Financial Management Systems
DHS Faces Challenges to Successfully Consolidate Its Existing Disparate Systems
Gao ID: GAO-10-210T October 29, 2009
In June 2007, GAO reported that the Department of Homeland Security (DHS) had made little progress in integrating its existing financial management systems and made six recommendations focused on the need for DHS to define a departmentwide strategy and embrace disciplined processes. In June 2007, DHS announced its new financial management systems strategy, called the Transformation and Systems Consolidation (TASC) program. GAO's testimony provides preliminary analysis of the status of its prior recommendations and whether there were additional issues identified that pose challenges to the successful implementation of the TASC program. GAO reviewed relevant documentation, such as the January 2009 Request for Proposal and its attachments, and interviewed key officials to obtain additional information. GAO provided a draft report that this testimony is based on to DHS on September 29, 2009, for review and comment. After reviewing and considering DHS' comments, GAO plans to finalize and issue the report including providing appropriate recommendations aimed at improving the department's implementation of the TASC program.
GAO's preliminary analysis shows that DHS has begun to take actions to implement four of the six recommendations made in the 2007 report; however, none of these recommendations have been fully implemented. GAO recognizes that DHS cannot fully implement some of the recommendations aimed at reducing the risk in accordance with best practices until the contract for TASC is awarded. DHS has taken, but not completed, actions to (1) define its financial management strategy and plan, (2) develop a comprehensive concept of operations, (3) incorporate disciplined processes, and (4) implement key human capital practices and plans for such a systems implementation effort. DHS has not taken the necessary actions on the remaining two recommendations, to standardize business processes across the department, including applicable internal control, and to develop detailed consolidation and migration plans since DHS will not know the information necessary to develop these items until a contractor is selected. While some of the details of the department's standardization of business processes and migration plans depend on the selected new system, DHS would benefit from performing critical activities, such as identifying all of its affected current business processes so that DHS can analyze how closely the proposed system will meet the department's needs. GAO's preliminary analysis during this review also identified two issues that pose challenges to the TASC program--DHS' significant risks related to the reliance on contractors to define and implement the new system and the lack of independence of the contractor hired to perform the verification and validation (V&V) function for TASC. DHS plans to rely on the selected contractor to complete key process documents for TASC such as detailed documentation that governs activities such as requirements management, testing, data conversion, and quality assurance. The extent of DHS' reliance on contractors to define and implement key processes needed by the TASC program, without the necessary oversight mechanisms to ensure that (1) the processes are properly defined and (2) effectively implemented, could result in system efforts plagued with serious performance and management problems. Further, GAO identified that DHS' V&V contractor was not independent with regard to the TASC program. DHS management agreed that the V&V function should be performed by an entity that is technically, managerially, and financially independent of the organization in charge of the system development and/or acquisition it is assessing. Accordingly, DHS officials indicated that they have restructured the contract to address our concerns by changing the organization that is responsible for managing the V&V function.
GAO-10-210T, Financial Management Systems: DHS Faces Challenges to Successfully Consolidate Its Existing Disparate Systems
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Testimony:
Before the Subcommittee on Management, Investigations, and Oversight,
Committee on Homeland Security, House of Representatives:
United States Government Accountability Office:
GAO:
For Release on Delivery Expected at 10:00 a.m. EDT:
Thursday, October 29, 2009:
Financial Management Systems:
DHS Faces Challenges to Successfully Consolidate Its Existing Disparate
Systems:
Statement of Kay L. Daly, Director:
Financial Management and Assurance:
Nabajyoti Barkakati:
Chief Technologist, Applied Research and Methods:
Center for Technology and Engineering:
DHS Financial Systems Consolidation:
GAO-10-210T:
GAO Highlights:
Highlights of [hyperlink, http://www.gao.gov/cgi-bin/getrpt?GAO-10-
210T], a testimony to Subcommittee on Management, Investigations, and
Oversight, Committee on Homeland Security, House of Representatives.
Why GAO Did This Study:
In June 2007, GAO reported that the Department of Homeland Security
(DHS) had made little progress in integrating its existing financial
management systems and made six recommendations focused on the need for
DHS to define a departmentwide strategy and embrace disciplined
processes. In June 2007, DHS announced its new financial management
systems strategy, called the Transformation and Systems Consolidation
(TASC) program.
GAO‘s testimony provides preliminary analysis of the status of its
prior recommendations and whether there were additional issues
identified that pose challenges to the successful implementation of the
TASC program. GAO reviewed relevant documentation, such as the January
2009 Request for Proposal and its attachments, and interviewed key
officials to obtain additional information.
GAO provided a draft report that this testimony is based on to DHS on
September 29, 2009, for review and comment. After reviewing and
considering DHS‘ comments, GAO plans to finalize and issue the report
including providing appropriate recommendations aimed at improving the
department‘s implementation of the TASC program.
What GAO Found:
GAO‘s preliminary analysis shows that DHS has begun to take actions to
implement four of the six recommendations made in the 200; however,
none of these recommendations have been fully implemented. GAO
recognizes that DHS cannot fully implement some of the recommendations
aimed at reducing the risk in accordance with best practices until the
contract for TASC is awarded. DHS has taken, but not completed, actions
to (1) define its financial management strategy and plan, (2) develop a
comprehensive concept of operations, (3) incorporate disciplined
processes, and (4) implement key human capital practices and plans for
such a systems implementation effort. DHS has not taken the necessary
actions on the remaining two recommendations, to standardize business
processes across the department, including applicable internal control,
and to develop detailed consolidation and migration plans since DHS
will not know the information necessary to develop these items until a
contractor is selected. While some of the details of the department‘s
standardization of business processes and migration plans depend on the
selected new system, DHS would benefit from performing critical
activities, such as identifying all of its affected current business
processes so that DHS can analyze how closely the proposed system will
meet the department‘s needs.
GAO‘s preliminary analysis during this review also identified two
issues that pose challenges to the TASC program”DHS‘ significant risks
related to the reliance on contractors to define and implement the new
system and the lack of independence of the contractor hired to perform
the verification and validation (V&V) function for TASC. DHS plans to
rely on the selected contractor to complete key process documents for
TASC such as detailed documentation that governs activities such as
requirements management, testing, data conversion, and quality
assurance. The extent of DHS‘ reliance on contractors to define and
implement key processes needed by the TASC program, without the
necessary oversight mechanisms to ensure that (1) the processes are
properly defined and (2) effectively implemented, could result in
system efforts plagued with serious performance and management
problems. Further, GAO identified that DHS‘ V&V contractor was not
independent with regard to the TASC program. DHS management agreed that
the V&V function should be performed by an entity that is technically,
managerially, and financially independent of the organization in charge
of the system development and/or acquisition it is assessing.
Accordingly, DHS officials indicated that they have restructured the
contract to address our concerns by changing the organization that is
responsible for managing the V&V function.
View [hyperlink, http://www.gao.gov/products/GAO-10-210T] or key
components. For more information, contact Kay L. Daly at (202);
Nabajyoti Barkakati (202) 512-4499.
[End of section]
Mr. Chairman and Members of the Subcommittee:
Thank you for the opportunity to discuss the Department of Homeland
Security's (DHS) current effort--the Transformation and Systems
Consolidation (TASC) program--to implement a consolidated
departmentwide financial management system. Since DHS began operations
in March 2003, it has faced the daunting task of bringing together 22
diverse agencies and developing an integrated financial management
system. DHS officials have long recognized the need to integrate their
financial management systems, which are used to account for over $40
billion in annual appropriated funds. The department's prior effort,
known as the Electronically Managing Enterprise Resources for
Government Effectiveness and Efficiency (eMerge2) project,[Footnote 1]
was expected to integrate financial management systems departmentwide
and address existing financial management weaknesses. However, DHS
officials terminated the eMerge2 project in December 2005,
acknowledging that this project had not been successful. In June 2007,
we reported[Footnote 2] the department had made little progress since
December 2005 in integrating its existing financial management systems,
and that, from an overall perspective, the decision to halt its eMerge2
project was prudent. We made six recommendations focused on the need
for DHS to define a departmentwide strategy and embrace disciplined
processes to reduce risk to acceptable levels.[Footnote 3]
In June 2007, DHS officials announced its new financial management
systems strategy, called the TASC program. At that time, the TASC
program was described as the migration of other DHS component systems
to two existing financial management systems already in use at several
components. After a bid protest was filed regarding the proposed
approach, the TASC request for proposal was revised to acquire an
integrated commercial off-the-shelf software (COTS) system to be
implemented departmentwide. In January 2009 DHS issued its TASC request
for proposal for the provision of an integrated financial, acquisition,
and asset management commercial off-the-shelf software (COTS) system
already in use at a federal agency to be implemented departmentwide.
DHS is currently evaluating the proposals received and expects to award
a contract in January 2010.
Today, our testimony will focus on our preliminary observations related
to our audit of (1) DHS' implementation of the six recommendations we
made in June 2007, and (2) two issues that have surfaced that pose
challenges to the TASC program. We have discussed the preliminary
observations included in this testimony with DHS officials. To address
these objectives, we reviewed the January 2009 request for proposal and
its attachments, such as the Statement of Objectives and Solution
Process Overview, to understand DHS' plans for implementing the TASC
program. We also reviewed other available planning documents, such as
the Acquisition Plan and the draft concept of operations, and
determined the status of these plans and others to see if DHS had fully
implemented our recommendations. We interviewed key officials from DHS'
Office of the Chief Financial Officer and its Resource Management
Transformation Office (RMTO), including its Director and Deputy
Director for elaboration and to provide additional perspectives to the
information contained in these documents. We also reviewed the
Statement of Work for an independent verification and validation (IV&V)
contractor and confirmed key information about this contract with the
Director of RMTO.
We recently provided our draft report, including recommendations, on
the results of our audit to the Secretary of Homeland Security for
review and comment. We plan to incorporate DHS' comments as appropriate
and issue our final report as a follow-up to this testimony. We
conducted this performance audit from March through October 2009 in
accordance with generally accepted government auditing standards. Those
standards require that we plan and perform the audit to obtain
sufficient, appropriate evidence to provide a reasonable basis for our
findings and conclusions based on our audit objectives. We believe that
the evidence obtained provides a reasonable basis for our findings and
conclusions based on our audit objectives.
Background:
Bid protests and related litigation have resulted in changes to DHS'
approach for the TASC program and have contributed to a significant
delay in awarding a contract. The initial TASC approach was to migrate
its component systems to two financial management systems--Oracle
Federal Financials and SAP--that were already in use by several DHS
components.[Footnote 4] Figure 1 shows the key events that have
occurred affecting the TASC program. One of these key events was the
filing of a bid protest regarding DHS' initial TASC approach to migrate
its components to two financial management systems already in use. DHS
subsequently issued its January 2009 TASC request for proposal for the
provision of an integrated financial, acquisition, and asset management
COTS system already in use at a federal agency to be implemented
departmentwide. A second bid protest was filed over this January 2009
request for proposal and the U.S. Court of Federal Claims dismissed the
protestor's complaint, allowing DHS to proceed with this request for
proposal. However, the protestor filed an appeal of this dismissal in
July 2009. DHS responded to the July 2009 appeal in September 2009 and
DHS officials indicated that the protestor responded to DHS' response
in October 2009.
Figure 1: Key Events Affecting the TASC Program:
[Refer PDF for image: chart]
2007: A, S, O, N, D:
8/07: DHS issued a request for proposal for managing the migration of
DHS‘ five different financial management software solutions to a shared
system baseline (Oracle or SAP systems).
10/07: DHS canceled the request for proposal because no offerors had
submitted proposals.
11/07: DHS issued a new, revised request for proposal with the same
purpose as the 8/07 proposal.
2009: J, F, M, A, M, J, J, A, S, O, N, D:
1/08: A financial services company, who was a potential offeror to DHS‘
2007 request for proposal, filed a bid protest with the U.S. Court of
Federal Claims.[A]
3/08: The Court enjoined DHS from proceeding with the November 2007
request for proposal until DHS conducted a ’competitive procurement,“
in accordance with the law.[B]
9/08: DHS issued a notice concerning a new request for proposal to be
issued shortly.
10/08: DHS issued a draft of a new request for proposal for public
comment.
11/08: The original protestor filed a motion with the Court to enforce
the March 2008 injunction.[C]
2009: J, F, M, A, M, J, J, A, S, O:
1/09: DHS issued a new TASC request for proposal for provision of ’an
integrated financial management, asset management and acquisition
management systems solution and performance of TASC support services.“
[D]
2/09: The original protestor filed a new bid protest with the Court,
alleging that DHS violated the March 2008 injunction by proceeding with
the January 2009 request for proposal.
4/09: The Court dismissed the bid protestor‘s complaint, which allowed
DHS to proceed with its TASC request for proposal.
7/09: The original protestor filed an appeal of the Court‘s April 2009
judgment.
9/09: DHS responded to the July 2009 appeal.
10/09: The protestor responded to the DHS September 2009 response.
Source: DHS.
[A] The offeror alleged that DHS had conducted an improper sole source
procurement.
[B] Under 28 U.S.C. § 1491(b), the U.S. Court of Federal Claims has
jurisdiction to render judgments and award relief to an interested
party objecting to a request for proposal issued by federal agencies.
The U.S. Court of Federal Claims issued an order enjoining DHS from
proceeding with this procurement until DHS conducted a competitive
procurement, in accordance with the Competition in Contracting Act (41
U.S.C. § 253), which generally requires executive agencies to procure
property and services through the use of competitive procedures that
allow for full and open competition.
[C] The potential offeror filed a motion with the U.S. Court of Federal
Claims alleging that DHS had violated the Court's March 2008 injunction
against proceeding with the original request for proposal.
[D] Unlike the first two TASC request for proposals, this request was
issued to the public in anticipation of a new contract. The first two
requests for proposals were issued only to awardees of existing
indefinite delivery, indefinite quantity contracts with the expectation
of awarding a task order under one of the existing contracts.
[End of figure]
DHS Has Made Limited Progress in Implementing Our Prior
Recommendations:
In June 2007, we made six recommendations[Footnote 5] to DHS to help
the department reduce the risks associated with acquiring and
implementing a departmentwide financial management system. Our
preliminary analysis indicates that DHS has begun to take actions
toward the implementation of four of the recommendations, as shown in
table 1. However, all six recommendations remain open. We do recognize
that DHS cannot fully implement all of our recommendations until a
contract is awarded because of its selected acquisition approach.
Table 1: DHS' Progress toward Addressing GAO's Recommendations:
Recommendation: Clearly define and document a departmentwide financial
management strategy and plan to move forward with its financial
management system integration;
Some actions taken.
Recommendation: Develop a comprehensive concept of operations
document;
Some actions taken.
Recommendation: Utilize and implement these specific disciplined
processes to minimize project risk: (1) requirements management, (2)
testing, (3) data conversion and system interfaces, (4) risk
management, (5) configuration management, (6) project management, and
(7) quality as;
Some actions taken.
Recommendation: Reengineer business processes and standardize them
across the department, including applicable internal;
No action taken.
Recommendation: Develop a detailed plan for migrating and consolidating
various DHS components to an internal shared services approach if this
approach is sustained.
No action taken.
Recommendation: Carefully consider key human capital practices as DHS
moves forward with its financial management transformation efforts so
that the right people with the right skills are in place at the right
time;
Some actions taken.
Source: GAO analysis of DHS information.
[End of table]
DHS Faces Significant Challenges To Implement Its Financial Management
Strategy and Plan:
DHS has developed certain elements for its financial management
strategy and plan for moving forward with its financial system
integration efforts but it faces significant challenges in completing
and implementing its strategy. DHS has defined its vision for the TASC
program, which is to consolidate and integrate departmentwide mission-
essential financial, acquisition, and asset management systems, by
providing a seamless, real-time, web-based system to execute mission-
critical end-to-end integrated business processes. DHS has also
established several major program goals for TASC which include, but are
not limited to:
* creating and refining end-to-end standard business processes and a
standard line of accounting,
* supporting timely, complete, and accurate financial management and
reporting,
* enabling DHS to acquire goods and services of the best value that
ensure that the department's mission and program goals are met, and:
* enabling consolidated asset management across all components.
DHS officials stated that this system acquisition is expected to take a
COTS-based system already configured and being used at a federal agency
as a starting point for its efforts. This approach is different than
other financial management system implementation efforts reviewed by
GAO where an agency acquired a COTS product and then performed the
actions necessary to configure the product to meet the agency's
specific requirements.[Footnote 6]
Our review found that the strategy being taken by DHS does not contain
the elements needed to evaluate whether the acquired system will
provide the needed functionality or meet users' needs. For example, it
does not require DHS to (1) perform an analysis of the current
processes to define the user requirements to be considered when
evaluating the various systems, (2) perform a gap analysis[Footnote 7]
before the system is selected[Footnote 8] and (3) assess the extent to
which the COTS-based system used at another agency has been customized
for the respective federal entities. Studies have shown that when an
effective gap analysis was not performed, program offices and
contractors later discovered that the selected system lacked essential
capabilities. Furthermore, adding these capabilities required expensive
custom development, and resulted in cost and schedule overruns that
could have been avoided.[Footnote 9] Without a comprehensive strategy
and plan that considers these issues, DHS risks implementing a
financial management system that will be unnecessarily costly to
maintain.
DHS Has Recently Developed a Concept of Operations for the TASC
Program:
The January 2009 request for proposal states that the selected
contractor will be required to provide a concept of operations for
TASC. This concept of operations is expected to provide an operational
view of the new system from the end users' perspective and outline the
business processes as well as the functional and technical architecture
for their proposed systems. On October 21, 2009, DHS provided us with a
concept of operations for the TASC program that we have not had the
opportunity to fully evaluate to assess whether it comprehensively
describes the new system's operations and characteristics. According to
DHS officials, this concept of operations document was prepared in
accordance with the Institute of Electrical and Electronics Engineers
(IEEE) standards.[Footnote 10] However, it is unclear how the DHS-
prepared concept of operations document will relate to the selected
contractor's concept of operations document called for in the request
for proposal.
According to the IEEE standards, a concept of operations is a user-
oriented document that describes the characteristics of a proposed
system from the users' viewpoint. A concept of operations document also
describes the operations that must be performed, who must perform them,
and where and how the operations will be carried out. The concept of
operations for TASC should, among other things:
* define how DHS' day-to-day financial management operations are and
will be carried out to meet mission needs;
* clarify which component and departmentwide systems are considered
financial management systems;
* include a transition strategy that is useful for developing an
understanding of how and when changes will occur;
* develop an approach for obtaining reliable information on the costs
of its financial management systems investments; and:
* link DHS' concept of operations for the TASC program to its
enterprise architecture.
A completed concept of operations prior to issuance of the request for
proposal would have benefited the vendors in developing their proposals
so that they could identify and propose systems that more closely align
with DHS' vision and specific needs.
DHS Has Not Fully Incorporated Disciplined Processes into the TASC
Program:
While DHS has draft risk management, project management, and
configuration management plans, DHS officials told us that other key
plans relating to disciplined processes generally considered to be best
practices will not be completed until after the TASC contract is
awarded. These other plans include the requirements
management,[Footnote 11] data conversion and system
interfaces,[Footnote 12] quality assurance, and testing plans.[Footnote
13] Offerors were instructed in the latest request for proposal to
describe their testing, risk management, and quality assurance
approaches as well as component migration and training approaches. The
approaches proposed by the selected contractor will become the basis
for the preparation of these plans. While we recognize that the actual
development and implementation of these plans cannot be completed until
the TASC contractor and system have been selected, it will be critical
for DHS to ensure that these plans are completed and effectively
implemented prior to moving forward with the implementation of the new
system.
Disciplined processes represent best practices in systems development
and implementation efforts that have been shown to reduce the risks
associated with software development and acquisition efforts to
acceptable levels and are fundamental to successful system
implementations. The key to having a disciplined system development
effort is to have disciplined processes in multiple areas, including
project planning and management, requirements management, configuration
management, risk management, quality assurance, and testing. Effective
processes should be implemented in each of these areas throughout the
project life cycle because change is constant. Effectively implementing
the disciplined processes necessary to reduce project risks to
acceptable levels is hard to achieve because a project must effectively
implement several best practices, and inadequate implementation of any
one may significantly reduce or even eliminate the positive benefits of
the others.
DHS Has Not Yet Identified All Business Processes Needing Reengineering
and Standardization Across the Department:
Although, DHS has identified nine end-to-end business
processes[Footnote 14] that will be addressed as part of the TASC
program, the department has not yet identified all of its existing
business processes that will be reengineered and standardized as part
of the TASC program. It is important for DHS to identify all of its
business processes so that the department can analyze the offerors'
proposed systems to assess how closely each of these systems aligns
with DHS' business processes. Such an analysis would position DHS to
determine whether a proposed system would work well in its future
environment or whether the department should consider modifying its
business processes. Without this analysis, DHS will find it challenging
to assess the difficulties of implementing the selected system to meet
DHS' unique needs.
For the nine processes identified, DHS has not yet begun the process of
reengineering and standardizing those processes. DHS has asked offerors
to describe their proposed approaches for the standardization of these
nine processes to be included in the TASC system. According to an
attachment to the TASC request for proposal, there will be additional
unique business processes or sub-processes, beyond the nine standard
business processes identified, within DHS and its components that also
need to be supported by the TASC system. For DHS' implementation of the
TASC program, reengineering and standardizing these unique business
processes and sub-processes will be critical because the department was
created from 22 agencies with disparate processes. A standardized
process that addresses, for example, the procurement processes at the
U.S. Coast Guard, Federal Emergency Management Agency (FEMA), and the
Secret Service, as well as the other DHS components, is essential when
implementing the TASC system and will be useful for training and the
portability of staff.
DHS Has Not Yet Developed Plans for Migrating the New System to its DHS
Components:
Although DHS officials have stated that they plan to migrate the new
system first to its smaller components and have recently provided a
high-level potential approach it might use, DHS has not outlined a
conceptual approach or plan for accomplishing this goal throughout the
department. Instead, DHS has requested that TASC offerors describe
their migration approaches for each of the department's components.
While the actual migration approach will depend on the selected system
and events that occur during the TASC program implementation, critical
activities include (1) developing specific criteria requiring component
agencies to migrate to the new system rather than attempting to
maintain legacy business; (2) defining and instilling new values,
norms, and behaviors within component agencies that support new ways of
doing work and overcoming resistance t; (3) building consensus among
customers and stakeholders on specific changes designed to better meet
the; and (4) planning, testing, and implementing all aspects of the
migration of the new system. For example, a critical part of a
migration plan for the new system would describe how DHS will ensure
that the data currently in legacy systems is fully prepared to be
migrated to the new system.
An important element of a migration plan is the prioritizing of the
conversion of the old systems to the new systems. For example, a FEMA
official stated that the component has not replaced its outdated
financial management system because it is waiting for the
implementation of the TASC program. However, in the interim, FEMA's
auditors are repeatedly reporting weaknesses in its financial systems
and reporting, an important factor to be considered by DHS when
preparing its migration plan. Because of the known weaknesses at DHS
components, it will important for DHS to prioritize its migration of
components to the new system and address known weaknesses prior to
migration where possible. Absent a comprehensive migration strategy,
components within DHS may seek other financial management systems to
address their existing weaknesses. This could result in additional
disparate financial management systems instead of the integrated
financial management system that DHS needs.
DHS Has Begun Hiring, But Has Not Developed a Human Capital Plan for
the TASC Program:
While DHS' RMTO has begun recruiting and hiring employees and
contractors to help with the TASC program, the department has not
identified the gaps in needed skills for the acquisition and
implementation of the new system. DHS officials have said that the
department is unable to determine the adequate staff levels necessary
for the full implementation of the TASC program because the integrated
system is not y; however, as of May 2009, the department had budgeted
72 full-time equivalents (FTE)[Footnote 15] for fiscal year 2010. The
72 FTEs include 38 government employees and 34 contract employees,
(excluding an IV&V contractor). DHS officials told us that this level
of FTEs may be sufficient for the first deployments of the new system.
According to RMTO officials, as of August 2009, RMTO had 21 full-time
federal employees with expertise in project management, financial
business processes, change management, acquisition management, business
intelligence, accounting services, and systems engineering. In
addition, RMTO officials stated that there are seven contract workers
supporting various aspects of the TASC program. RMTO also utilizes the
services of the Office of the Chief Financial Officer and component
staff. According to RMTO officials, some of DHS' larger components,
such as Immigration and Customs Enforcement have dedicated staff to
work on the TASC program.
Many of the department's past and current difficulties in financial
management and reporting can be attributed to the original stand-up of
a large, new, and complex executive branch agency without adequate
organizational expertise in financial management and accounting. Having
sufficient human resources with the requisite training and experience
to successfully implement a financial management system is a critical
success factor for the TASC program.
Planned TASC Implementation Efforts Pose Unnecessary Risks:
While updating the status of the six prior recommendations, we
identified two issues that pose unnecessary risks to the success of the
TASC program. These risks are DHS' significant reliance on contractors
to define and implement the new system and the lack of independence of
DHS' V&V function[Footnote 16] for the TASC program.
Significant Reliance Placed on Contractors to Define and Implement the
TASC Program:
The department plans to have the selected contractor prepare a number
of key documents including plans needed to carry out disciplined
processes, define additional business processes to be standardized, and
propose a migration approach. However, DHS has not developed the
necessary contractor oversight mechanisms to ensure that its
significant reliance on contractors for the TASC program does not
result in an unfavorable outcome.
Work with other systems acquisition and implementation efforts have
shown that placing too much reliance on contractors can result in
systems efforts plagued with serious performance and management
problems. For example, DHS' Office of Inspector General (OIG) recently
reported[Footnote 17] that the U.S. Customs and Border Protection (CBP)
had not established adequate controls and effective oversight of
contract workers responsible for providing Secure Border Initiative
(SBI) program support services. Given the department's aggressive SBI
program schedule and shortages of program managers and acquisition
specialists, CBP relied on contractors to fill the staffing needs and
get the program underway. However, CBP had not clearly distinguished
between roles and responsibilities that were appropriate for
contractors and those that must be performed by government employees.
CBP also had not provided an adequate number of contracting officer's
technical representatives (COTR) to oversee support services
contractors' performance. As a result, according to the OIG report,
contractors were performing functions that should have been performed
by government workers. According to the OIG, this heavy reliance on
contractors increased the risk of CBP relinquishing its
responsibilities for SBI program decisions to support contractors,
while remaining responsible and accountable for program outcomes.
Verification and Validation (V&V) Review Function for the TASC Program
Was Not Independent:
DHS' V&V contractor was not an independent reviewer because RMTO was
responsible for overseeing the contractor's work and authorizing
payment of the V&V invoices. On October 21, 2009, DHS officials
indicated that they have restructured the V&V contract to address our
concerns by changing the reporting relationship and the organization
that is responsible for managing the V&V contract. Under the previous
arrangement, the V&V contractor was reporting on work of the RMTO, the
program manager for the TASC program and the RMTO Director was serving
as the COTR[Footnote 18] for the V&V contract. As part of the COTR's
responsibilities, RMTO approved the V&V contractor's invoices for
payment. The independence of the V&V contractor is a key component to a
reliable verification and validation function.
Use of the V&V function is a recognized best practice for large and
complex system development and acquisition projects, such as the TASC
program. The purpose of the V&V function is to provide management with
objective insight into the program's processes and associated work
products. For example, the V&V contractor would review system strategy
documents that provide the foundation for the system development and
operations. According to industry best practices, the V&V activity
should be independent of the project and report directly to senior
management to provide added assurance that reported results on the
project's status are unbiased.[Footnote 19] An effective V&V review
process should provide an objective assessment to DHS management of the
overall status of the project, including a discussion of any existing
or potential revisions to the project with respect to cost, schedule,
and performance. The V&V reports should identify to senior management
the issues or weaknesses that increase the risks associated with the
project or portfolio so that they can be promptly addressed. DHS
management has correctly recognized the importance of such a function
and advised us that they have taken prompt steps so that the V&V
function is now being overseen by officials in DHS' Office of the Chief
Information Officer. It is important that V&V is technically,
managerially, and financially independent of the organization in charge
of the system development and/or acquisition it is assessing.
In conclusion, Mr. Chairman, six years after the department was
established, DHS has yet to implement a departmentwide, integrated
financial management system. DHS has started, but not completed
implementation of the six recommendations we made in June 2007, aimed
at helping the department to reduce risk to acceptable levels, while
acquiring and implementing an integrated departmentwide financial
management system. The open recommendations from our prior report
continue to be vital to the success of the TASC program. In addition,
as DHS moves toward acquiring and implementing a departmentwide
financial management system, it has selected a path whereby it is
relying heavily on contractors to define and implement the TASC
program. Therefore, adequate DHS oversight of key elements of the
system acquisition and implementation will be critical to reducing
risk. Given the approach that DHS has selected, it will be paramount
that DHS develop oversight mechanisms to minimize risks associated with
contractor-developed documents such as the migration plans, and plans
associated with a disciplined development effort including requirements
management plans, quality assurance plans, and testing plans. DHS faces
a monumental challenge in consolidating and modernizing its financial
management systems. Failure to minimize the risks associated with this
challenge could lead to acquiring a system that does not meet cost,
schedule, and performance goals.
To that end, our draft report includes specific recommendations,
including a number of actions that, if effectively implemented, should
mitigate the risks associated with DHS' heavy reliance on contractors
for acquiring and implementing an integrated departmentwide financial
management system. In addition, we also recommended that DHS designate
a COTR for the IV&V contractor that is not in RMTO, but at a higher
level of departmental management, in order to achieve the independence
needed for the V&V function. As discussed earlier, DHS officials
advised us that they have already taken steps to address this
recommendation and we look forward to DHS expeditiously addressing our
other recommendations too.
Mr. Chairman, this completes our prepared statement. We would be happy
to respond to any questions you or other Members of the Subcommittee
may have at this time.
GAO Contacts:
For more information regarding this testimony, please contact Kay L.
Daly, Director, Financial Management and Assurance, at (202) 512-9095
or dalykl@gao.gov, or Nabajyoti Barkakati, Chief Technologist, at (202)
512-4499 or barkakatin@gao.gov. Contact points for our Offices of
Congressional Relations and Public Affairs may be found on the last
page of this testimony. In addition to the contacts name above, other
team members include John C. Martin, Senior Level Tech; Chanetta R.
Reed, Assistant; and Sandra Silzer, Auditor-in- Charge.
[End of section]
Footnotes:
[1] The eMerge2 project was expected to establish the strategic
direction for migration, modernization, and integration of DHS'
financial, accounting, procurement, personnel, asset management, and
travel systems, processes, and policies.
[2] GAO, Homeland Security: Departmentwide Integrated Financial
Management Systems Remain a Challenge, [hyperlink,
http://www.gao.gov/cgi-bin/getrpt?GAO-07-536] (Washington, D.C.: June
2; and GAO, Homeland Security: Transforming Departmentwide Financial
Management Systems Remains a Challenge, [hyperlink,
http://www.gao.gov/cgi-bin/getrpt?GAO-07-1041T] (Washington, D.C.: June
28, 2007).
[3] The use of the term "acceptable levels" acknowledges the fact that
any systems acquisition has risks and can suffer the adverse
consequences associated with defects.
[4] Oracle Federal Financials was already in use within the U.S. Coast
Guard, the Transportation Security Administration, and the Domestic
Nuclear Detection Office. SAP was already in use within the U.S.
Customs and Border Protection.
[5] [hyperlink, http://www.gao.gov/cgi-bin/getrpt?GAO-07-536].
[6] GAO, Business Modernization: Improvements Needed in Management of
NASA's Integrated Financial Management Program, [hyperlink,
http://www.gao.gov/cgi-bin/getrpt?GAO-03-507] (Washington, D.C.: April
3; and GAO, DOD Business Systems Modernization: Navy ERP Adherence to
Best Business Practices Critical to Avoid Past Failures, [hyperlink,
http://www.gao.gov/cgi-bin/getrpt?GAO-05-858] (Washington, D.C.: Sept.
29, 2005).
[7] A gap analysis is an evaluation performed to identify the gaps
between needs and system capabilities.
[8] Software Engineering Institute, Rules of Thumb for the Use of COTS
Products, CMU/SEI-2002-TR-032 (Pittsburgh, PA: December 2002).
[9] U.S. Department of Defense, Commercial Item Acquisition:
Considerations and Lessons Learned (Washington, D.C.: June 26, 2000).
[10] IEEE Guide for Information Technology - System Definition -
Concept of Operations (ConOps) Document, Standard 1362-1998.
[11] According to the Software Engineering Institute, requirements
management is a process that establishes a common understanding between
the customer and the software project manager regarding the customer's
business needs that will be addressed by a project. A critical part of
this process is to ensure that the requirements development portion of
the effort documents, at a sufficient level of detail, the problems
that need to be solved and the objectives that need to be achieved.
[12] Data conversion is defined as the modification of existing data to
enable it to operate with similar functional capability in a different
environment.
[13] Testing is the process of executing a program with the intent of
finding errors.
[14] These nine processes are Request to Procure, Procure to Pay,
Acquire to Dispose, Bill to Collect, Record to Report, Budget
Formulation to Execution, Grants Management, Business Intelligence
Reporting, and Reimbursable Management.
[15] According to OMB guidance, an FTE or work year generally includes
260 compensable days or 2,080 hours. These hours include straight-time
hours only and exclude overtime and holiday hours.
[16] Institute of Electrical and Electronics Engineers Standard 1012-
2004--Standard for Software Verification and Validation (June 8, 2005)
states that the verification and validation processes for projects are
used to determine whether (1) the products of a given activity conform
to the requirements of that activity and (2) the software satisfies its
intended use and user needs. This determination may include analyzing,
evaluating, reviewing, inspecting, assessing, and testing software
products and processes. The verification and validation processes
should assess the software in the context of the system, including the
operational environment, hardware, interfacing software, operators, and
users.
[17] Department of Homeland Security, Office of Inspector General,
Better Oversight Needed of Support Services Contractors in Secure
Border Initiative Programs, OIG-09-80 (Washington, D.C.: June 17,
2009).
[18] COTRs are responsible for monitoring the contractor's progress in
fulfilling the technical requirements specified in the contract. COTRs
often approve invoices submitted by contractors for payment.
[19] To provide this objective evidence, V&V contractors analyze,
evaluate, review, inspect, assess, and test software products and
processes.
[End of section]
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