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Monday, January 14, 2008

Commentary: Other agencies use DoT accounting services

The Transportation Department four years ago completed the conversion of all of its component agencies to a single state-of-the-art financial system using commercial off-the-shelf software. We now provide proven financial system and expert accounting services to other agencies as a federal shared service provider, as designated by the Office of Management and Budget.

In the past, each federal agency developed its own financial system, writing custom software to create unique systems. This resulted in hundreds of different financial systems and was never cost-effective.

Over time, more and more governmentwide accounting standards were mandated. These standards made possible a great change: using standardized commercial off-the-shelf software to replace outdated “home-grown” financial systems that were expensive to operate and maintain. The Financial Systems Integration Office operated by the General Services Administration tests and certifies that vendors’ commercial software meets federal accounting requirements.

After extensive planning and testing, a new financial system called Delphi was implemented in one of Transportation’s components, the Federal Railroad Administration, in April 2000. The remaining components migrated to Delphi over the next 3½ years culminating in November 2003, when the Federal Aviation Administration went live on Delphi with an integrated procurement management system.

Delphi is unique in producing financial statements and reports overnight from the core accounting system. This strengthens internal controls and makes financial reporting faster and more efficient.

Over the last few years, the department has consolidated its operational accounting at the Enterprise Services Center in Oklahoma City. FAA saved $4 million a year by consolidating nine regional accounting offices. Consolidating accounting services makes it easier to standardize business processes, which results in even more cost savings.

The Government Accountability Office, the Commodity Futures Trading Commission, the National Endowment for the Arts and the Institute for Museum and Library Services all use the department’s Delphi system and some or all of our accounting services.

The risk is low because customers get an accounting system that’s been in production for 7½ years, provides all standard federal interfaces, and has been successfully upgraded six times. It is better, faster and cheaper to implement and use the standard Delphi system than it is for an agency to design, implement and operate a new customized system on its own.

Initially, some agencies focused only on consolidating the hosting of their financial systems. This view was too narrow. Merely moving a system from one data center to another provides no net benefit to the government. Plus, hosting is only a small part of the cost of a financial system. The biggest cost is application support — the knowledgeable, experienced professionals who support, enhance and upgrade the system. The only way to minimize the cost of application support is to use a standardized financial system operated by a designated shared service provider.

When you combine the savings of consolidating accounting services with a cost-effective standard financial system, customers realize an even bigger financial advantage. This is good for the users, good for the government and good for the taxpayers.

Ensuring competition among shared service providers initially focused on federal and private-sector service providers competing with each other for new customers. However, Transportation and most other shared service providers use contractors to provide a third, a half or more of the staff resources needed to support our customers. Based on the department’s experience as a shared service provider, we can better ensure competition by having joint public-private teams compete for customers. This simplifies the competitive process and enables customers to take advantage of the unique strengths that both the federal and private-sector providers bring to the table.

The department had made tremendous progress by implementing Delphi and consolidating accounting operations at the Enterprise Services Center. This strategy offers benefits to all federal agencies. For information, visit www.esc.gov.

-Larry Neff, FederalTimes.com
Larry Neff is deputy chief financial officer at the Transportation Department.

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