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Thursday, December 30, 2010

New Comptroller General Formally Sworn into Office

WASHINGTON, D.C. (December 30, 2010) - Gene L. Dodaro was sworn in today as the eighth Comptroller General of the United States and head of the Government Accountability Office (GAO), an independent, legislative-branch agency that helps oversee federal programs.

"It is a great honor and a privilege to lead GAO. I thank the Congress and the President for their bipartisan support," Dodaro said. "As Comptroller General, I plan to build on GAO's proud tradition as a steadfast, non-partisan, professional watchdog for the American people; a trusted advisor to Congress; and a leading advocate for more efficient and effective management across government.

"Looking ahead, the decisions facing policymakers will, in many cases, be difficult ones crucial to our nation's security and prosperity. As in the past, GAO will be there to provide Congress with high-quality, objective, and timely information," Dodaro said.

Dodaro was chosen by President Obama from a list of candidates proposed by a 10 member bipartisan, bicameral congressional commission; the Senate confirmed his nomination on December 22, 2010. The Comptroller General is appointed to a 15-year term. A career civil servant, Dodaro previously held a number of key executive posts at GAO: http://www.gao.gov/cghome/gdbiog.html

Dodaro took the oath of office today at GAO's headquarters in Washington, D.C. and was sworn in by Patrina Clark, Chief Human Capital Officer for GAO. Dodaro has served as Acting Comptroller General since 2008.

Established in 1921, GAO examines how taxpayer dollars are being spent and advises lawmakers and agency heads on ways to make government work better. Recent GAO work has addressed the use of Recovery Act and TARP funds, problems in mortgage financing, the conflicts in Iraq and Afghanistan, food safety, climate changes, postal reform, border security, and the financial pressures facing state and local governments.

Wednesday, December 29, 2010

Financial Blogging, Consulting, Charity And More

I was recently interviewed by Benzinga.com about my blog. Click the link below to learn more about me  and the origination of the Federal Financial Management News Weblog.


GAO: Weaknesses in federal financial management

Bob Dacey, Chief Accountant, Government Accountability Office

For the 14th straight year, the Government Accountability Office announced that it could not issue an opinion on the federal government's consolidated financial statements.

In its report, the GAO highlights three main obstacles:

1.Serious financial management problems at the Defense Department.
2.An inability to effectively report inter-agency expenses.
3.An overall ineffective process for preparing financial statements.

Bob Dacey, chief accountant at GAO, told the Federal Drive that 20 of the 24 agencies of the CFO Act had "clean opinions" on their financial statements. However, in addition to DoD, Labor, Department of Homeland Security and NASA did not have clean opinions, Dacey said.

Dacey said weaknesses in DoD's financial management have been "pervasive and longstanding." Improvements are focused on two areas: budget information and mission-critical assets, he said.

The defense authorization bill includes implementation of the Defense Financial Improvement and Audit Readiness or FIRE Plan, which mandates DoD financial statements be audi-ready by the end of fiscal year 2017.

One problem persistent since consolidated audits started in 1997 is the lack of a standardized process across agencies for identifying interagency transactions, Dacey said.
-Jolie Lee, FederalNewsRadio.com

IBM: 10 principles for federal financial systems projects

Debra Cammer Hines, vice president and partner, and Angela Carrington, partner, IBM Global Business Services

Few types of projects have confounded federal agencies as much as the development of financial systems. So many have been troubled, they drew the interest of the Office of Management and Budget. OMB has ordered time-outs on some of them, and even canceled a few.

The IBM Center for the Business of Government has a new report with some of the ways its experts think could help agencies do a better job. Debra Cammer Hines, vice president and partner in IBM's public sector consulting practice, Angela Carrington, partner with IBM Global Business Services, joined the Federal Drive with the ten principles to best deploy financial management systems following OMB policies.

Download the IBM Report


Sunday, December 26, 2010

Coburn: Control Government Spending or Face 'Apocalyptic Pain'

"Apocalyptic pain" from an out-of-control debt could cause 18 percent unemployment and a massive contraction in the economy that would destroy the middle class, a leading Republican deficit hawk said in an interview that aired Sunday.

Sen. Tom Coburn, R-Okla., who recently issued a report on government waste, warned that the U.S. only has about three or four years to get its fiscal house in order or it could find itself facing austerity measures seen in Greece, Ireland, Spain, Portugal and earlier in Japan.

"The problem that faces our country today, the last 30 years we have lived off the future, and the bill is coming due," he added.

The senator, who was recently elected to a second -- and he pledges -- final term in Congress, said he's not trying to scare anyone, but eliminating waste in the federal government's ledgers is imperative not just to prevent default but a massive implosion that he defined in catastrophic terms.

Coburn said he can come up with $350 billion off the top of his head in inefficiency and waste that could be eliminated without impacting anyone in a practical sense. He noted $50 billion in programs that are duplicative and $100 billion in Medicare and Medicaid fraud that was not addressed in the health care law.

"We have 267 job training programs across 39 different agencies. Why do we have 267 of them? We have 105 programs to encourage people to go into science and technology, engineering and math. That's 105 sets of bureaucrats. None of them have metrics on it," he said.

"The Pentagon can't even audit its own books. It doesn't even know where its money is going. And we refuse to have the tough forces go on the Pentagon so that at least they are efficient with the money they're spending," Coburn added.

In one of his last acts in the lame-duck session that ended last week, Coburn, an obstetrician who earned the nickname "Dr. No" for his refusal to spend taxpayer dollars, was a critical factor in getting a health care program for Sept. 11 responders reduced in scope and cost. The $7.2 billion program was cut to $4.3 billion and was paid for through additional fees and reductions in other spending.


Wednesday, December 22, 2010

2010 Financial Report of the United States Government

Treasury releases the 2010 FRUSG along with its Citizen's Guide to the report.

The fiscal year (FY) 2010 Financial Report of the United States Government (Report) provides the President, Congress, and the American people with a comprehensive view of the Federal Government’s finances, i.e., its financial position and condition, its revenues and costs, assets and liabilities, and other obligations and commitments. The Report also discusses important financial issues and significant conditions that may affect future operations. This year's Report gives particular emphasis to two key issues: the Government’s ongoing efforts to strengthen the economy and create jobs, and the need to achieve fiscal sustainability over the medium and long term.

Download the report here...

Tuesday, December 21, 2010

U.S. Government's 2010 Financial Report Shows Significant Financial Management and Fiscal Challenges

WASHINGTON (December 21, 2010) - The U.S. Government Accountability Office (GAO) cannot render an opinion on the 2010 consolidated financial statements of the federal government, because of widespread material internal control weaknesses, significant uncertainties, and other limitations.

"Even though significant progress has been made since the enactment of key financial management reforms in the 1990s, our report on the U.S. government's consolidated financial statement illustrates that much work remains to be done to improve federal financial management. Shortcomings in three areas again prevented us from expressing an opinion on the accrual-based financial statements," said Gene Dodaro, Acting Comptroller General of the United States.

The main obstacles to a GAO opinion were: (1) serious financial management problems at the Department of Defense (DOD) that made its financial statements unauditable, (2) the federal government's inability to adequately account for and reconcile intragovernmental activity and balances between federal agencies, and (3) the federal government's ineffective process for preparing the consolidated financial statements.

In addition GAO was unable to render an opinion on the 2010 Statement of Social Insurance because of significant uncertainties, primarily related to the achievement of projected reductions in Medicare cost growth. The consolidated financial statements discuss these uncertainties, which relate to reductions in physician payment rates and to productivity improvements, and provide an illustrative alternative projection to illustrate the uncertainties.

Dodaro also cited material weaknesses involving an estimated $125.4 billion in improper payments, information security across government, and tax collection activities. He noted that three major agencies-DOD, the Department of Homeland Security, and the Department of Labor-did not get clean opinions. Nineteen of 24 major agencies did get clean opinions on all their statements.

"Given the federal government's fiscal challenges, it's imperative that Congress, the administration, and federal managers have reliable, useful, and timely financial and performance information. Improved accuracy and transparency in financial reporting are urgently needed," Dodaro said.

Dodaro commended the commitment and professionalism of the Inspectors General across government who are responsible for auditing the annual financial statements of individual federal entities each year.

The fiscal year 2010 Financial Report of the United States Government, which includes financial information from the 24 major federal departments and agencies along with GAO's audit report, is being released today by the Treasury Department. The report is also available on GAO's web site at: http://www.gao.gov/financial.html

Friday, December 17, 2010

Biggest ERP Failures of 2010

No year in the IT industry would be complete without a number of high-profile ERP (enterprise resource planning) project failures, ones that burn through mountains of cash, bring company operations to a standstill, generate bad publicity for vendors and toss careers in the trash.

There's no one reason why ERP projects run off the rails. In fact, you can equate a typical project to a three-legged stool, with the customer, vendor and systems integrator each serving as a leg.

Customers have to plan well, budget enough money for training and evolve their usual way of working. Vendors must deliver software that functions properly and matches up well with a customer's business processes. And implementation teams have to set the right expectations, meet project milestones and avoid waste.

If one or more of these "legs" doesn't hold up, things can get ugly.

-Chris Kanaracus, PCWorld.com

Wednesday, December 15, 2010

FAR update clarifies interagency contracting responsibilities

Anytime the Defense Department hires another federal agency to do procurements for it, those servicing agencies are now responsible in regulation for ensuring that the General Services Administration schedule orders they place on behalf of the DoD comply with Defense regulations.

The new regulation--part of an interim rule made effective Dec. 13 and so subject to change (although, if past experience is anything to go by, minor changes)--settles an argument among federal agencies about how far regulations from the original customer agency penetrate past the level of another federal agency hired to perform procurement services. The answer is all the way.

The rule, in fact, applies to the entire government, but the Defense Department is the federal agency with the most involved set of department-specific regulations and so generally the most likely to have a difference from federalwide regulations. The new rule specifically states that the contracting officer placing the order is responsible for applying the regulatory and statutory requirements of the agency for which the order is being placed. The same goes when establishing a GSA blanket purchase agreement. The new language is part of a revised Part 8.404(b)(1) of the Federal Acquisition Regulation

-David Perera, FierceGovernmentIT.com

Friday, December 10, 2010

January 11, 2010 - AGA Federal Financial System Summit

On January 11th, AGA will host a FREE one-day event in Washington, D.C. that brings together federal financial managers and the private sector executives to discuss the practical implications of the

OMB issued Memorandum M-10-26 . We will hear from several large and small agencies on their approaches to the new requirements and their lessons learned. We will also hear perspectives on where things are moving with technology modernization from both government and private sector.

Featured speaker: Danny Werfel, Controller, U.S. Office of Management and Budget.

CPEs: 7


Thursday, December 09, 2010

DOI's National Business Center (NBC) Posts Financial Management Whitepapers Online

Located within the Department of the Interior, for more than 30 years the National Business Center (NBC) supports the Offices and Bureaus within the Department, as well as federal agencies outside the Department, as a Shared Service Center.   NBC provides a diverse, yet integrated set of administrative solutions, and are currently the only federal agency designated by both OMB and OPM as a Center of Excellence in the financial management and human resources lines of business.

NBC recently updated its Financial Management Resource Library, which includes a series of White Papers.

Visit the NBC Resource Library for Financial Management Here

Friday, December 03, 2010

DHS Transformation Delayed, Again, by Protests

On November 30, 2010 protests were filed with GAO against the award of the DHS TASC contract. 

One protest was filed by the unsuccessful bidder, GCE.  The other was filed by years-long TASC antagonist, Savantage Financial Services - whose legacy software running in multiple DHS component agencies will eventually be replaced by the TASC solution. 

DHS is now forced to wait until March to proceed with much needed transformation and consolidation efforts to improve the effectiveness and efficiency of its homeland security operations.

Below are the protest docket numbers:

Global Computer Enterprises, Inc. (HSHQDC-09-R-00001)

Department of Homeland Security
Outcome: Not Decided
Status: Case Currently Open
Filed Date: November 30, 2010
Due: March 10, 2011
Case Type: Bid Protest
GAO Attorney: Jonathan L. Kang
File Number: 404597.1

Savantage Financial Services, Inc. (HSHQDC-09-R-00001)
Department of Homeland Security
Outcome: Not Decided
Status: Case Currently Open
Filed Date: November 30, 2010
Due: March 10, 2011
Case Type: Bid Protest
GAO Attorney: Jonathan L. Kang
File Number: 404597.2

Thursday, December 02, 2010

Obama administration begins publishing names of federal subcontractors on Web

The U.S. government is giving the public new details about how it is spending taxpayer money on government business.

Starting Wednesday, the Obama administration began publicizing the names of subcontractors - the companies that get the majority of federal contracts - along with the dollar amounts they receive.

For years, the government reported only the companies that won major, or prime, government contracts - even if those companies then hired subcontractors to do most of the job. Now taxpayers can follow more accurately where their dollars are going, tracing public money to the specific companies and communities that share in multimillion- and billion-dollar federal work.

The previous dearth of information about government subcontracts led to incomplete and sometimes misleading conclusions about Uncle Sam's impact on communities.

The new subcontractor details are available on the Office of Management and Budget's Web site, USASpending.gov. Recipients of all federal contracts and grants larger than $25,000 will be required to report the names of companies they hire.

The subcontractors' names are being made public as required by the Federal Funding Accountability and Transparency Act, which became law in 2006 under President George W. Bush. The informations' release is two years behind schedule. A smaller portion of subcontractor information - for contracts larger than $20 million - was made public in October.

-Carrol Leonning, WashingtonPost.com

Wednesday, December 01, 2010

Labor Dept. loses clean audit opinion thanks to IT system

The Labor Department's new $27.6 million (and counting) core financial system prevented the department from producing an auditable financial statement for fiscal 2010. This marks the first time in 13 years that the department has failed to earn a "clean" audit opinion for its financials.

Since January, when Labor turned on the New Core Financial Management System, the department has experienced "significant transaction and reporting errors" in its financial reporting processing primarily caused by NCFMS data migration problems, subsystem interfaces not operating as intended and some processes not functioning well, such as the account for property, plant and equipment, department officials acknowledge in their fiscal 2010 financial report.

KPMG, the department's outside auditors, warned (.pdf) Labor in late 2009 about issues related to the system, but many identified risks were not rectified prior the system's initiation. Labor awarded Reston, Va.-based Global Computer Enterprises a contract in 2008 worth up to $50 million to provide the system, support its implementation and migrate data from the old system.

Among the errors identified by auditors in an initial draft of year-end financial statements is a $4.1 billion discrepancy of liability in $12.1 billion compensation fund for nuclear weapons workers. In order to compensate for NCFMS problems the office of chief financial officer has to hire additional contractors. Bonhert said the additional contractors will cost $10 million and GCE's contract has been raised to $60 million as a result.

-David Perera, FierceGovernmentIT.com

FSIS Posts Financial Management Positions

Branch Chief in the Systems Branch, Beltsville, MD

Public announcement number W-OM-FMD-2011-2004; current/former government employees announcement W-OM-FMD-2011-0006.

A brief summary of the position is below and the full announcement can be accessed on USAJOBS at the attached link (copy and paste the link or locate the job with the vacancy number at http://www.usajobs.gov/).

The Financial Accounting and Systems Branch of the Financial Management Division provides the overall oversight and security access of the Agency within the parameters of the Department's Financial Management Modernization Initiative (FMMI) and related administrative feeder subsystems. The Branch maintains master data, monitors and reports system availability, provides assistance with understanding and retrieving information and monitors and controls system access. They work across FSIS, the Department and the National Finance Center.

For more information please visit the following link:

Branch Chief in the Financial Review and Analysis Branch in Beltsville, MD

Public announcement number W-OM-FMD-2011-2007; current/former government employees announcement W-OM-FMD-2011-0008.

A brief summary of the position is below and the full announcement can be accessed at http://www.usajobs.gov/.

The Financial Review and Analysis Branch negotiates indirect cost rates with recipients (i.e., State Agencies); conducts on-site financial and compliance reviews of recipients' policies, procedures reporting and grant expenditures; performs grant close-out reviews; researches/establishes cost policy for FSIS-USDA programs; and serves as the main liaison between recipients and FSIS-USDA concerning cost issues.

For more information please visit the following link:


Monday, November 29, 2010

DOL Loses Clean Audit Opinion Due to New Core Financial Management System Implementation

The DOL 2010 Annual Financial Statements contain the following excerpt within the "Message from the Chief Financial Officer" (page 31).

"The U.S. Department of Labor implemented a new core financial management system this year to increase productivity and reduce costs when processing financial transactions and preparing financial reports....

As a consequence of converting to the New Core Financial Management System, the auditors were unable to complete a full examination of the Department’s FY 2010 financial statements. Difficulties with the timely
migration of data from the legacy system delayed the new system’s audit readiness, imposing limitations on the auditors’ scope of work which caused the Inspector General to withhold an opinion on the Department’s FY 2010 financial statements.

A clean audit opinion provides independent confirmation that the Department’s financial statements are presented fairly and in conformity with generally accepted accounting principles. Accurate and timely financial information improves the DOL’s accountability to Americans and allows the department to make informed operational, budget, and policy decisions. DOL is committed to regaining the unqualified (clean) audit opinion it held for the previous 13 years."

Further detail is provided in the Independent Auditor's Report (pp. 32 - 64).

Page 33:

"Our consideration of internal control over financial reporting resulted in identifying certain deficiencies that we consider to be material weaknesses and other deficiencies that we consider to be significant deficiencies, as defined in the Internal Control over Financial Reporting section of this report, as follows:

Material Weaknesses

1. Lack of Sufficient Controls over Financial Reporting

2. Lack of Sufficient Controls over Budgetary Accounting

3. Improvements Needed in the Preparation and Review of Journal Entries

4. Lack of Adequate Controls over Access to Key Financial and Support Systems"
Page 34:
"In January 2010, DOL implemented a new financial accounting and reporting system. As a result of the implementation, DOL encountered a significant number of data migration, posting, reconciliation, and reporting issues that hindered its ability to assure the accuracy and completeness of consolidated financial statement balances and to provide data necessary for audit testing.

Specifically, DOL was unable to provide sufficient evidential matter that supports certain balance sheet accounts including fund balance with Treasury, intra-governmental accounts receivable, accounts receivable, other-advances, intra-governmental accounts payable, accounts payable, accrued benefits, and the components of net position, as reported in the accompanying DOL consolidated balance sheet as of September 30, 2010. Certain of these issues also impact the statement of social insurance as of September 30, 2010."

Carter: Incremental development and prototypes for business systems

The Defense Department says it's taking a more incremental development approach to business information technology systems and will require prototypes, starting immediately.

In a Nov. 15 memo, Pentagon acquisition czar Ashton Carter says the department should allow no more than three-and-a-half years of measured time to elapse between the moment when the milestone decision authority approves a business system modernization worth more than $1 million to when the system achieves initial operational capability. If a larger business system effort has been broken down into discrete increments, then the timeline for IOC applies to those increments, says Carter--whose official title is undersecretary of defense for acquisition, technology and logistics.

According to the memo, that means 12 months for assigning a program manager, developing a project plan and getting the investment review board to sign off on the business case. The clock starts ticking again after contract award (the memo doesn't appear to budget time for the procurement process) for a 12 month phase during which the program must produce a prototype. Thereafter, project officials have 18 months to complete engineering development and reach initial operational capability. The timeline, along with all the attendant decision points, is known as the Business Capability Lifecycle.

Overall, no more than five years should pass from when money is first obligated to when an increment of a major automated information system is complete or, should the program not be a MAIS, it achieves initial operational capability, Carter states.

-David Perera, FierceGovernmentIT.com

Wednesday, November 24, 2010

Auditors find financial system material weakness in DHS

Homeland Security Department components continue to struggle with cybersecurity controls over their financial systems, according to annual independent auditor examination of DHS financial statements.
The audit (.pdf)--an "other accompanying information" attachment to the department's fiscal 2010 financial report (.pdf)--finds that problems with information technology controls and system functionality collectively add up to a material weakness.

DHS has "systematic challenges" in complying with security policies and requires a stable and centralized financial system to fully address its problems, the audit states.

Coincidentally, DHS is pressing forward with an enterprise resource planning system meant to be just that, awarding on Nov. 19 a $450 million contract to Arlington, Va.-based CACI International to implement the system.

-David Perera, FierceGovernmentIT.com

U.S. Department of Homeland Security Publishes FY 2010 Performance and Accountability Reports

The Department of Homeland Security's Performance and Accountability Reports provide information that enables the President, Congress and the public to assess the effectiveness of the Department's mission performance and stewardship of resources. In participation with the Office of Management and Budget (OMB) alternative approaches to Performance and Accountability Reporting, the Department publishes the reports listed here rather than the consolidated Performance and Accountability Report published in previous years.

Fiscal Year 2010 Releases

Annual Financial Report for Fiscal Year 2010
(PDF, 316 pages - 10.78 MB), full report; also available by section:

Monday, November 22, 2010

DHS Awards Transformation and Systems Consolidation (TASC) Contract

DHS hires CACI to integrate back-office systems
-Jason Miller, FederalNewsRadio.com

The Homeland Security Department awarded CACI a contract to integrate several back office management systems.

Larry Orluskie, DHS director of communications for the Under Secretary for Management, confirmed that CACI will be the prime contract under the department's Transformation and Systems Consolidation (TASC) program.

TASC could be worth $450 million over a five-year base period and five one-year options.

Sources say it had been on hold until the Office of Management and Budget finished its review of all agency systems.

OMB deputy director for management Jeff Zients announced Friday that of the 20 systems reviewed by the administration, OMB found 10 were on track, five had to be significantly reduced, three had to be accelerated and two were terminated.

Under TASC, CACI will provide an integrated financial management, asset management and acquisition management system. The vendor also will provide program management, change management and integration services to implement and sustain the new system.

"TASC will provide a proven solution that integrates financial, acquisition, and asset management businesses processes, procedures and reporting capabilities," Orluskie said in an e-mail statement.

"The TASC solution will first be delivered to FEMA. Pending successful migration and approval from our Financial Services Advisory Board, the solution will then be delivered to additional components with an identified critical business need," according to Orluskie's e-mail.

Washington Technology first reported the award.

This will be DHS' second time trying to integrate its disparate financial and procurement systems. DHS tried to integrate up to eight different financial management systems in September 2004 when it awarded a $229 million contract to BearingPoint. But after about $52 million and 18 months, DHS canceled the contract.

And TASC hasn't gone smoothly either. DHS first issued the request for proposals in 2008. Savantage Solutions protested the RFP in February 2009.

DHS is placing a lot of expectation behind TASC despite its long history of challenges.

Janie Holl Lute, DHS deputy secretary, said in a recent hearing that DHS established an executive steering committee to make sure TASC meets its goals. Lute added that the program will focus on 18-24 month deployment schedule and a plan to minimize cost and risk.

PUBLISHER'S NOTE: TeraThink Corporation is a protege firm under CACI's mentorship within the Department of Homeland Security and is a prominent member of the CACI TASC team.

OMB cuts back financial management programs

The Office of Management and Budget canceled two federal financial management programs and significantly reduced the scope of five others following a broad review that was launched over the summer.

According to Jeffrey Zients, federal chief performance officer, the OMB canceled systems under development for the Department of Veterans Affairs and the Small Business Administration, saving more than $500 million.

Three financial management programs at the Department of Health and Human Services as well as one at the Department of Homeland Security and one at the Justice Department will proceed with a narrowed scope. The government said the changes will save $680 million.

This summer, the OMB halted new spending on selected federal agencies' financial management systems, requiring reviews before the projects could continue. The agency cited the typical sluggishness and high cost of the projects.

With the review now complete, Zients said about half of the 20 identified programs are on track.

Besides the two cancellations and five scaled-down projects, the OMB has accelerated the most useful parts of the programs of the Department of Housing and Urban Development and the Environmental Protection Agency, according to Zients.

Additionally, the OMB said it has made another $200 million in budget reductions in various agencies.

-Marjorie Censer, WashingtonPost.com

Agencies turn to technology for help reducing payment errors

In the past few years, 14,000 felons, both fugitive and jailed, raked in $230 million in federal benefits they were not entitled to receive. Twenty thousand dead Americans earned $180 million. In 2009 alone, the federal government made $110 billion in improper payments--that's nearly double the amount taxpayers will end up shelling out for the massive financial bailout, according to the latest estimates from the Congressional Budget Office.

The Office of Management and Budget breaks down the numbers like this: One-third of improper payments can be explained by poor documentation that makes it impossible to verify whether they were accurate, and another third result from failure to confirm individuals are eligible to receive the payments in the first place. The rest boil down to simple program errors, or people duping the system.

In July, President Obama signed the 2010 Improper Payments Elimination and Recovery Act, saying it would reduce waste and fraud by $50 billion by 2012. The law requires agencies to conduct recovery audits for programs that spend $1 million or more annually, review programs susceptible to significant payment errors every three years, and plan corrective actions for preventing future waste.

The White House also launched PaymentAccuracy.gov, a public website to track progress in reducing improper payments, and established the Do Not Pay List for agencies to verify individuals' or contractors' eligibility before making payments. Agencies were instructed to establish prepayment controls that systematically confirm eligibility of payment beneficiaries with existing databases, including the Social Security Administration's Death Master File and the General Services Administration's Excluded Parties List System that tracks companies barred from receiving federal contracts. At the same time, OMB is leading an initiative to integrate relevant databases into a central portal agencies can check prior to making payments.

Technology, Werfel agrees, plays a critical role in enabling access and integration of data, "so agencies can make smart, informed judgments before payment are made." But no single technology solution will address all risk of fraud or waste in federal programs. Agencies will have to customize data mining and analytics software to extract patterns from information and to flag anomalies, he says.

The Health and Human Services Department, whose Medicare program accounted for $24.1 billion in improper payments in 2009, according to a June report from the Government Accountability Office, plans to install data analysis tools to root out fraudulent payments in that program, as well as Medicaid and children's health insurance programs. Under a rule introduced in September, the Centers for Medicare and Medicaid Services will deploy computer applications that alert administrators to suspicious activities in the systems that process requests, including unusual patterns in billing and applying for services.

The agency will buy more sophisticated analytical tools to screen applications to enroll in the program and to identify patterns in phone calls to the toll-free Medicare hot line from beneficiaries who flag possible problems in the program. CMS also is seeking public comment on the rule's proposal to collect fingerprints from health care providers and suppliers, which would be checked against law enforcement databases.

Technology solutions depend largely on individual programs, all of which face different challenges in closing loopholes or addressing flaws in their systems. For the Agriculture Department that means finding a way to prevent school employees from ringing up the cost of meals incorrectly, which led to $1.6 billion in improper payments through the School Lunch Program in 2009, INPUT reported. That objective is distinct from HHS identifying individuals attempting to defraud the health insurance system, or the IRS flagging errors taxpayers make in filing their own returns.

Though automated processes can go a long way in identifying anomalies in financial systems, the human element is crucial to targeting the right data and taking steps to address problems once they're identified.

-Jill R. Aitoro, NextGov.com

Wednesday, November 17, 2010

Audio: Danny Werfel and Ken Baer on federal improper payments

The Office of Management and Budget held a press call Nov. 16 to announce that the governmentwide improper payment rate decreased during the last fiscal year to 5.49 percent, down from the 5.65 agencies reported the year before.

That decrease amounts to a $3.8 billion reduction in improper payments, according to OMB officials. However, even as the rate declined somewhat, the absolute number grew by $15 billion to $125 billion during fiscal 2010. An improper payment occurs when a recipient receives either too much or too little of an intended federal payment, or when the recipient misuses the funds, or even when there's a lack of sufficient documentation to prove that a payment was proper.

During the call, OMB Controller Danny Werfel also announced the release of new guidance (.pdf) requiring agencies to submit a payment recapture audit plan.

-David Perera, FierceGovernmentIT.com

For more:
- download the new OMB improper payment guidance (.pdf)

- read a Nov. 16 post on the OMB blog about improper payments

- read Sen. Collins statement

Tuesday, November 16, 2010

NASA Financials Get Clean Bill of Health

WASHINGTON, Nov. 16, 2010 /PRNewswire-USNewswire/ -- The National Aeronautics and Space Administration received a much-improved financial statement audit opinion for the 2010 fiscal year.

"I am pleased to receive this qualified audit opinion that reflects the fact NASA is fairly stating our financial position to our stakeholders," NASA Chief Financial Officer Elizabeth Robinson said. "We are working hard to provide useful, accurate information about our financial results, and this audit opinion is an important achievement in that effort."

It marked the first time since the 2002 fiscal year that independent auditors issued a qualified opinion, with no material weaknesses, rather than a disclaimer of opinion on NASA's financial statements. The agency's independent auditors also reported that, in their opinion, NASA's fiscal 2010 financial statements fairly represent the financial position of the agency as of Sept. 30, 2010, and its budgetary resources for the year that ended. This significant achievement is clear evidence of NASA's progress in financial management during the past decade.

As a result of successful efforts to fully integrate the financial accounting system, the auditors concluded for the first time since the 2000 fiscal year that NASA is now substantially compliant with federal financial management systems requirements of the Federal Financial Management Improvement Act.

AGA Awarded Contract by the U.S. Department of Veterans Affairs to Deliver CGFM Courses to Government Financial Management Staff

ALEXANDRIA, Va.--(BUSINESS WIRE)--Recently, the Association of Government Accountants (AGA) delivered eight sets of Certified Government Financial Manager (CGFM) courses to the U.S. Department of Veterans Affairs’ (VA) employees, as part of the contract awarded to AGA by the VA. The contract spans five years with a potential of 68 sets of CGFM courses to be delivered during this period.

Each set consists of three CGFM courses:

Course 1: Governmental Environment

This course looks at the organization and structure of government, public accountability, ethics in government, the governmental financing process and other legal and environmental aspects of government.

Course 2: Governmental Accounting, Financial Reporting and Budgeting

This course looks at the general principles of governmental financial accounting and performance reporting, and budgeting, as well as the unique aspects of both federal and state and local financial accounting and reporting.

Course 3: Governmental Financial Management and Control

This course looks at internal and management control, auditing, performance measurement and reporting, financial and managerial analysis and techniques, concepts and controls.

The CGFM courses provide a foundation in all areas of government financial management and deal with all levels of government -- federal, state and local. These courses have been designed as high-quality continuing professional education (CPE) for individuals new to the government financial management arena or individual looking to expand their knowledge of this field. These courses also help candidates prepare for the three CGFM Examinations.

About AGA: The Association of Government Accountants is a 15,000-member professional association that serves government accountability professionals by providing quality education, fostering professional development and certification, and campaigning in the public interest to for higher standards of government accountability and transparency. www.agacgfm.org


Monday, November 15, 2010

Today's GAO Publications

The Government Accountability Office (GAO) today released the following reports and correspondence:

The Federal Government's Long-Term Fiscal Outlook: Fall 2010 Update.
GAO-11-201SP, November 15.
Highlights - http://www.gao.gov/highlights/d11201sphigh.pdf
Podcast - http://www.gao.gov/podcast/watchdog_episode_37.html

Financial Audit: Office of Financial Stability (Troubled Asset Relief Program) Fiscal Years 2010 and 2009 Financial Statements.
GAO-11-174, November 15.
Highlights - http://www.gao.gov/highlights/d11174high.pdf

Financial Audit: Federal Housing Finance Agency's Fiscal Years 2010 and 2009 Financial Statements.
GAO-11-151, November 15.
Highlights - http://www.gao.gov/highlights/d11151high.pdf

U.S. Government Accountability Office: Performance and Accountability Report, Fiscal Year 2010.
GAO-11-2SP, November 15.

Friday, November 12, 2010

GAO chastises IRS over financial system cybersecurity

Persistent, serious deficiencies in the Internal Revenue Service's controls over information security remain uncorrected from the last fiscal year, says the Government Accountability Office.

The GAO, in an annual audit of IRS financial statements and internal controls, chastises the tax agency for not adhering to the least privilege principal of network access and leaving uncorrected an access control weakness in the Redesign Revenue Accounting Control System that compromised the IRS's ability to segregate duties. The RRACS weakness "jeopardized the integrity of the application's data," the GAO audit states.

None of the information security holes undermined the validity of IRS financial statements, but GAO auditors say that manual compensation for information security vulnerabilities is disappearing as an option for the IRS.

As automation takes over the agency--as it's meant to do, under a multi-billion modernization effort--manual options will simply not be possible, the GAO says.

Failing to resolve those deficiencies "could have serious adverse implications for our ability to determine whether IRS's financial statements are fairly stated in the future," auditors warn.

-David Perera, FierceGovernmentIT.com

- download the report, GAO-11-142 (.pdf)

Postal Service posts $8.5 billion loss

The cash-strapped U.S. Postal Service delivered more bad news Friday, announcing it lost $8.5 billion in the fiscal year that ended in September. Without congressional action to change its obligations, officials said, the Postal Service likely will go broke at the end of fiscal 2011.

Letter carriers delivered 6 billion fewer pieces of mail in fiscal 2010, with a significant drop in first-class mail deliveries, officials said. Financial losses also came from about $5.4 billion in obligations to pre-fund future retiree health benefits and about $2.5 billion paid to the federal government's workers' compensation insurance fund.

Outgoing Postmaster General John E. Potter said last month that he anticipated at least $6 billion in annual losses, but cautioned the number would likely go higher once the mail service tallied its workers' compensation contributions. All federal agencies and the Postal Service, a quasi-federal outfit, have workers' compensation obligations to help fund four major disability compensation programs.

The Postal Service also announced Friday that it plans to deplete its $15 billion line of credit with the U.S. Treasury by borrowing the remaining $3.5 billion available to it. Though the Postal Service does not use taxpayer funding, it has tapped the credit line since the early 1990s. Depleting it means the Postal Service likely will go broke at the end of fiscal 2011 unless Congress takes action, officials said.

-Ed O'Keefe, WashingtonPost.com

Monday, November 08, 2010

DoD IG blasts Army LMP

The Defense Department inspector general is calling into question an Army Materiel Command implementation of a $1.1 billion enterprise resource planning effort known as the Logistics Modernization Program.
LMP is an installation of SAP software by Computer Sciences Corp, which began work in December 1999. The inspector general says, in a report dated Nov. 2, that the system doesn't record financial data at the transaction level, meaning that the Army Working Capital Fund cannot receive an unqualified audit opinion.

Defense Department accounting is notoriously messy, with auditors unable to reconcile DoD or military service financial statements. The department says it can have clean books by 2017, provided that auditing guidelines are modified.

Because the service will have to spend additional money on top of the $1.1 billion it already spent on LMP through fiscal 2009 to capture transactional data, report author Mary Ugone, deputy inspector general for auditing, recommended that the Army suspend further deployment of LMP. It's a recommendation that the Pentagon comptroller and the deputy chief management officer disagreed with and CSC announced on Nov. 3 the third and final phase of LMP implementation.

Ugone also recommended that the Pentagon conduct an analysis of alternatives to determine whether it might be more cost-effective to cancel LMP and look at alternative solutions in order "to obtain DoD compliance with the U.S. Government Standards General Ledger requirements." That's also a recommendation that the comptroller and deputy chief management officer disagreed with.

However, Pentagon officials did say they will ponder the future direction of LMP and issue an acquisition decision memorandum. A September meeting of the DoD investment review board also required the Army to come up with an overall Army ERP strategy by this December, the report states.

LMP will be subject to a review by the Office of Management and Budget as part of an evaluation of federal financial management system projects, the report adds.

-David Perera, FierceGovernmentIT.com

- download the report, D-2011-015 (.pdf)

Single-audit database would increase efficiency

States, nonprofits and other groups that annually expend $500,000 or more in federal awards are required to obtain an annual audit under the 1996 Single Audit Act Amendments and Office of Management and Budget Circular A-133. Requiring a single audit of an organization is intended to be a cost-effective measure, in place of requiring multiple audits of individual programs.

An interactive database would allow OMB to begin analyzing single audit reports instead of just collecting them. A recent research project sponsored by PricewaterhouseCoopers under the Association of Government Accountants' Corporate Partner Research Series was able to exploit existing technologies to transform single audit reports from PDF files to digital text and then to digitally link the collection form and the auditor's report. Once converted, the reports became searchable with intelligent and intuitive software that could articulate findings for a program across entities, across all programs within an entity, and between entities.

This is a great opportunity to turn this investment of 15 years and almost 500,000 reports into something useful. Going back just three years would create data trends sufficient to permit analysis that might help identify in advance high-risk recipients, or better yet, high-risk applicants.

Think of the possibilities. Details of audit findings could be examined: for a program across entities, to identify common issues with a program and type of entity; across all programs within an entity to identify common issues with an individual entity; and between entities to identify common issues occurring at a state level.

Another purpose for an interactive single-audit database would be to track corrective action plans to identify recurring or uncorrected problems, and to obtain metrics for how well the recipient is performing and how well the single audit is working.

-Joeseph Kull, FederalTimes.com

Saturday, November 06, 2010


WASHINGTON – The Department of Justice announced that another of its components, the Bureau of Alcohol, Tobacco, Firearms and Explosives (ATF), implemented the Unified Financial Management System (UFMS), a core centralized accounting system that improves internal controls and standardizes data.

ATF is the second department law enforcement organization to convert to UFMS as the financial system of record. The Drug Enforcement Administration (DEA) implemented UFMS in January 2009, following a pilot deployment to the Justice Management Division’s (JMD) Asset Forfeiture Management Staff. UFMS now serves more than 2,500 Department of Justice users worldwide.

The ATF implementation was completed on schedule and on budget, employing a two-phased approach to minimize risk and capitalize on lessons learned from earlier implementations. More than 95 percent of ATF’s requirements were met by the standard processes, interfaces and reports already designed and available in the department’s foundation build of UFMS. As a result, the initial design and development was done on time, and deployed to many users.

The department shares the Office of Management and Budget (OMB)’s goal to reduce the risks and costs of implementing federal financial management systems. The most critical department business need for core accounting functionality is delivered by UFMS, implemented in phases across components with defined milestones, the department said.

The implementation of UFMS, based on CGI Federal’s Momentum 6.3, is a collaborative effort by JMD and ATF with the systems integrator, IBM.

For more information on the department’s UFMS program, visit: www.justice.gov/jmd/ufms/overview.htm

Tuesday, November 02, 2010

Today's GAO Publication

The Government Accountability Office (GAO) today released the following report:

Reissued Product
1. Recovery Act: Department of Justice Could Better Assess Justice Assistance Grant Program Impact. GAO-11-87, October 15.


Highlights - http://www.gao.gov/highlights/d1187high.pdf

Monday, November 01, 2010

Cashing out: 3SB financial management companies drawdown

JOINT BASE BALAD, Iraq— As phase two of the reduction of forces in Iraq begins, units are continually finding ways to do more with less. The same holds true for financial management companies across Iraq.

The 82nd Financial Management Company, 3rd Special Troops Battalion, 3rd Sustainment Brigade, 103rd Sustainment Command (Expeditionary), handed off operations Oct. 8 to the 15th FM Co., 3rd STB, 3rd Sustainment Bde., 103rd ESC, leaving the 15th FM Co. as the lone financial management company in Iraq.

In February of this year, there were 15 finance detachments spread throughout Iraq. After the initial reduction of U.S. Forces Sept. 1, that number was reduced to eight, which left room to reduce the number of U.S. Forces even further by doing away with one of the finance headquarters.

The entire process of transfer took approximately two weeks, administratively speaking, said Heckel. That doesn’t include the time it took to move approximately $16 million dollars and Iraqi dinar from the 82nd FM Co.’s vault at JBB to the 15th FM Co.’s vault at Victory Base Complex, Iraq, which was completed Oct. 15.

For the 15th FM Co., this is the culmination of a mission that started 11 months ago, said Maj. Jason Shick, commander of the 15th FM Co., and Bremen, Ohio, native.


Monday, October 11, 2010

Financial management systems in need of upgrade

FederalNewsRadio.com In Depth with Francis Rose interviews:
Bob Tobias, director of public sector executive education, American University

Managers are being asked to "do more with less." Making smart choices requires a strong financial management system, but many agencies just don't have one in place.

"Many departments find it incredibly difficult because it's very expensive. By the time an agency gets all of its individual ... agencies in identifying what it needs and developing the IT project, the IT has made advances and then it's back to the drawing board," said Bob Tobias, director of public sector executive education at American University, in an interview with In Depth with Francis Rose.

When it comes to financial management systems, one of the biggest debated issues is whether or not to "start from scratch with a new fiscal year." One option for agencies is a financial management software package, but Tobias rejects using a software package, saying it does not solve the problem of transferring the agency's current data into the package.

The Office of Management and Budget requires five-year rolling budgets. Maintaining two separate systems and reconciling those systems every year "creates cost-efficiency and effectiveness problems," Tobias said.

An overhaul of financial systems is a tough sell to lawmakers, who take a "if it's not broken, don't fix it" stance, Tobias said. He added that Congress and the Obama administration are more concerned with creating public policy than maintaining and implementing those policies already created.

In order for the financial systems to be updated, a "confluence of events" have to happen, including credibility with Congress, the GAO and inspectors general about the need, cost and staffing to design and implement a program.
This all requires "a great deal of significant leadership time, energy and effort by political appointees who turn over pretty quickly," Tobias said.

Compounding this problem is the current budgetary standstill, with the federal government operating on a continuing resolution.


Friday, October 08, 2010

Today's GAO Publication

DOD Business Transformation: Improved Management Oversight of Business System Modernization Efforts Needed. GAO-11-53, October 7.

Highlights - http://www.gao.gov/highlights/d1153high.pdf

Wednesday, October 06, 2010

Auditor questions DoT financial system database

The Transportation Department's shared service center for federal financial management systems could be operating a database for which new security upgrades aren't provided, according to the Transportation inspector general.

In a report dated Oct. 5, the OIG says contractor auditor Clifton Gunderson, of Calverton, Md., found that the shared service center has been operating a Delphi financial system on a database whose vendor stopped providing security updates in February 2009.

Transportation operates the center as one of four financial systems shared service providers that support other federal agencies under a George W. Bush-era Office of Management and Budget initiative known as the lines of business. In addition to providing financial system support services to DoT, the center also supports a clutch of small agencies including the Government Accountability Office. Current OMB policy no longer requires that agencies at least consider utilizing a shared service provider when upgrading their financial systems.

In its response to the audit, the Transportation office of chief financial officer--which manages the center--said the Delphi operating system never went out of support. "The software remains supported by Oracle (NASDAQ: ORCL) and will continue to be until we move the system to an updated version of the software," wrote David Rivait, the DoT deputy CFO.

The audit otherwise found that the center's controls are suitably designed to meet their objectives and that tested controls "operated with sufficient effectiveness to provide reasonable, but not absolute, assurance."

-David Perera, FierceGovernmentIT.com

Friday, October 01, 2010

DHS management improvements start with acquisition

The Homeland Security Department is tackling one of its biggest management problems first as part of its overall approach to complete its transformation and get off the government's high-risk list.

Janice Holl Lute, DHS deputy secretary, told Senate Homeland Security and Governmental Affairs lawmakers Thursday that it was improving all stages of its acquisition process as part of its overall management integration effort.

One of the end results, Lute said, is to get off the Government Accountability Office's high-risk list, which is due out in January. DHS management has been on the list since Congress created the agency in 2003.

She added that DHS has reevaluated every performance measure - 180 in all. Lute said the agency has recast them in plain language so they provide indicators of the value the program brings to the mission.

Lute said DHS is focusing on seven initiatives that will contribute to the integration of the department's management. These include enterprise governance, balanced workforce strategy, headquarters consolidation and data center migration.

But it's coming up with a common language and business discipline across their acquisition, financial management and human capital management processes that will make the biggest difference.

She added that DHS is taking additional steps from integrating science and technology to a greater extent to instituting acquisition career development programs to strengthening their procurement staffing.

The department also is conducting regular reviews of project portfolios. Besides the acquisition processes and workforce, Lute said DHS is moving ahead with its financial systems consolidation project, known as TASC.

Industry sources expected DHS to make an award in August for the $400 million program. But the Office of Management and Budget slowed down all financial systems projects for review.

Lute said DHS is following OMB's requirements to focus on specific needs of the components based on risk.

She said once awarded TASC will focus on 18-24 month deployment schedule and a plan to minimize cost and risk.
-Jason Miller, FederalNewsRadio.com

GAO: Pentagon is years from achieving clean financial books

The Defense Department is making progress toward the long-sought goal of putting its financial books in order, but it will take an extended commitment to get there, a top Government Accountability Office official told senators at a Wednesday hearing.

The Pentagon's business operations have long been on GAO's high-risk list. It is under orders from Congress to have its financial statements in auditable shape by 2017.

In the past, the Pentagon's efforts have been hindered by faulty requirements management, systems testing, and oversight, said Asif Khan, GAO's director of financial management and assurance.
Subcommittee Chairman Tom Carper, D-Del., said new military accounting systems are years behind schedule and at least $6.9 billion over their original budget.

Republican lawmakers were critical of the Pentagon's performance.

-Sean Reilly, FederalTimes.com

DoD will spend at least $6.9 billion more on ERPs

The future financial systems health of the Defense Department depends on enterprise resource planning projects that are mostly late and over budget, according to the Government Accountability Office.

In testimony presented Sept. 29 before a Senate Homeland Security and Government Affairs subcommittee, the GAO said the Defense Department has identified 10 ERPs essential to transforming its business operations. Of those ten, so far one--the Defense Logistics Agency's Business System Modernization--has been implemented despite $5.8 billion already spent, according to the GAO.

That spending figure will likely increase by at least another $6.9 billion, according to figures in the GAO's prepared testimony.

During the hearing, Defense officials emphasized the importance of ERPs in making the notoriously messy DoD books auditable at fiscal year's end. The 10 ERPs being implemented should replace more than 500 legacy systems.

As for the department's stated goal of achieving a clean audit by 2017--a goal that previously was by 2007, but which was changed after the Pentagon realized it would be impossible--Robert Hale, the DoD comptroller and chief financial officer, said it's doable. That is, doable for budget information and information pertaining to mission critical assets.

"If we try for everything, I'm afraid we'll get nothing once again. I believe firmly we've got to pick some priorities and go after it. The only way, in my mind, to set those priorities is to focus on what we use to manage in the Department of Defense," Hale said.

Under current audit guidelines, a clear financial picture in those areas would be insufficient to get a clean audit, Hale acknowledged. The rules might need to be changed, he added, since the hurdle to getting a clean audit would be historical asset cost data.

-David Perera, FierceGovernmentIT.com
For more:
- go to the hearing webpage, complete with prepared statements, or go directly to the webcast
- download the GAO's prepared testimony (.pdf)
- read the fiscal 2010 Defense authorization bill

Monday, September 27, 2010

Bob Hale to explain the impact on the Financial Management community of Secretary Gates’ 8 Initiatives (Audio Conference)


HUD Re-awards HIFMIP Contract

After more than three years of proposal reviews, initial award, protests, re-submissions from vendors, re-evaluations, and re-protests, HUD's Contracting Office released an Award Notice on September 24, 2010 for the HUD INTEGRATED FINANCIAL MANAGEMENT IMPROVEMENT PROJECT (HIFMIP). Contract #C-OPC-23053 was awarded to IBM Global Business Services on September 23, 2010 for a maximum total value of $213,430,963.

Industry watchers see this award as a promising sign that OMB will allow additional departments and agencies to proceed with much needed financial management modernization programs.

HUD Re-Awards HIFMIP Contract to IBM

After more than three years of proposal evaluations, protests, re-submissions from vendors, and re-protests, HUD's Contracting Office released an Award Notice on September 24, 2010 for the HUD INTEGRATED FINANCIAL MANAGEMENT IMPROVEMENT PROJECT (HIFMIP). Contract #C-OPC-23053 was awarded to IBM Global Business Services on September 23, 2010 for a maximum total value of $213,430,963.

Industry watchers see this as a promising sign that OMB will allow additional departments and agencies to proceed with much needed financial management modernization programs despite the recent halt in activity due to OMB reviews.

Friday, September 24, 2010

Senators seek to remove special inspector general for Afghanistan

Four senators have asked President Obama to remove Arnold Fields as the special inspector general for Afghanistan reconstruction, saying a recent government review had found major deficiencies in audits carried out by Fields's office.

Twice in the past 18 months "we have repeatedly raised concerns regarding performance of the SIGAR," wrote Sen. Claire McCaskill (D-Mo.), chairman of the homeland security subcommittee on contracting oversight. She was joined in the letter by Sens. Tom Coburn (R-Okla.), Susan Collins (R-Maine) and Charles E. Grassley (R-Iowa). SIGAR is the abbreviation for Fields's office.

SIGAR spokeswoman Susan Phelan said that Fields was en route to Afghanistan and that she had no direct comment on the senators' letter. Phelan said Fields had welcomed recommendations made by the Council of Inspectors General on Integrity and Efficiency, an independent government organization that carried out the review, and had vowed to implement them by Sept. 30.

In February of this year, the Council of Inspectors General began its review, which Fields initiated, according to SIGAR's Web site. That review "found multiple major deficiencies in SIGAR audits including failure to meet minimum standards for quality control," the senators wrote.

McCaskill and others have in the past recommended that the office of the special inspector general for Iraq reconstruction, a parallel organization run by Stuart W. Bowen Jr., a figure popular on Capitol Hill, be merged with SIGAR so that there is only one inspector general for work in both countries.

-Walter Pincus, WashingtonPost.com

Tuesday, September 21, 2010

How to work under a CR

As each day passes, it's becoming more likely that many agencies will soon need begin running federal programs with temporary funding. The current budget year ends on September 30th. And Congress still hasn't finished work on permanent spending bills for 2011.

Experts say they'll probably have to pass a continuing resolution (CR) to keep government running. That means no new programs for your agency, at least until those permanent spending bills become law.

While CRs "seem to be becoming a way of life for federal managers," John Palguta is the vice president for policy at the Partnership for Public Service told Federal News Radio, "it is frustrating because you would love to know 'how much money do I have to spend so let me go about getting the job done,' and under a continuing resolution, you don't know."

- Suzanne Kubota , Senior Internet Editor, FederalNewsRadio.com


Oracle Unveils Oracle Contract Lifecycle Management for Public Sector

Co-Development Agreement With CACI Delivers Automated Procurement Contract Processes for Public Sector Organizations
News Facts

-- To help public sector organizations author, execute and manage both routine and complex procurement contracts, Oracle today announced the availability of Oracle Contract Lifecycle Management for Public Sector, developed in co-operation with CACI.

-- By providing complete end-to-end acquisition and contract writing capabilities, Oracle Contract Lifecycle Management for Public Sector enables organizations to audit all categories of government spending by increasing transparency and providing clear accountability.

-- Oracle Contract Lifecycle Management for Public Sector builds on the advanced procurement capabilities within the Oracle E-Business Suite 12.1 and is fully integrated with Oracle Federal Financials. Oracle Contract Lifecycle Management for Public Sector delivers clear visibility into procurement contracts helping to achieve compliance with federal mandates such as the Federal Acquisition Regulation (FAR) and the Defense Federal Acquisition Regulation Supplement (DFARS).


SOURCE: Oracle Corporation


Youtube Video Available: http://www2.marketwire.com/mw/frame_mw?attachid=1366949

Monday, September 20, 2010

GSA may have caused agencies to violate bona fide rule

The General Services Administration might have caused agencies to inadvertently break the rule restricting the use of one fiscal year's funds for services rendered in another.

In a report dated Sept. 13, the GSA inspector general says the agency's HSPD-12 managed service office set up an interagency agreement for other federal entities to purchase private sector support in implementing the homeland security presidential directive, which requires standardized identity cards for government workers.

The GSA office has treated HSPD-12 support as a "nonseverable" service, meaning that GSA said the value of the service depends on a discrete outcome, such as is the case with a research project. With a nonseverable service, the benefit of the service isn't realized until the project reaches completion.
However, the Government Accountability Office ruled (.pdf) last December that the HSPD-12 services in question are in fact "severable." That is, they are recurring in nature, which means that the value of the service doesn't depend on a single outcome as with a research report, but is realized periodically through the life of the service contract. Other examples of severable services include janitorial work and help desk support--the value of the service contract is incrementally realized every time a bathroom floor gets mopped.

The difference between "nonseverable" and "severable" matters because of something called the bona fide rule of federal spending, which is meant to uphold the part of the Constitution that prevents federal agencies from spending money without congressional approval. The bona fide rule states that a federal agency can spend money tied to a particular fiscal year only for needs which it has during that current fiscal year. That is, agencies must have a sincere (a bona fide) reason for spending current fiscal year money, the sincerity (the bona fideness) measured by its current, not future, needs.

For future needs, Congress demands the right to evaluate their legitimacy via an annual appropriations bill. The bona fide rule should make it impossible for a federal agency to use funds appropriated this fiscal year for something it won't need until the next fiscal year.

However, agencies are allowed to fully fund nonseverable service contracts with current fiscal year appropriations, even if their outcome will occur in future fiscal years. They are also allowed to fund severable service contracts with current fiscal year funds for a period of up to 12 months, even if that 12 month period crossed the federal fiscal year, which starts every Oct. 1. (We are in the final weeks of fiscal 2010.)

However, the 12 month rule for severable services also means that a contract for them cannot be open-ended with respect to the period of performance--exactly as the GSA interagency agreement was constructed, the GAO found. GSA officials told the GAO they consider HSPD-12 services to be nonseverable because each card has a life cycle consisting of a bundle of tasks, none of which would have value standing alone. However, the GAO ruled otherwise, stating that the services purchased via the GSA interagency agreement consist of two discrete undertakings--production of HSPD-12 identity cards, and maintenance of the cards. The latter is a severable service, the GAO said.

-David Perera, FierceGovernmentIT.com

Sunday, September 19, 2010

OMB's new approach to agency financial modernization lacks strategy, says GAO

The Office of Management and Budget's new approach to federal financial system modernization is riddled with uncertainty, according to a new Government Accountability Office report.

Specifically, although OMB has directed agencies to adopt to-be-developed common automated solutions for certain common transactions and warned them against financial system projects that take longer than 24 months to implement, it nonetheless lacks a strategy and a concept of operations to guide implementation efforts, the GAO states. The congressional watchdog issued its report on OMB's new financial system modernization thinking on Sept. 8.

For example, when it comes to agency adoption of common processing solutions--such as for intergovernmental transactions--without an established concept of operations, it's unclear how those common solutions will integrate with existing core financial systems, the GAO notes. The report cites Institute of Electrical and Electronic Engineering guidance which states that a concept of operations is normally one of the first documents produced during a disciplined development effort.

OMB official told GAO auditors they're developing a concept of operations, but did not provide a timeframe for its completion. OMB officials also said they're updating OMB Circular A-127 to include new standards for agencies when developing and updating federal financial management system requirements. However, GAO auditors add that it's not clear whether OMB will keep those standards up to date, and if it won't, then which organization will.

As for OMB's directive that agencies not implement financial system efforts that take longer than 24 months to complete, the GAO report says OMB lacks guidance to ensure that such efforts provide needed functionality rather than merely comply with a scheduled deadline.

-David Perera, FierceGovernmentIT.com

For more:
- download the report, GAO-10-808 (.pdf)
- download OMB memo M-10-26 (.pdf), which outlines OMB's new approach to federal financial systems

Friday, September 17, 2010

OMB redefines federal financial health

Now armed with a newly signed Improper Payments Law, Office of Management and Budget controller Danny Werfel said it's time to re-think improper payments as "a key indicator of the health of federal financial management in the government today."

He told the gathering of federal, state, and local financial managers even though he understands the importance of audits as a tool of financial management in government, he is now also mindful of the shifting public perception of government spending. At the Association of Government Accountants, on the second day of their Internal Control and Fraud Conference Thursday, he suggested the issue of improper payments means more to citizens than the holy grail of the clean audit opinion.

Werfel used his AGA talk to offer some of the most current thinking on the topic of fraud and improper payments to come from OMB since Congress passed, and the President signed, a new Improper Payments bill into law within the last several months.

For one thing, he said his office is mulling over guidance on the issue of single audits, and was asked when it might be forthcoming.

Werfel also talked about the genesis of the new Improper Payments Law, and how it combined the best of the old Improper Payments Act of 2002, and the Recovery Audit Act. He said the new law reflects some lessons learned, the first being the need for partnerships between the federal, states and local auditing communities.

Werfel said it's important that financial officials understand the need to make adjustments when rules for good financial accountability and fraud avoidance become an unfair hurdle to citizens.

Finally, Werfel told his AGA audience that he's very excited about the possibilities surrounding a recently-unveiled fraud detection tool developed by the Recovery, Accountability and Transparency Board, which tracks the economic stimulus program.

Responding to a question, Werfel said that as the Recovery Board fraud tool is further developed and refined, OMB will work with the state and local auditing community about the possibility of sharing it.

-Max Cacas, FederalNewsRadio.com

OMB claims two cancellations, two re-scopings in financial management IT reviews

Office of Management and Budget-led reviews of agency financial management systems have resulted in the cancellation of two such efforts and a significant paring of two others, said Controller Danny Werfel during a Sept. 15 call with reporters.

Specifically, the Small Business Administration has canceled its planned Loan Management and Accounting System and the Veterans Affairs Department scratched the financial management portion of its Financial and Logistics Integrated Enterprise project. Those agencies would have spent $113 million and $423 million on the demised projects, respectively, according to federal officials.

Also, the Environmental Protection Agency has cut $180 million worth of future planned spending on its Financial System Modernization Project while the Department of Housing and Urban Development has taken a red pencil to $44 million of planned spending for its HUD Integrated Financial Management Improvement Project.

OMB told agencies in June to freeze spending on financial management systems worth more than $20 million until OMB has reviewed them; the reviews on all 20 affected systems should be complete by mid October, Werfel said.

Which projects are scuppered or re-scoped isn't necessarily function of how badly managed they may be, Werfel added.

Competing priorities or changing technology needs with a federal agency might mean that money meant for a financial management system could be better reallocated elsewhere, Werfel said.

At the very least, that's what happened with the SBA project, Werfel said. As for whether the functionality and anticipated funding removed from the EPA and HUD projects is restored, that depends on agency and agency contractor performance in the meantime, he added.

For more:

- listen to audio of the Sept. 15 press call with Danny Werfel; also briefly on the call was Jeffery Zients, deputy director for management and OMB.

- read a Sept. 15 blog post by Zients on the reviews

-David Perera, FierceGovernmentIT.com

Tuesday, September 14, 2010

Federal agencies cutting, revising $337 million worth of IT contracts

The Office of Management and Budget on Wednesday plans to announce the cancellation or restructuring of three multiyear information technology contracts totaling $337 million, according to senior administration officials.

The changes are part of the Obama administration's budgetary and management reforms designed to cut billions of dollars in wasteful and no-bid government programs and contracts.

According to the OMB, the Environmental Protection Agency plans to save $180 million and the Department of Housing and Urban Development will pocket about $44 million by restructuring two long-term IT contracts. The Small Business Administration should save $113 million by canceling a contract.

The Department of Veterans Affairs in July canceled a similar multiyear IT project slated to cost as much as $300 million. Other agencies may cancel or rewrite similar deals in the coming months, the OMB said.

The cuts announced Tuesday are "a classic outcome of what we expected when we looked more closely at these projects," said OMB Controller Danny Werfel. Though they amount to a small fraction of the $80 billion in annual federal IT costs, they are part of a series of reforms announced since the spring that administration officials hope demonstrate the White House's resolve to curtail government spending as deficit concerns dominate midterm election campaigns.

The cuts - and their impact on several Washington-area contracting firms - come as the Senate plans to pass a multibillion-dollar package of loans and tax relief for small businesses. They also add to growing fears that the Washington region could face significant layoffs as the government slashes billions in contracting deals.

In an interview Tuesday, OMB Deputy Director Jeffrey Zients said: "Our job is to focus on making sure every taxpayer dollar is well spent. There are plenty of opportunities for us to spend dollars on IT projects that have very high returns for taxpayers. We're going to make sure that the dollars are spent on high-return projects."

By Ed O'Keefe and Marjorie Censer
Washington Post Staff Writers
Tuesday, September 14, 2010; 10:35 PM

ed.okeefe@washingtonpost.comcenserm@washpost.com Staff writer Dana Hedgpeth contributed to this report.

Find More:

Obama administration's IT Dashboard, a public Web site that compiles data on federal agencies' IT programs.


Monday, September 13, 2010

VA mismanaged FLITE contractor, according to IG

The Veterans Affairs Department mismanaged a contractor relationship which caused the department's Financial and Logistics Integrated Technology Enterprises (FLITE) program's Strategic Asset Management Pilot Project to struggle, according to a September 7 report from the VA's inspector general.

"FLITE program managers did not adequately monitor the contractor's performance and ensure that the Office of Information and Technology assigned legacy system programmers to the project in a timely manner," wrote Belinda Finn, deputy inspector general at the VA OIG. "They also did not develop written procedures that clearly defined roles and responsibilities related to interface development for contractor and VA personnel."

The report also found that VA would have had more success if it had engaged in side-by-side collaboration with General Dynamics Information Technology. Instead, VA missed key conference calls with the contractor and used written comments to provide feedback, which led FLITE to be poorly monitored, and roles and responsibilities of project managers to be confused.

In one result of mismanagement, the IG report found as of April 5, 2010, VA had accepted only two of 12 formal deliverables submitted by the contractor. According to the initial project schedule, FLITE program managers should have accepted eight of the formal deliverables three months prior to that date. In addition, General Dynamics' submission of the SAM Training Plan was due by January 11, 2010. It was first delivered on December 31, 2009, and it was not complete and accurate until March 22 of the following year, according to the report.

Finn recommended that:

• The assistant secretary for IT designate VA staff to formally review deliverables and submit comments according to a time line;

• The assistant secretary for IT develop and implement procedures to ensure improved collaboration; and

• The assistant secretary for IT encourage in-person attendance by key VA personnel at meetings, conferences and work sessions.

A July 13 announcement called for the cancellation of a financial management system overhaul, in favor of a series of smaller financial modernization projects, due to doubts over program execution, as well as re-prioritization of limited resources. IT management at the VA has been closely watched since the June 2009 establishment of the Program Management Accountability System, a program which aims to break the cycle of high-profile IT failures in the VA's recent past.

For more: read the IG report (.pdf)

-Molly Bernhart Walker, FierceGovernmentIT.com

Friday, September 10, 2010



The Chief Administrative Officer (CAO)/Chief Financial Officer (CFO) reports directly to the Comptroller General (CG) and is principally responsible for directing administrative services that support GAO mission teams in audits and investigations.

With 8 direct reports, 400 full-time employees, and direct budget responsibility for approximately $100M, the CAO/CFO’s portfolio includes the Office of the Controller, Human Capital Office, Information Systems and Technology Services, Knowledge Services, the Professional Development Program, and Field Operations.

Compensation: To $174,000 plus performance bonus
Deadline: To be considered, applications must be received no later than midnight, October 18, 2010.

Citizenship: U.S. Citizenship required. You will be required to obtain a security clearance.


Joseph DeGioia

JDG Associates, Ltd.
1700 Research Boulevard
Rockville, MD 20850
(301) 340-2210

Thursday, September 02, 2010

Auditors: CBP unable to detect excessive custom refunds in fiscal 2009

Customs and Border Patrol was unable to prevent itself from issuing excessive custom duty refunds during the last fiscal year due to inherent limitations and lack of controls in certain information technology systems.

Auditing firm KPMG found the material weakness--which also includes in an inability to prevent and correct excessive refunds--during a review of CBP internal controls over financial reporting during fiscal 2009. The Homeland Security Department inspector general released the audit to the public Sept. 1 in redacted form.

U.S. firms are entitled to a customs duty refund, known as "drawback claim," under some circumstances, such as when they export products made with imported merchandise. The customs duty paid when that imported merchandise entered the United States can be the subject of a drawback claim. The penalty for submitting a false drawback claim ranges from a written notice to a fine constituting the amount of the entire false claim, plus restitution.

The amount of redaction done to the KPMG audit makes it impossible to state which information technology system is responsible for the material weakness.

However, the key systems subject to review by KPMG auditors for the report include the Automated Commercial System and the Automated Commercial Environment.

The latter, a web-based portal, is replacing the former, a mainframe-based system. A 2009 review of ACE by the DHS chief information officer found the program has encountered challenges since its initiation in 2001. Among them has been a shifting baseline and significant delays; the review states that as planned, ACE cannot be completed within budget.

The KPMG audit also reviewed the Seized Assets and Cases Tracking System (SEACATS) and CBP's financial management system, which is SAP R/3.

In CBP's official response to the audit, Charles Armstrong, CBP CIO, said he agrees with KPMG's findings.

-David Perera, FierceGovernmentIT.com