Lawmakers ask White House to stop DHS financial system

Rep. Bennie Thompson, D-Miss., says DHS has not defined system requirements or a transition strategy. Ron Sachs/Newscom

House Democrats this month went over the heads of Homeland Security Department officials and appealed directly to the White House to cancel a financial management system project that could cost as much as $1 billion.

DHS plans to award a contract this year for consolidating the financial management networks at component agencies such as the Federal Emergency Management Agency and Immigration and Customs Enforcement into one megasystem. House Judiciary Committee leaders have questioned for months whether the effort violates a White House order issued on June 28 to halt the development of all financial systems governmentwide so that departments can rework the historically troubled modernizations to avoid wasting billions of dollars.

Financial systems are intended to gather daily financial transaction data that take place throughout departments so that agencies can produce a set of statements that can be independently audited, officials at the Office of Management and Budget recently said. The White House memo calls on agencies to consider splitting upgrades into smaller projects, or canceling them. OMB and other department leaders already have terminated a Small Business Administration system worth $113 million and a $423 million Veterans Affairs Department project.

House Homeland Security Committee Chairman Bennie Thompson, D-Miss., and Rep. Christopher Carney, D-Pa., chairman of the subcommittee on management, investigation and oversight, sent a letter dated Sept. 16 to OMB claiming Homeland Security's financial system project does not meet OMB requirements. The members sent the letter after they did not receive satisfactory answers from DHS about the effort.

In the letter to Jeffrey Zients, acting director of OMB and federal chief performance officer, the lawmakers said DHS has yet to define system requirements, a transition strategy or an overall plan for its Transformation and Systems Consolidation project. Cost estimates vary from $450 million to $1 billion and the completion date is unknown, they added.

"In essence, at this juncture, DHS cannot definitely determine whether a completed TASC will meet the department's needs," they wrote. "Hopefully, the well-documented problems associated with TASC will weigh heavily in your determination of whether the department will be given authority to move forward."

Thompson and Carney initially raised their concerns in a July 19 letter to DHS, asking whether the department had halted the procurement as instructed in the OMB memo. The lawmakers also asked if Homeland Security was considering alternatives to TASC.

In response, Homeland Security Undersecretary for Management Rafael Borras wrote in a letter dated July 30 that TASC complies with OMB's rules, so DHS is not considering alternative plans. "The department has been working closely with OMB to explain and demonstrate how the TASC program is consistent with the guiding principles in the OMB memorandum," he wrote. "Upon successfully completing OMB's review, DHS plans to award the TASC contract."

Borras added, "TASC was specifically designed to segment work into small, manageable projects with individual task orders targeted for clear and concise deliverables. This mirrors OMB's policy regarding the use of small, manageable segments with clear deliverables."

Also, he said DHS, as prescribed by the memo, assembled a steering committee of senior leaders to provide oversight of the projects, which Borras chairs.

On Friday, DHS spokesman Larry Orluskie said, "DHS is fully committed to following OMB guidance to ensure a successful financial system implementation. We are working closely with OMB and progressing forward as we continue the planned TASC contract award."

Other critics of TASC say the department's existing systems already embody OMB's vision of smaller, simpler and cheaper financial systems, and federal authorities have provided Congress with evidence of trouble in the program. An inspector general's audit of the project released in June found DHS does not have the necessary planning documents, cost estimates or staffing projections. The Government Accountability Office determined in December 2009 the program's reliance on contractors to deploy the new system poses unnecessary risks.

Lisa Kazor, president of a Savantage, a technology company whose product is included in about 80 percent of DHS agencies, questioned, "Why are you replacing systems that haven't come to the end of their useful life?"

She wants to know whether Homeland Security analyzed other consolidation options. "I think the administration has the opportunity to say, wait a minute, what is the real business proposition. . . . Does this have something to do with waste at a time when we should be fiscally responsible -- changing tires and not buying new cars?" Kazor noted.

Daniel Carr, an executive who has worked on FEMA's system since before DHS was formed, refuted Borras' characterization of the project as segmented work. He said TASC was conceived as a massive software implementation with individual task orders. "You could cut a $100 million task order and say, 'That's your increment,'" joked Carr, the chief executive officer of software firm Distributed Solutions Inc. "They had a hard enough time trying to bring all these agencies together. This is really ignoring what they've already got sitting there."

But market researchers said similar consolidation projects have succeeded in the private sector. Paul D. Hamerman, principal analyst and vice president for enterprise applications at Forrester Research, said many major corporations have combined disparate financial accounting systems, especially after mergers.

"If you have dozens of accounting systems, it's not really a sustainable business model because it is highly inefficient," he said. "There is a good precedent in the private sector, which suggests that consolidation, centralization is a best practice, . . . so there is visibility into how the business is performing."

White House officials said they have not made a decision about the future of the system. "The Office of Management and Budget, the Financial Systems Advisory Board and the Department of Homeland Security, are in the midst of reviewing the TASC project," OMB spokeswoman Moira Mack said. The office expects all reviews "to be concluded this fall and for final determinations to be appropriately reflected in the president's fiscal 2012 budget," which will be released in February 2011.