial management system and voiced his intent to discuss the turn of events with Sherry.

"Ranking Member Ed Towns, D-N.Y., and I remember all too well the debate surrounding eMerge2, the financial systems project that was started in 2003 and abandoned after spending $9 million," Platts said. "The successor to eMerge2, TASC, was able to leverage some of that money, but there are certainly some sunk costs associated with these two failed attempts. If the department is taking a new approach, we look forward to hearing how that change in focus will help DHS reach its goals."