OMB Expands Sequestration Guidance, Increasing Scrutiny of Expenses

With just a day to go before the onset of sequestration, the Office of Management and Budget on Wednesday evening supplied federal agency heads with expanded guidance on how to begin implementing across-the-board spending cuts.

Unless Congress and the president achieve a new budget deal by Friday, wrote Controller Danny Werfel in a Feb. 27 memorandum, agencies must now execute $85 billion in cuts over seven months, which translates to about 9 percent for nondefense programs and 13 percent for defense programs. “These reductions will result in significant and harmful impacts to national security and domestic priorities,” he said.

Detailed instructions addressed processes for planning, communication, adjustments to acquisition, protecting recipients of financial aid and “increased scrutiny of certain activities.” That last category directs managers to employ “risk management strategies and internal controls” to scrutinize spending on hiring new personnel; issuing “discretionary monetary awards to employees, which should occur only if legally required until further notice;” and incurring obligations for new training, conferences, and travel (including agency-paid travel for non-agency personnel).

In light of reduced funding, Werfel wrote, managers should be “actively and continuously communicating with affected stakeholders -- including states, localities, tribal governments, federal contractors, federal grant recipients and federal employees."

Agencies should “identify any major contracts that they plan to cancel, re-scope or delay as well as any grants that they plan to cancel, delay, or for which they plan to change the payment amount,” the memo said. “Agencies should only enter into new contracts or exercise options when they support high-priority initiatives or where failure to do so would expose the government to significantly greater costs in the future. Agencies may also consider de-scoping or terminating for convenience contracts that are no longer affordable within the funds available.”

-Charles S. Clark, GovExec.com
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OMB to test agency readiness to move to financial shared services

Agencies will have to take a test to measure just how ready they are to move their financial management system to a federal shared-service provider.

The Treasury Department's Office of Financial Innovation and Transformation (OFIT) and OMB will run the tests, which are specifically designed for large agencies, that over the past nine years have been reluctant to use these common services.

"What the test will do is we'll say, ‘What are the business requirements you have established for your financial system?' We will compare and contrast them to the requirements of a standard, common, generic shared-service provider. And the closer your requirements are to that generic shared-service provider, the higher score you will get on the test and the more amenable OMB is going to be to propose funding and approve such a system in the President's budget," said Danny Werfel, OMB's controller, in an exclusive interview with Federal News Radio. "The further you are away, the more bells and whistles, the more integrated requirements you are seeking out that makes you very different from a shared service provider footprint, the lower your score will be on the test and the more difficulty you will have in getting support from OMB for that solution."

He said the message agencies need to understand is OMB's goal is to have them use simple, non-unique and generic systems for their basic general ledger accounting system.

Werfel said OMB is developing a governmentwide policy that should be out in the next few weeks to formalize how this new process will work. OFIT will develop and initiated the test of agency business requirements.

-Jason Miller, FederalNewsRadio.com
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NLC Training Event's Common Theme: Collaboration and Efficiency

Last week, more than 700 government finance professionals gathered to learn from management leaders representing OMB, GAO and other federal agencies about what to expect in the coming days as the sequestration deadline looms.  The published report includes summaries of the keynote speaker's presentations.

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AGA Releases Executive Report: 2013 Federal Financial Systems Summit Summary

Nearly 500 government financial leaders gathered at AGA's Federal Financial Systems Summit (FSS) in Washington, DC to learn about and discuss the near-term and future prospects of federal financial management and systems in a budget constrained environment.  AGA released its Executive Report on the summit sessions on their website recently.

Download the Report Here...

OMB guidance promised to ensure USASpending accuracy

Just days after a watchdog found that agencies had misreported more than $1.55 trillion on USASpending.gov, a senior Office of Management and Budget official pledged to improve the numbers in the online portal that shows how taxpayer dollars are spent.

Speaking at AGA’s National Leadership Conference on Feb. 13, Danny Werfel, controller at OMB, spoke of data transparency as a major priority for both his agency and Congress, and dealing with the lack of standardization across government.

"We’re going to start at OMB, on the priority of complete and reliable data on USASpending," he said. As the "the most prominent touchpoint" between the public and government financial information, Werfel stressed, the portal needs to have accurate, dependable information.

- Camille Tuutti, FCW.com
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Federal News Radio coverage of the 2013 AGA National Leadership Conference

The Association of Government Accountants' National Leadership Conference brings together financial-management experts from across government to share best practices and to discuss the latest management and accountability techniques.

The 2013 Association of Government Accountants National Leadership Conference was held Feb. 12-13 in Washington, D.C. Federal News Radio attended the event and spoke with several of the key speakers ahead of their respective panel discussions.

- FederalNewsRadio.com
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IRS program, interagency contracting finally removed from High-Risk list

Interagency contracting and the IRS Business Systems Modernization program are no longer considered high risk initiatives by the Government Accountability Office.

GAO removed these two programs from its biennial High Risk Listreleased today.

The multi-billion dollar IRS program made it off the list after 18 years of constant challenges around technology and financial management controls, and other management weaknesses.

The GAO put the management of interagency contracting on watch in 2005 because of unclear lines of accountability between customer and assisting agencies, and improper use of these contracts, which included buying out-of-scope work and limited or non-competitive procurements.

GAO said both the IRS and the Office of Federal Procurement Policy have improved the weaknesses so the programs now are considered to be on a strong path toward success.

-Jason Miller, FederalNewsRadio.com
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Controller outlines strategy to simplify government

The chief impediments to streamlining federal functions are “parochial stakeholder interests” and a lack of urgency among managers implementing laws and programs, U.S. Controller Danny Werfel told a business group on Wednesday.

The solutions include relying more on independent commissions in deciding how to “rightsize and reshape” government as well as “changing the culture to channel the urgency” commonly felt during a crisis into everyday situations.

Speaking at a forum on transforming government for the 21st century sponsored by the Business Roundtable and Governing magazine, Werfel also stressed the importance of pending legislation to restore historical authority to the president to reorganize agencies. “Congress has our bill,” he said, “and the fact that the president felt strong enough to transmit it says he is committed to reshaping and resizing government. Every tool we can use should be at our disposal.”

In efforts to sell off unneeded federal real estate, he said, there’s been progress, but not enough. “We’re lagging behind,” Werfel said. “The federal government has offices in nearly every county, a pattern that emerged in the 1950s and 70s, but citizens are no longer served in a bricks-and-mortar way.”

Similarly, he pointed to “pockets of progress” in the government’s efforts at leveraging shared services and common infrastructure, as in cloud technology and the economies of scale in “buying once, using many times. But there’s still a significant opportunity for efficiencies, and if we don’t avail ourselves, it will slow us down,” he said.

Asked why the government hadn’t made more progress replacing legacy information technology systems, Werfel said there are resource and budget issues, but also “a track record of a lot of cultural and emotional toll among people who’ve seen many systems fail.” An environment encouraging modernization is vital, he said, but he has also asked agencies to get more out of their legacy systems, to make sure all are clear on what is to be gained by replacing them. Modernization “won’t go from zero to 100 mph overnight,” he said.

The second Obama administration, Werfel said, might involve improved leveraging of the work of the Government Accountability Office and inspectors general in identifying inefficiencies and determining which parochial interests are legitimate. Best-practice sharing among agencies “is also a second-term imperative,” he said. “In the first term, groundwork was laid for a lot of opportunity for a return on investment, smart investment in things like co-location, innovations, shared services, and a digital strategy for mobile devices,” he said. “We have to decide how expensive [it will be and] how long it will take to raise the customer service level.”

Werfel told the business executives they could play a key role advocating for modernization and working through the President’s Management Advisory Board.

-Charles S. Clark, GovExec.com
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Simplified rules proposed for agencies doling out $600 billion in federal grants

To hold agencies more accountable for reducing paperwork and reducing improper payments, the Office of Management and Budget proposed consolidating federal guidance for administering some $600 billion in annual grants and financial assistance payments.

The proposed rule “is intended to both increase the efficiency and effectiveness of grant programs by eliminating unnecessary and duplicative requirements and strengthen the oversight of grant dollars by focusing on areas such as eligibility, monitoring of sub-recipients, adequate reporting, and other areas that are potential indices of waste, fraud or abuse,” wrote Comptroller Danny Werfel in a Friday blogpost. The proposed improvements follow President Obama’s 2009 executive order on reducing improper payments and curbing waste but are balanced against a February 2011 presidential memorandum on promoting administrative flexibility. They were prepared after public comment and consultation with the interagency Council on Financial Assistance Reform, which the White House created in October 2011.

Key components of the proposed guidance include:

• Harmonizing and streamlining all OMB guidance on grants from eight documents into one, while clarifying key differences for different entities;
• Simplifying the reporting requirements grantees must adhere to in justifying salaries and wages charged to grants;
• Ensuring that federal agencies better review financial risk posed by applicants and merits of an application before providing a grant;
• Providing guidance to ensure robust oversight of sub-recipients;
• Focusing more audit resources on preventing waste, fraud, and abuse; and
• Holding agencies accountable for getting results and addressing weaknesses among grant recipients.

Comments on the proposed consolidation are due by May 2, 2013.

- Charles S. Clark, GovExec.com
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