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Monday, September 18, 2006

DHS scuttles Emerge2 program

"The Homeland Security Department has halted all activities under the once-vaunted Emerge2 project, which began as $229 million effort to build one enterprise resource management system across the department and later morphed to a series of planned financial-system migration projects.

DHS financial officials will now suspend all their major financial-system upgrade work while senior management studies the problem.

The department's chief financial officer, David Norquist, told the House Government Reform Subcommittee on Government Management, Finance and Accountability yesterday that, 'With respect to our systems-modernization efforts, let me state that Emerge2 is dead.'

Like other department officials, he declined to fully explain why the project - officially titled the Electronically Managing Enterprise Resources for Government Effectiveness and Efficiency program - to build a new ERP system had been abandoned and changed to an approach under which DHS' various components would migrate their financial work to one of several ERP programs, both inside and outside the department, deemed efficient.

Norquist noted that the Emerge2 documentation set out the right goals, but that 'the problem is that success in all these areas - from consolidated financial reporting to internal controls to the standardization of policies and processes was all wrapped around the implementation of a new system. The approach was not balanced enough across the framework of people, policies, processes, systems and assurance - it was too heavily weighted on systems transformation to lead changes in the other areas. So as our signature systems effort struggled, progress along many other related fronts also struggled.'

Norquist acknowledged that DHS' financial systems remain troubled in that some are aging, others don’t meet user requirements and some systems aren’t integrated across the functions of finance, procurement and asset management.

He noted that after DHS ended the first phase of Emerge2, the department set out to shift its problematic financial systems to efficient, modern ones run by centers of excellence inside and outside DHS.

“While DHS had discussed beginning a series of systems migrations this year, I am not going to undertake this approach until I know that the benefits will outweigh the costs. Migrations can be costly and risky. Migrations take time and effort, and are disruptive. Before we begin making migrations, we must have a solid business case and know how the migrations tie into our longer-range plans,” he told the subcommittee.

Norquist said he plans to combine information from past reviews of the department’s systems with additional analysis to provide an assessment of which DHS financial systems can be improved to meet basic standards with modest changes. He said he expects to use those systems to replace other financial projects that don’t meet minimal standards.

“The good news about all this is that they spent only [less than $20 million] on Emerge2 [in the first phase], while the FBI spent more than $100 million on the failed Virtual Case File project and the [Federal Aviation Administration] spent hundreds of millions of dollars on systems that they later abandoned. DHS pulled the plug early,” said James Lewis, director of the technology and public policy program at the Center for Strategic and International Studies in Washington.

“At an agency like DHS where people still introduce themselves by saingy they are from their legacy agency, you have to do things that move them toward a single agency and this is one of those things,” Lewis added.

Estimates of Emerge2’s final costs have ranged from $9 million to $18 million. Last year, DHS officials stated that some of the work done by the original Emerge2 contractor, BearingPoint Inc. of McLean, Va., would be useful in taking the project forward after the department ended the vendor’s work in December.

The department has never offered a detailed explanation of why the Emerge2 project failed, but some procurement officials have suggested that responsibility for the project’s failure was due partly to actions by DHS and partly to BearingPoint’s activities.

“In Norquist’s defense, he is stopping and trying to figure out where all the pieces are and how to fit them together,” Lewis said. “If he can carry out his plan, we may see a consolidation plan six months from now on a smaller scale.”

The program was also known as Electronically Managing Enterprise Resources for Government Effectiveness and Efficiency, or sometimes as Submerge2. "

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