OMB freezes more IT funds

OMB memo

The Office of Management and Budget took another step July 30 toward consolidating information systems at agencies bound for the proposed Homeland Security Department, freezing more than $200 million earmarked for major management systems in the fiscal 2002 and 2003 budgets.

The freeze, OMB's second in less than three weeks, halts planned investments of $500,000 or more for financial, personnel and procurement management systems.

That encompasses everything from the financial portions of the Customs Service's multibillion-dollar modernization program to the Federal Emergency Management Agency's personnel system (see box).

OMB officials plan to take up to several weeks to review the plans, seeking ways to save money by reducing overlap in the systems across agencies.

The proposed department would include nearly two dozen agencies, many of which are already spending money on personnel or financial management systems. But once the department becomes a reality, each agency will need to be on the same system.

"This, literally, is the only way to ensure that the new department isn't just a conglomeration of bureaus," said Mark Forman, associate director for information technology and e-government at OMB. "We have kind of a one-time opportunity."

The affected organizations planned to spend more than $235 million during the next two years on financial management systems alone, and according to initial OMB estimates, consolidating those systems could save the government up to $85 million in that time period.

"As they come together into a new department, then it's prudent to figure out which financial management system they should be on," Forman said.

OMB announced a similar freeze July 19 on spending for core infrastructure projects, such as the Transportation Security Administration's IT Managed Services program.

In their latest move, OMB officials said they plan to take advantage of management-related initiatives already under way as part of the Bush administration's E-Government Strategy.

"If they didn't do this, a clear signal would be sent that they don't really mean what they are saying about e-government," said Alan Balutis, a former deputy chief information officer at the Commerce Department.

OMB officials have created a Business Systems IT Review Group to determine what to consolidate and how, Forman said. For example, some agencies may be able to set up cross-servicing agreements with one another, he said.

The group, which OMB and the Office of Homeland Security will lead, will include chief financial officers, procurement executives, CIOs and human resources executives from each affected agency. It will also include representatives from different user communities, such as first responders and border patrol officers.

The freeze involves broad modernization programs such as Customs' Automated Commercial Environment (ACE), an import processing system with links to financial management systems at the Treasury Department.

But only the funding for those linked components is affected — amounting to approximately 16 percent of ACE's fiscal 2002 budget, for example, Forman said.

This is a hard step to take right now, but it's the right one, said Barry White, director of government performance projects at the Council for Excellence in Government.

Congress has not yet passed the legislation establishing the proposed department, so some agencies affected by the freeze could stay where they are, he said. But the greater risk is to have an investment go forward, but then be made irrelevant.

"It's a real mess, but it's an understandable thing to do," White said. "This is why they pay these guys the big bucks; this is a hard thing to do and there is no right answer."

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On ice

The Office of Management and Budget is freezing more than $200 million in planned investments during fiscal 2002 and 2003 from agencies expected to be part of the proposed Homeland Security Department. Here are some of the targeted savings (in millions):

Agency ... Project Name ... Fiscal 2002 ... Fiscal 2003

Coast Guard ... Finance Center Total System ... $10.3 ... $13.8

Customs Service ... Automated Commercial Environment ... $26 ... $60

Customs ... Automated Commercial System Life Support ... $18.4 ... $18.4

FEMA ... Personnel Resources Information Systems Mart ... $1.6 ... $1.4

INS ... Federal Financial Management System ... $14.2 ... $9.7

TSA ... Financial Management System ... — ... $20