How CXOs can close the value-proposition gap

Federal financial managers received some shrewd advice last week. Stop talking like financial managers.

Stop talking about clean opinions. Don’t talk about material weaknesses. You don’t need to mention the CFO Act or the Digital Accountability and Transparency (DATA) Act.

With new leaders coming in across every agency, federal financial managers, instead, should focus on value and mission support.

Adam Goldberg, the executive architect at the Treasury Department’s Financial Innovation and Transformation (FIT), said by focusing on how the CFO’s office furthers the agency’s mission, agency budget and financial management executives can change the conversation about back-office functions.

Richard Haley, the FBI CFO, said his folks have to communicate in the language that agents and leaders use every day. He said they shouldn’t have to work hard to understand financial management initiatives.

Goldberg said it’s about shifting the conversation to talk about what the agency needs to better support agency operations.

The point of the Federal IT Acquisition Reform Act (FITARA), for example, aims to close the gap between IT, acquisition and mission areas. It forces the chief information officer into discussions about planning and procuring mission critical technology.

In the human resources world, we’ve heard about chief human capital officers begging and pleading mission area hiring managers to make decisions, review applications and are involved in every step of the process. The Office of Personnel Management issued guidance in November stressing the need to engage and empower hiring managers.

The idea behind all of these efforts is to break down the siloes that have built up over time for probably no real reason, creates layers of inefficiency and leads to the perception of a stilted bureaucracy and inefficiency.

Treasury is trying to help agencies remove these barriers for the financial management folks. The department is developing a maturity model to help agencies think about how their CFO offices are impacting mission beyond just “being the money people.”

-Jason Miller, FederalNewsRadio.com
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IG: Justice Department shows leadership for DATA Act rollout, but gaps remain

The Justice Department is on schedule to meet the DATA Act implementation deadline — sort of.

DOJ’s Office of Inspector General recently issued a review of the department’s progress toward standardizing its financial spending  reports, and according to the internal watchdog, “nothing came to our attention that caused us to believe that a material modification should be made” to Justice’s plans to meet the May 2017 deadline.

But the IG did note “areas of concern that potentially could impact the department’s ability to most effectively meet all the requirements within the requisite timeframe.”

Those areas of concern range from completing a full inventory, mapping and gap analysis of the department to an incomplete data extraction standard.

The inspector general looked at the first four steps of the eight-step plan recommended by the Treasury Department for DATA Act implementation. Treasury and the Office of Management and Budget are the agencies spearheading the work.

Within the Digital Accountability and Transparency Act is a requirement that agency IGs report on the law’s implementation. The first set of reports was due in November, however, the Council of Inspectors General on Integrity and Efficiency (CIGIE) recommended last December that because the spending data would not be available for November 2016, that the first required reports be due November 2017, with additional reports in 2019 and 2020.

According to the review, the Department has three financial systems: the Unified Financial Management System (UFMS); the Financial Management Information System 2 (FMIS2), a legacy financial system; and the Systems, Applications, and Products (SAP) system.

Instead of inventorying these systems, DOJ inventoried the Drug Enforcement Administration’s (DEA) procurement information in UFMS and an initial inventory of the Office of Justice Programs’ (OJP) grant award information in FMIS2 — with the hope that the lessons learned could be applied to the other financial systems.

-Meredith Sommers, FederalNewsRadio.com

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Treasury begins shared services quest to educate, integrate

The Treasury Department's Office of Financial Innovation and Transformation is starting to put the bigger pieces of the shared services puzzle in place.

It started by approving four shared service providers — one new one and three current providers — on May 2. Now OFIT is on an education and data quest.

The office issued two requests for information to industry in the past few weeks, including one to begin telling industry about the role contractors will play in this governmentwide initiative.

One RFI , issued May 7, announced an industry day on May 21 where all four shared service providers — the departments of Agriculture, Interior, Transportation and Treasury — will present current capabilities and those they would like to have in the future.

OFIT also wants to gather market research on private sector solutions and capabilities that could be of assistance to OFIT (in its oversight role), the FSSPs (in their service provider role) and customers or prospective customers) in 11 different areas, including optimizing shared services, assisting in customer migrations and identifying alternative contract approaches such as share-in- savings or public-private partnerships.

Then on May 22, OFIT will host an agency day so potential customer agencies can learn about the shared services offerings and ask questions about the initiative.

The second RFI is focused on data management.

The April 18 RFI asks vendors for insights into "the development and implementation of a shared data transfer capability (e.g., enterprise bus) to facilitate the interaction and communication between mutually interacting software applications. Software applications may include financial systems, procurement systems, e-invoicing systems, inventory systems, or other mixed systems. These software applications may or may not be owned and operated by the federal government."

Responses to the RFI are due May 16.

The RFIs are more pieces to this financial management shared services puzzle.

Treasury, which is leading this administration effort, is trying to get data and information out to the agencies so they really get what's expected of them and what they can expect.

At the conference, audience members sought answers about how the initiative works, and the RFIs and several other document or data releases over the next two weeks are part of those answers.

Angerman says the OFIT will post those documents on its website.

-Jason Miller, FederalNewsRadio.com
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USDA joins the ranks of the financial shared services providers

Agencies will continue to have four approved federal shared services providers to buy financial management services from. The only difference is the Agriculture Department replaces the General Services Administration.

The Office of Management and Budget and the Treasury Department today announced they recertified the departments of Interior, Treasury and Transportation and added USDA to be the support pylons of its shared services initiative.

By adding USDA, OMB and Treasury partly solve concerns over a lack of competition among providers, because they all offered Oracle as their back-end software. USDA offers SAP's federal financials.

USDA in 2013 continued deploying its Financial Management Modernization Initiative (FMMI), a new financial system that replaces USDA's legacy financial system, according to OMB's January 2014report to Congress on the benefits of E-Government initiatives. "FMMI is based upon a commercial, off-the-shelf resource planning product. FMMI is an advanced, Web-based, financial management system that provides general accounting, funds management, and financial-reporting capabilities that has been deployed to 28 of USDA's 29 administrative organizations."

GSA's decision to get out of the financial management services is no real surprise. The agency said it was getting out of the human resources services last summer, and several government and industry sources said financial management wasn't far behind.

But by GSA not receiving OMB and Treasury's approval, it means one less software package will be available for agencies to choose from (it offered CGI's Momentum), and it's unclear what will happen to the people running the Federal Integrated Solutions Center's External Services Branch or its 44 internal and external financial management customers.

OMB and Treasury's approval of the four providers should kick off a series of decisions that will underlie the financial management share services effort.

-Jason Miller, FederalNewsRadio.com
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Treasury figuring out how the shared services pieces fit into governmentwide puzzle

Over the next few months, answers to some of the most pressing questions about how financial management shared services will work must be clarified.

The Office of Management and Budget, the Treasury Department and the CFO Council are trying to plug the holes in the shared services process that thwarted the effort a decade ago.

Whether it's ensuring the four current civilian agency shared service providers or the new ones OMB expects to name in the coming weeks have the capacity to take on large agencies, or whether it's the role of the private sector in this latest effort, or whether it's the process by which Treasury will work with customer agencies to determine which shared service provider is most suitable and make sure there is lasting governance, reducing the amount of uncertainty about how version 2 of financial management shared services will work is among the administration's top priorities over the next six months.

In part three of the special report, Shared Services Revisited, Federal News Radio explores how OFIT is putting the pieces in place to create a successful shared services program.

OMB reintroduced the concept of shared services for financial management systems in March 2013. 

The White House issued a memo creating a federal-first policy when agencies upgrade their financial systems.

Over the last year, OFIT and OMB have slowly been putting the processes together to smooth out some of the long-standing problems.

In the mid-2000s under the George W. Bush administration, OMB introduced this concept of shared services, offering both public and private sector options. Large agencies mostly opted out of initiative, instead deciding to upgrade their systems on their own. OMB said mostly small agencies took advantage of the shared service providers.

But after a series of failed financial management projects at large agencies, and the fact that OMB estimates agencies are spending $8 billion a year for the operation, maintenance and upgrade of these financial systems, the administration decided to push through with another attempt at shared services.

-Jason MIller, FederalNewsRadio.com
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Financial management providers ill-equipped to take on large customers

A metric of success for federal shared services is how many agencies are using the capability. Federal financial management shared service providers are facing an uphill battle to meet that metric.

One of the biggest challenges to making this second attempt at financial management shared services in the last decade successful is federal providers' ability to ramp up in a timely manner.

Interior, Transportation, Treasury and possibly as many as four other agencies are gearing up to accept 40,000 or more new customers at a time over the course of the next few years.

As federal financial management shared services providers, these agencies need help in the form of changes to law and policy to meet those goals.

Experts say only by letting these providers act more like private sector businesses will federal shared services find success.

In part 2 of the special report, Shared Services Revisited, Federal News Radio explores the long-standing capacity challenges that current and new financial management shared service providers will have to overcome in the coming years to meet the growing demands of agency customers.

The Office of Management and Budget requires agencies to modernize financial management systems only through federal shared service providers (SSPs). In a March 2013 memo, OMB detailed its plans to reduce costs and duplication across the government through the use of federal SSPs.

But many of the same questions limited the success of this initiative in the mid-2000s, including whether the shared service providers have the capacity to handle large cabinet level agencies.

Over the course of the last seven years, no cabinet level agency moved to a federal shared service provider. The Labor Department outsourced to a private sector provider. The Small Business Administration unsuccessfully followed suit to a different private sector company.

But over the course of the next five to 10 years and starting this year with the departments of Commerce and Housing and Urban Development, and the Coast Guard, large agencies are expected to let go of their financial management systems and take advantage of a multi-tenant set up that is widely considered an industry best practice.

OMB and Treasury's Office of Financial Innovation and Transformation (OFIT), which is managing the financial management shared services initiative, are trying to address the challenges providers face.

But it's about more than just money and people. The question is whether Interior, Transportation, Treasury or any of the new providers can handle more than one large agency every few years.

Federal and private sector experts say migrating to a shared service provider is extremely complex.

Beth Angerman , the director of OFIT, said OMB and OFIT will not mandate where agencies migrate to, but there are factors that agencies must take into account.

"We recently finished the design of the FIT Agency Modernization and Evaluation (FAME) process. What that process consists of are a series of evaluative models and artifacts that are produced by the agency with FIT's oversight and assistance to help them get through different gates of identifying if there is a federal shared service provider who will meet their needs," Angerman said.

OMB estimates agencies are spending $8 billion a year and have more than 53,000 people supporting all federal financial management systems.

There is a long history of financial management systems that have failed to meet expectations. In fact, OMB in 2010 reviewed 30 financial systems to ensure they were meeting cost, schedule and performance goals, and ended up rebaselining several after finding they were off track.

Despite this increased oversight, the Government Accountability Office found in 2012 that the reviews had little effect. Auditors said 13 projects estimated no change in their long term costs, and 16 said their schedule remained the same.

So given all of these systemic problems, Angerman said the private sector has to appreciate the changes that are happening, meaning once they were implementing large scale systems, and now they are supporting the agency providers with specific expertise.

-Jason Miller, FederalNewsRadio.com
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Familiar questions, few answers so far for OMB's latest financial systems effort

The departments of Commerce and Housing and Urban Development and the Coast Guard are planning to outsource their financial management systems in the coming year.

These three agencies have only one choice in how they modernize their financial management systems — through a federal shared services provider.

The Office of Management and Budget's March 2013 policycreated a federal first priority for agencies to modernize their financial management systems through a shared services provider.

But this second attempt by OMB to move agencies to financial management shared services is fraught with the same obstacles of a decade ago.

But OMB believes this attempt at shared services is different. The administration says budget concerns and technology advancements will help overcome these long- standing barriers.

OMB named five shared service providers under the Financial Management Line of Business initiative. With the exception of the Defense Finance and Accounting Service, the four civilian providers — the departments of Treasury, Transportation and Interior, and GSA — mostly found success with small and micro agencies.

But with agencies spending more than $8 billion a year on financial management systems and with more than 53,000 employees supporting those efforts, the opportunity to consolidate and simplify is great.

So administration officials say the time is right for a renewed push for shared services.

Three of the four current shared service providers for civilian agencies offer only Oracle's Federal Financial software.

GSA offers CGI's financial management software called Momentum. But industry and federal sources say GSA is likely to get out of the financial shared services this year.

Other agencies are using SAP, Savantage and other financial management software that meet federal standards.

Infor and Workday both offer software-as-a-service options for enterprise financial management services.

OMB and OFIT are close to naming new federal shared services providers, with at least one agency providing software that is not Oracle.

Federal News Radio's special series, Shared Services Revisited, looks at whether there still are too many unanswered questions that would doom shared services once again.

-Jason Miller, FederalNewsRadio.com
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Treasury's Reger joins OMB to fill financial management void

The Office of Management and Budget turned to a veteran of federal budgeting to begin replacing its top two financial managers.

Mark Reger recently came over to OMB on detail from the Treasury Department to be the acting deputy controller.

Reger's detail helps fill the void left when controller Danny Werfel became the acting IRS Commissioner in May 2013, and his replacement Norman Dong, who had been deputy and then acting controller, moved over to head up the General Services Administration's Public Building Service in late March.

By bringing Reger over, OMB has a veteran of state and local government, and someone who has served in senior executive capacities in small and large agencies.

Reger has been Treasury's deputy assistant secretary accounting policy in the Office of the Fiscal Assistant Secretary since 2010 where he's helped lead the financial management standards effort. He is a member of the Federal Accounting Standards Advisory Board and was CFO at the Office of Personnel Management for three years.

Reger also comes as OMB is putting some of the most important pieces in place to give its financial management shared services some life. OMB and Treasury's Office of Financial Innovation and Transformation are expected to name new federal shared service providers in the coming month.

-WTOP.com
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2014 AGA Federal Financial Systems Summary and Links to Presentations

Pinpointing how to address challenges through leadership for future success takes center stage

By: Joseph Davis, Marketing & Communications Manager, AGA

It’s no secret the last year has been a tough one — fiscally and otherwise — for the federal government and its supporting agencies, which highlights the tough conditions government financial managers in particular, have had to endure. Though they produce constraints, budgetary and resource limitations also create opportunities for innovation and leadership.

Addressing challenges and paving a way for the road ahead was the center of attention as nearly 400 government and private sector financial managers took part in AGA’s 2014 Federal Financial Systems Summit (FSS) last week.

“Because of fiscal constraints, we have to do everything we can to focus on ‘mission’ and leadership,” said Norman Dong, Interim Controller, Office of Management and Budget (OMB), during a panel discussion centered on, “The Vision and Roadmap for Federal Financial Management and Systems.” He stressed that with the help of shared services — which remained at the forefront of this year’s FSS — OMB, as well as other government agencies, can focus on business outcomes rather than a “check-the-box approach” to financial management processes.

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READ THE EXECUTIVE REPORT HERE...

Financial management and freedom of choice

At a time when governments are increasingly looking to private-sector solutions to improve efficiency and solve complex challenges, the Treasury Department appears to be headed in the opposite direction when it comes to shared services, with potentially disastrous results.

In April, the CIO Council published the Federal Shared Services Implementation Guide, which establishes a strategy for moving agencies to shared-services environments for business areas such as budget formulation, human resources and, notably, financial management. Charged by the Obama administration with developing an implementation strategy, Treasury's Office of Financial Innovation and Transformation (FIT) developed a plan to streamline and consolidate financial management systems by tapping federal shared service providers (FSSPs) almost exclusively.

Although consolidation might be a good idea, major concerns exist about the viability of the chosen approach.

Representatives from the Software and Information Industry Association and its member companies met with Office of Management and Budget and FIT officials to understand how their effort would improve upon previous attempts, such as the Lines of Business initiative, which ultimately failed in 2006. So far, however, those conversations have led to more questions than answers, particularly concerning the role of commercial providers in the new shared-services arrangement.

Consolidation is a noble goal but not when it flies in the face of efficiency and rationality.

In fact, OMB and Treasury recently announced plans to "assign" all agencies to an existing FSSP, deviating from the April memo and leaving commercial providers completely out of the picture. That action makes little sense in theory and is not feasible in practice. It fails to recognize the complexity of the current federal financial management system environment.

Today only a handful of the agencies covered by the Chief Financial Officers Act receive their core financial management services from an FSSP, and most of those agencies are themselves FSSPs. Even Treasury, which is implementing the initiative and has its own shared-services center, does not host the core financial management systems of three of its largest bureaus. Presumably, those bureaus were deemed too large or complex to use Treasury’s center or another FSSP.

Most agencies are running their own financial management systems powered by commercial software, and those systems largely work as intended. And we know that commercial software has the right capabilities because even the FSSPs use commercial software as their backbone.

By virtue of their size, large federal agencies cannot simply pick up their financial systems and move them to an FSSP. If the Department of Homeland Security or Defense Department tried, the provider would be completely overwhelmed by the complexity and number of financial transactions generated on a daily basis. The cost of migration would far outweigh any projected cost savings.

Consolidation is a noble goal but not when it flies in the face of efficiency and rationality. The administration needs to wake up to the fact that an agency like DHS, with a $40 billion budget and 22 component agencies, is already operating at such a large and complex scale that moving it to a new FSSP would be an unwieldy, expensive mess.

Instead, the administration should take a step back and focus on its original objectives of boosting efficiency and saving money. To start, officials must determine whether there is any evidence that we are currently wasting significant money on our financial management systems. And because commercial software powers the federal government's financial systems -- even the FSSPs -- the private sector must be included in the reform process.

Ultimately, agencies need the freedom to choose the financial management solution that is best for them. They should not be bullied into switching to an FSSP that likely won't meet their needs.

-Mike Hettinger, FCW.com
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Financial system shared services still lacks governance model

Establishing a governance model for the latest Office of Management and Budget attempt to move federal financial managed systems onto a shared systems model remains an unfinished priority, officials said during a Sept. 25 panel.

OMB released in March a memo (.pdf) requiring agencies to use "with limited exceptions" a shared services solution when modernizing core accounting or mixed financial systems, with preference given to federal agencies designated as a shared service provider. The idea is that shared infrastructure for processes that can be standardized within and across agencies will reduce spending on financial systems, which currently consumes about $8.4 billion annually, said Elizabeth Angerman, director of the Office of Financial Innovation and Transformation within the Treasury Department. She spoke at an AFCEA-Bethesda morning event in Rockville, Md.

The concept is similar to the George W. Bush-era OMB's financial management line of business initiative, which also faced difficult governance questions that were never fully resolved; the FMLoB effort fell further behind when in its first term, the Obama administration de-emphasized Bush-era OMB policies.

"We don't have the governance structure set up, and that is a concern for our politicals--that they don't have a say, that it'll be some other secretary, and that secretary is five, six levels removed," said Myrian Myer, Labor Department associate deputy chief financial officer.

If the expectation is that agencies are (again) going to contract with each other for financial system services, "what are the rules, who gets a say, how is that going to work?" Myer said. "All those things need to be figured out, and they can be--but they haven't yet."

-David Perera, FierceGovernmentIT.com

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Treasury’s FIT Office Leading the March to Financial Management Shared Services

OMB has tasked Treasury’s Office of Financial Innovation and Transformation (FIT) to assist in design, implementation, and improvement of federal financial management services shared service provider offerings.  Enhancements to the Federal Shared Services Provider’s (FSSP) framework are meant to stimulate larger agencies to move to a shared services environment for future modernization of core accounting systems.

OMB released a memo in March directing agencies to move their financial systems to a shared services environment.  

OMB is encouraging agencies to look to federal providers first, as opposed to commercial vendors.

OMB has been trying to incite agencies to adopt shared services for financial systems since 2004 with the advent of the Line of Business initiative.  The administration at the time named four federal agency shared services providers – DFAS, GSA, Interior’s Business Center, and Treasury’s Bureau of Public Debt.  Agencies were to move financial processes to one of these four SSPs when it came time to upgrade their current systems.  However, only small agencies made the leap.  Few large agencies made the change, and those that did, found if difficult.

OMB’s controller Danny Werfel stated in a March interview, that the past initiative was slated for agencies to move their entire financial systems to a provider, which became too complex.  The new effort is focused specifically on general ledger systems. 

FIT is playing a critical role in the migration effort by aiding OMB in assessing the current landscape of FSSPs and identify capability gaps, evaluating agency needs, identifying the need for additional FSSPs, and developing a strategy to address gaps.  FIT will also provide oversight for the effort by evaluating any new agency systems modernization plans, establishing a framework for agency migration efforts, maintaining core government-wide requirements, and facilitating the implementation of government-wide operational capabilities.

FIT recently launched a series of teleconferences to introduce the financial management shared services initiative to industry and explain how industry will be engaged throughout the process.  FIT is taking the lead in developing the marketplace where agencies can choose from financial service offerings, service delivery options, and purchase through SSP storefronts.  The ultimate goal is to launch a financial management product and services catalog by spring or early summer of 2014.  FIT will act as a liaison for agency customers, but they will buy directly from the provider.  FIT will work with agencies to develop a modernization timetable which will include the selection and migration to a SSP. 

Werfel expects it will take several years for SSPs to be able to meet all agencies’ financial system needs.  Enhancements to SSP service offerings will be added to the initial catalog and storefronts over time. 

-Angie Petty, GovWin.com
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OMB reworking financial system requirements to focus on outcomes, not inputs

CAMBRIDGE, Md.— The Office of Management and Budget is finalizing a new directive to change federal financial management processes.

The goal is to make it easier for agencies to balance their books, and for vendors to provide software to help them do that.

Adam Goldberg, the executive architect for the Treasury Department, said this new guidance, which is about 30 days or so away from being finalized and made public, would update Circular A-127.

A-127 defines the processes and policies agencies should follow when managing their financial management systems. Goldberg said A-127 instructs agencies on how to meet the requirements based on which systems meet government requirements and testing.

Goldberg said Treasury, working as OMB's implementation arm, changed the approach to determine the requirements of financial management systems.

OMB last revised A-127 in January 2009, shortly before President Barack Obama took office.

Goldberg said the Federal Financial Management Improvement Act calls for agencies to meet certain requirements in how they report financial data. The revised A-127 will tell agencies what the end results have to look like, rather than saying how or by what systems, and they can get there anyway they see fit.

He added this change likely will open the door to new vendors to provide shared services or partner with one of the four federal shared service providers for financial management.

Additionally, Goldberg said Treasury is developing a product/service catalog for financial management services.  Goldberg said the catalog pilot should be in place by the end of the calendar year.

All of these efforts build on OMB's requirement from March for agencies to move to a shared service provider for financial management when it's time to upgrade their systems.

Goldberg said reducing the number of requirements and focusing them on outcomes or outputs will make it easier to make the transition.

-Jason Miller, FederalNewsRadio.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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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...

CFOs remain tepid on financial shared services

Federal chief financial officers say finding efficiencies in their agency is among their top priorities. But moving to a financial management shared service provider or even to individual shared applications doesn't rank high on their to-do lists.
 In an exclusive Federal News Radio survey of CFOs and deputy CFOs conducted in August, 55 percent of the respondents rated spending money more wisely as their top priority. But at the same time, 36 percent rated moving to the Internet Payment Portal or other financial management shared services as their fourth highest priority, while only 9 percents ranked it as high as third overall.
Adam Goldberg, executive architect in the Office of Financial Innovation and Transformation (OFIT), said CFOs are showing a greater interest in shared services, but they haven't fully committed to the concept.

Federal News Radio conducted the anonymous survey to find out how CFOs and deputy CFOs are dealing with and preparing for sequestration, budget cuts and other challenges. We sent the survey to 58 federal budget officers and received a 24 percent response rate. Out of those who responded, 46 percent were with a cabinet-level agency and 39 percent were with a large agency. All respondents said they are a career official and not a political appointee. This is the second survey of CFOs in 2012. The first survey also showed CFOs weren't ready to move to shared service providers either.  But now nine months later and with the release of the Office of Management and Budget's shared services strategy, agency budget executives remain uncertain about using these common systems. Goldberg said CFOs are starting to come around to the idea especially as budgets shrink and their workforce retires.

OFIT is leading an effort to develop several shared services, including electronic invoicing, centralized receivables collections and intergovernmental transactions.  Goldberg said there is greater interest to use these one-offs as opposed to moving an entire financial management system to a shared service provider.  OFIT is getting ready to start a two-year pilot with the centralized receivables collections application. The program will help agencies collect outstanding debts, which could be for a travel expense, a fine or a penalty. Treasury hired a contractor to act as a debt collector, who would take over the billing, the notices and the follow ups that need to take place.

Goldberg said agencies could save $300 million-to-$350 million annually when it is fully scaled across the government.

In addition the debt collection initiative, OFIT's e-invoicing program could save the government millions. Goldberg said at full capacity, agencies could save between $400 million-and-$450 million a year.

-Jason Miller, Federal NewsRadio.com
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Treasury Internet push may speed $532 billion to U.S. vendors

A Treasury Department push for electronic invoicing for federal contractors could speed payments and save the government $450 million a year, the government says.


Treasury, which purchased about $6 billion in goods and services last year, is mandating that by 2013 its offices and bureaus must receive invoices from vendors via its new Internet payment system.

Because most U.S. agencies still rely on paper invoices, government-wide adoption of electronic billing could cut payment processing times in half, accelerate cash flow for vendors, and reduce late-payment interest charges. Those innovations would save the government $450 million a year, according to a Treasury statement issued on July 13. The government paid contractors a total of $532 billion in fiscal 2010.
Treasury said its bureaus and offices, whose roles include processing tax returns, seizing terrorist assets, printing U.S. currency and regulating banks, would save $7 million a year by using the platform, which is maintained for Treasury by the Federal Reserve Bank of Boston.


The Defense, Interior and Agriculture departments already use electronic invoicing. Interior, the Social Security Administration, and Agriculture’s Forest Service use the new system, known as the Internet Payment Platform, said Adam Goldberg, director of the Treasury’s Office of Financial Transformation and Innovation, formed last year. The Justice Department and the Census Bureau, which issued a request for industry input on electronic invoicing last month, have expressed interest.



-Nishad Majmudar, WashingtonPost.com
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Federal Financial Management Systems: A New Reality

The Association of Government Accountants published its most recent whitepaper summarizing the January 11, 2011 Financial Systems Summit.  The report provides a narrative account of the summit presentations by OMB, Treasury, participating federal agencies and the private sector.

Federal Financial Management Systems: A New Reality
A Report on the Federal Financial Systems Summit, January 11, 2011

At the summit Office of Management and Budget Controller, Danny Werfel, and Chief Information Officer, Vivek Kundra, outlined the way forward for federal financial management systems acquisition projects.


The message was clear: the age of massive system implementations is over. The future course will be one of smaller-scale projects with clearly defined deliverables and timeframes.

As the government financial management profession's thought leader, AGA brought together federal financial management professionals and their private-sector counterparts to discuss the challenges and to pave the way forward in what Werfel calls "the new reality."

Download the White Paper (PDF) Here...

New governmentwide financial systems on tap

By the summer, agency chief financial officers will begin figuring out how to move to new governmentwide systems to process intergovernmental transactions and vendor invoices.


Danny Werfel, the Office of Management and Budget's controller, said the Treasury Department is in the middle of testing and analyzing existing systems to see which could be expanded.

Werfel said by May or June Treasury and OMB should come to a final decision about which systems to use and begin to figure out how agencies should migrate to these common systems.


OMB and Treasury has been working on these common systems since last winter.

It's also how the Obama administration has modified the Financial Management Line of Business initiative started under the Bush administration. The FM LOB tried to standardize business processes and terminology, and get agencies to shut down their systems and move to shared service providers. OMB announced in March it was closing the Financial Systems Integration Office (FSIO), which led much of the business process standardization work. Instead of FSIO, OMB set up the Office of Financial Innovation and Transformation (OFIT) within Treasury to lead these intergovernmental transactions and vendor invoicing pilots.

Werfel said the governmentwide systems are among the CFO community's top priorities in 2011.

One of the top goals is to further reduce improper payments. Werfel said agencies made significant progress in 2010, reducing the governmentwide improper payment rate to 5.49 percent, from 5.65 percent in 2009.

Werfel said this means that agencies prevented an additional $3.8 billion in improper payments from being made in 2010.

Along with improper payments, Werfel and other agency CFOs detailed priorities and plans at a recent CFO Council meeting. The 47-page PowerPoint presentation goes through everything from improper payments to technology innovation to open government and transparency to decision support and workforce challenges.


Werfel said federal financial management is getting better each year despite the Defense Department's inability to get audited.

The Government Accountability Office issued its annual report last month finding for a 14th straight year that auditors could not issue an opinion.

Still, Werfel said the total number of clean opinions is up to 20, including NASA, which moved from a disclaimed opinion to a qualified opinion.

OMB also is working closely with DoD on its financial books.


Werfel said the Pentagon is focused on different key areas to help it become auditable. He said DoD is starting with activities that are most closely related to their operational and mission success, which includes things like how money flows through the agency, managing execution and cash flows.

-Jason Miller, FederalNewsRadio.com
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Is industry facing a $20B hit?

OMB's freeze on financial management and modernization projects might cost opportunities for contractors

Industry today had a mixed reaction to the Obama administration’s move to halt any project that updates a federal financial management system and to change the features of future projects.

Some companies working on agencies’ financial systems are unsure about how they will get hit by the new directive. At the same time, one small business welcomes the news of smaller projects, instead of the mammoth, built-from-scratch systems. Overall though, everyone’s going to get hit, experts say.

On June 28, Obama administration officials said they were forcing agencies to stop projects to modernize financial management systems, until officials in the Office of Management and Budget review and approve the project. Currently 30 projects are on hold, according OMB. The total cost spent on these projects is anticipated to be $20 billion over the life of these projects, with an additional $3 billion spent annually. Officials also issued a policy to chop large modernization projects into smaller bits, which would keep tighter reins on projects that tend to veer off course.

Several of the large companies that work with the government on financial systems were still trying to find out as much as they can about the new guidance. Several spokesmen said they needed more information about the projects and the project reviews before commenting. Without those details, they couldn’t get a good sense of what’s likely to happen and how the policy would affect their companies, and industry overall.

One expert who works at a major IT company was sure of one thing: This would be a hot topic of conversation in the coming days.

The underlying issue is spending money wisely. Jeffrey Zients, deputy director for management and federal chief performance officer, said the overall effort is getting higher returns for the roughly $80 billion the government spends on information technology.

Zients said he wants to use the private sector’s approach of checking a program frequently to keep things on track.

However, Doug Davidson, publisher of the Federal Financial Management News Web Log, said the small companies will be get hit by OMB’s hold. When the projects stop, the big companies, which are often the prime contractors, have to scale back their work. The companies will reserve their resources for their own employees and let the subcontractors go, he said.

In the end, companies that maintain agencies’ legacy systems will benefit from OMB’s memo, he said. With no new projects, agencies must rely on their current systems. Davidson agreed with OMB’s principle of saving money and reducing the government’s risks. But the consequences of stopping modernization projects can hurt the government more than some projects, especially those that are in the final stages of implementation.




-Mathew Weigelt, FederalComputerWeek.com
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