The Grants Quality Service Management Office over the last year helped several micro agencies buy award management services.

This pilot was part of how the QSMO is crawling before it tries to walk or run with larger agencies.

Andrea Sampanis, the acting director of the Grants Quality Service Management Office in the Department of Health and Human Services, said the procurement pilots with AmeriCorps, the Inter-American Foundation and the Northern Border Regional Commission opened the door to bigger possibilities to modernize federal grant services.

“We worked with them to explore the vendors on our Catalog of Market Research, making sure they were ready to meet their needs and helping to support them through the procurement process,” Sampanis said on Ask the CIO. “IAF and NBRC are live, on target and on budget, which is not an easy thing to do. AmeriCorps is expected to go live this fall. Huge kudos to these three agencies, as they were prepared to be good customers, willing to accept the system as-is and supported by great leaders in their chief information officer and chief procurement offices.  Their grants teams came together to support a great vendor product from our Catalog of Market Research.”

While the AmeriCorps, the Inter-American Foundation and the Northern Border Regional Commission are considered micro agencies, the amount of money each of them awards through grants is anything but small. Sampanis said the AmeriCorps is more like a medium-sized agency when looking at the amount of money it awards through grants. In fiscal 2024, for example, the agency expects to award $577 million in grants.

The Inter-American Foundation and NBRC are much smaller with IAF, awarding about $145 million and about $50 million in grants, respectively.

Grants QSMO aims to speed acquisition

While these three agencies don’t reach the billions HHS or the Education Department or the NASA hand out, Sampanis said demonstrating how the procurement assistance pilot works opens the door to improve and expand the QSMO’s efforts.

The QSMO marketplace current has approved seven grants management system providers and is in the middle of conducting market research to expand its services.

“We have one quote that says having access to Grants QSMO market research puts you 1,000 steps ahead in your procurement. It’s our goal to speed up the acquisition process and give agencies more buying confidence as they are pursuing a vendor on our catalog.  The vendors on our catalog are selected to support meeting grants standards and align to 2CFR 200 requirements,” Sampanis said. “It just lets them really focus their attention on a fewer number of providers to really say, ‘Hey, this solution is purpose built for grants. It’s an award management solution that is software-as-a-service and very configurable.’ It should feel easy. They don’t have to go and renegotiate a contract.”

The QSMO also works with the agency’s CIO and security leadership, helps develop performance work statements and serves as advisors during the entire acquisition phase.

“I always encourage agencies to meet with all the vendors on our Catalog of Market Research to understand what’s out there and share their specific needs. I think they learn a lot about themselves by talking to the vendors,” Sampanis said. “I helped them all the way through the pilot because I’m learning a lot. Every time I hear a contracting officer ask a new question, I think, ‘hey, that’s something I need in my catalog because that’s true.’ I always say our goal is to speed up an agency’s acquisition and give them buying confidence.”

HHS has led the Grants QSMO since January 2021 and has been building its services over the last few years.

With the Office of Management and Budget finalizing the update to the governmentwide grants guidance under 2 CFR earlier this year, standardizing certain key areas like notices of funding opportunities and overall trying to expand access to more than $1.2 trillion in grants and cooperative assistance agencies pay out each year, Sampanis said the QSMO is ready to expand its services and offerings.

Two common drivers of grants modernization

Having that baseline understanding and confidence in the marketplace is a key factor in success, said Wagish Bhartiya, the chief growth officer for REI Systems, which helps agencies modernize their grant systems.

Bhartiya said there are two basic drivers of grant modernization. The first is budget and second is technology.

“There has been a greater focus on budget and how much of our budget goes towards grant funding and how that funding is being deployed? How much of that is serving management processes, some of the overhead aspects of grant management, which will exist inherently, versus how much should be deployed into the community? That analysis, I think, is getting more acute,” he said. “The technology itself has evolved and shipped in a way that, I think, is much more possible now to be thoughtful about performance and mission. The technology is enabling some of this some of these questions to be asked because we now have the potential and the power to look at it for the first time.”

These two big trends are part of how grants providers are shifting their mindsets away from being so compliance focused to spending more time and money on measuring and ensuring outcomes.

“There’s all these dollars flowing through our grant programs so we need to start to think just as much about the downside, protecting from a compliance and a risk mitigation perspective, as the upside into the mission impact in terms of what are the tangible and successful outcomes,” Bhartiya said. “The other big theme is customer experience and user experience, and now the grantee experience.”

He said this updated point of view is part of why many grant providers are more willing to change today than ever before. He said this means the singularity of the way grants management worked over the last few decades is going away.

“Every grant program thinks they’re a snowflake and they think they’re special or unique and actually bespoke. But when you zoom out, you see that actually 85% of what a grant making agency does is essentially the same in the core lifecycle design,” he said. “Convincing them that they don’t need to make everything bespoke and tailored to the Nth degree because they can leverage best practices, use what’s worked for other agencies because there’s a chance to reduce the burden on their staff and on the recipient community is part of the challenge.”

Bhartiya added that the benefits of an end-to-end system, that’s in the cloud are becoming more clear to agencies.

The post Grants procurement pilots demonstrate speed to modernization first appeared on Federal News Network.

The Marine Corps celebrated a much sought after milestone in February: obtaining an unmodified audit opinion for fiscal 2023.

This two-year effort proved that the corps’ 2023 financial statements “present a true and fair reflection of the Marine Corps’ financial information,” which is about $46 billion in total assets.

While audits say there still are seven areas where the Marines still need to improve, Greg Koval, the assistant deputy commandant for resources for the Marine Corps, said this historic feat means, for maybe the first time ever, they can provide accountability, transparency and validity for their spending.

“It gives us transparencies into the cost of production, and in the future, it means the tracking of the cost of maintenance for many of our weapons system platforms,” Koval said on the discussion Marine Corps Milestone: Unqualified Audit Insight. “What it does over time is allow us to really plan, program, budget, execute better and identify those programs, where maybe they cost a little bit more, a little bit less, get those funds to the right place more timely so that we’re better able to execute and give the warfighter what they need to execute the mission. Ultimately on the financial side, we’re here to support them, help them and give them everything they need. So when they deploy, they’ve got the best solution, the best weapons systems they can have at that point in time.”

Like most of the Defense Department, the Marine Corps has been under pressure from Capitol Hill for decades to achieve a clean audit and has been putting more significant resources and focus on the challenges since 2017.

Marines new general ledger system

The Marines came close previously to a clean audit before the 2023 opinion. For example in 2012, the Marines thought it had achieved a “favorable opinion,” only for the DoD inspector general to reverse that decision in 2015.

DoD, as a whole, is targeting fiscal 2028 to achieve a clean financial opinion.

The Marines success demonstrates that it is possible for the largest organizations in DoD to successfully align their data, systems and processes to achieve this goal.

“At the beginning of this journey, we moved to a new general ledger. We had what we called SABRS, which was known and loved across the Marine Corps for over three decades. We took everybody off of that accounting system and moved into this new modern enterprise resources planning (ERP) system, which had its set of challenges. We basically adopted a system that smaller DoD components used, and some of our business processes were new to the system, new to the process, so there was a huge learning curve there,” Koval said. “That learning curve didn’t just impact the financial folks, but they impacted supply and procurement. There were times where we were working hard to pay vendors on time because the system wasn’t working as our old system did. But I think it really brought some additional discipline and internal controls to the financial processes that ultimately helped us understand some of our procurement and logistic processes a little bit better. It really kind of opened our aperture on some of the costs that we were incurring, who we were paying, and it gave us that additional transparency and visibility into the data.”

That major shift in the way the Corps did business, Koval said, really kicked the entire effort into gear by providing the financial team with the agility needed to understand and improve its data.

For any agency or large organization, the big data challenge can be daunting, said Joe Nave, principal federal finance transformation lead for KPMG, which helped the Marines achieve the clean audit opinion.

Analyze and assess risks

“You had to sift through the business processes across the board for geographically dispersed organizations such as the Marine Corps. You look at all of the integration across the rest of the DoD and the different partners outside of the spectrum that the Marine Corps has operational control over, and you start to look at how complex and complicated those processes can really be. From our perspective, it was helping them analyze, assess risk, boil down a couple of them and get the activities that we really needed to accomplish down to a finite list, where we could really focus our efforts and help them move some of these big rocks associated with the material weaknesses and audit deficiencies,” Nave said. “I think over time, you look at the way that the workforce is structured and having to do 100% of the day job, and then you add in some of these audit priorities and you add in some of the samples, we’ve really had to look at ways to modernize and automate those processes to help facilitate quicker reviews, quick requests, quality control ease, and make sure that we’re set up for success and able to respond efficiently and effectively to the audit.”

Nave said moving to the new ERP accounting system played a significant role in helping the Corps adapt processes and procedures as the needs change during the modernization process.

“I like dash boarding as a way to make sure that our clients have the insight that they need to see in real-time where progress is being made, and where progress is being made against those discrete buckets [of goals],” he said. “Then usually, we like tiger teams to assess progress against that. These small, mobile, tactical units, if you will, are going out and solving these problems with brute force, and then focusing on the sustainment of that. That really gets us to our end goal of a modified opinion and being able to continue that modified opinion, year in and year out, layering in that automation and modernization to those tiger team efforts.”

Auditors say the Marines still had seven material weaknesses to resolve.

Koval said a lot of those were on the property side and the need to better integrate data from disparate systems.

“What the audit did for us was really bring those organizations closer together. It broke down a lot of the walls and communications in the way that we work with each other,” he said. “Now, supply, logistics, procurement and accounting all have a better understanding of what we do, how we impact each other and what needs to change to make the organization more efficient, effective and to save costs, frankly, going forward.”

Going forward, among the Marines’ goals are to continue to build upon the previous two-year effort to further integrate processes and systems to make them a more efficient organization.

Nave said the Marine Corps now are set up for long term sustainment because of the process and procedural changes they’ve made and for audit response overall.

The key lessons learned from the Marines’ experience that other military services and organizations can heed, Nave said, is adaptability, being comfortable with the plan, and understanding that plans will change over time.

“We really want systems working for us, not against us. We want to make sure that our IT environment is squared away. We want to make sure that all of the interfaces or feeder systems that we have are clearly laid out. And we’ve looked at the complexity of those different processes and made sure that those all make sense,” he said. “So it is really just a rationalization of your portfolio and trying to make the sandbox smaller. First make sure everything’s in the sandbox, and then what can you do to make it smaller? Then I think leadership must set the tone from the top, cascading that information down and emphasizing the importance. Whether it’s an audit or any other objective you’re trying to accomplish, having that buy-in and tone from the top has been critical.”

The post The team effort that led to the Marines’ clean audit triumph first appeared on Federal News Network.

The Federal Housing Finance Agency (FHFA) says it is working to strengthen its internal financial control practices. That is after a Government Accountability Office (GAO) audit found FHFA’s financial statements miscalculated the agencies obligations under the Federal Employee Compensation Act. And the way it happened might offer a cautionary tale for other small agencies. Anne Sit-Williams is a director for financial management and assurance at GAO. She talked about the findings with Federal News Network’s Jared Serbu on The Federal Drive with Tom Temin.

Interview Transcript: 

Tom Temin The Federal Housing Finance Agency says it’s working to strengthen its internal financial control practices. That’s after a Government Accountability Office audit found FHFA’s financial statements miscalculated the agency’s obligation under the Federal Employee Compensation Act. And the way it happened might offer a cautionary tale to other small agencies. Anne Sit-Williams is a director for financial management and assurance at GAO. She talked about the findings with Federal News Network’s Jared Serbu.

Jared Serbu Anne, thanks for doing this. And this is a little bit of a complicated story to try to tell on the radio, but I’m confident we can do it. Take us through, if you would, just at the outset here. What actually happened? Take us through the chain of how this misstatement was made, what this misstatement was, and how it was ultimately discovered.

Anne Sit-Williams GAO has been conducting this audit of FHFA’s financial statements and internal controls, every year since about 2008. Sometimes I lose people when I say those words: financial statements, internal controls. So, what are those? Ultimately, financial statements are reports that show how much money is coming into the agency and how that money is being spent. And the internal controls are really the processes that make sure that the information in those financial statements are authorized and properly recorded. So in this scenario with FHFA, it is a little complicated because there are several players involved. One being FHFA, they have consolidated financial statements that include their IG. That’s common to have the IG included. However, in this scenario, the IG makes up a pretty substantial portion of the consolidated financial statements, about 14%, which is bigger than probably other agencies. And they also use what’s called a service provider. So, Treasury is involved in preparing some of the information and also pulling together the financial statements for FHFA. So, in this case, there was an error in the calculation for what’s called the FICA, or worker’s compensation liability. And it was a simple miscalculation that wasn’t caught in the review from the IG, making sure that those amounts were correct. And then at the financial statement level, FHFA, when they reviewed the financial statements, didn’t catch that error, either. There wasn’t caught until EAO was doing their testing and reperforming that calculation notice there, and in discussions with FHFA, did determine that it was a calculation error.

Jared Serbu And so this amounted to a $1.3 million misstatement that you ultimately characterize as a significant deficiency in auditor terms. First of all, you want to just take us through what are the elements of a significant deficiency? What does that mean to a layperson, and, sort of an unfair two part question — first, define significant deficiency, and then tell us, you know, what is the deficiency? Is it this $1.3 million in and of itself, or is it more that, oh, this is a red flag, that there may not be controls in place to prevent this kind of thing?

Anne Sit-Williams That is a good question, because a lot of people do get caught up in ‘well, what is the control deficiency?’ And there are different levels of control deficiency. When we’re testing internal controls, it could be the first level is control deficiency. The second level is a significant deficiency, meaning that it’s something that we want to alert management to. It is a bigger deal than obviously a control deficiency, but not to the level of what we would say is a material weakness, which means that it’s pretty reasonable. If it was a material weakness, that means it’s reasonable that there’s a material misstatement in the financials. We weren’t at that level yet. We were in this middle bucket, meaning, ‘hey, management, you need to pay attention to this and take it seriously.’ And they really have. The second part to your question is, was it just about the dollar amount? And it might seem that the dollar amount, 1.3 million is not a huge amount, but we do have to remember, A, that we have to scale it to the agency that we’re looking at. So for example, if Bill Gates had a $1 million misstatement in his bank account, it probably not matter to him as much as it does to me. $1 million would be a big deal in my bank account. So this 1.3 million might not seem like a big deal. If it was a bigger agency, it probably wouldn’t be. But FHFA’s a smaller agency. They are the agency that oversees the regulators for the home loan banks, and Freddie and Fannie. So they need to make sure that their records and controls are functioning properly as well.

Jared Serbu And as part of the same audit, you also identified some IT access control issues that you kind of characterize separately, apart from the significant deficiency that we were just talking about. One, why did you bin those separately, I think is an important question? And then, kind of describe the issues that you found on the IT front.

Anne Sit-Williams Sure. Those IT access issues, we always think about what line items do those impact. And when we’re doing the audit and trying to group these together. And these were at that lower level that I was talking about, control deficiencies. One was related to their payroll system, and the other one was related to just taking away access once people were separated from the agency. So, obviously, payroll system, we’re very conscientious of that. And just making sure that because payroll is FHFA’s big expense, we always pay particular attention to those. In this scenario, there was missing documentation to really make sure that, were these people authorized to have access to the system? And we weren’t able to get documentation for that. Ultimately, we were able to have discussions with the agency and make sure that people had appropriate access. Some of them had what’s called elevated access, meaning that they had people describe it as the, you know, keys to the kingdom, and they have access that’s probably — if you think about separation of duty — like, you don’t want your cashier to also be the person who’s making the bank deposit at the end of the day. So in this case, these people had elevated access, and they rightfully did, because they were supposed to be monitoring some of the operations that were happening. But we just need to make sure that FHFA has a process to make sure that the people who have elevated access are also being monitored. And with the other one, was also kind of that lower level controlled efficiency, is for separated employees when they leave, just making sure they take access away for all of their systems that they had access to when they were employed, which, in the old days, making sure keys and badges were taken away was easier because that was a physical thing. But now, in the remote environment, making sure that that access is taken away is important.

Jared Serbu My sense is these issues are fairly common across federal agencies. Is that true? Do you have a good sense for whether this is kind of pervasive? I’m talking specifically about the IT access control issues, removing access for separated employees and controlling the levels of access.

Anne Sit-Williams It’s definitely an area we always tend to look at because they are the riskier areas, just in thinking about the agencies I’ve audited. A few of them have definitely had these type of issues. I think a lot of people do have employees separating, and they also grant elevated access and access without the appropriate documentation. So, I would agree that it’s not uncommon to see this.

Jared Serbu And the last thing I wanted to ask you, I think, Anne, is, are there any cautionary tales for other agencies who might have similar setups with shared services providers that handle their financial statements? I mean, this is a little bit of an unusual situation in that you have this chain of the OIG to the main agency, to a shared service provider. Any takeaways for other agencies that might use a similar setup?

Anne Sit-Williams Yeah, I think that in several cases there are agencies that use contractors or shared services, and they think that, well, because we’ve hired them, they have good internal controls, so we can rely on that. And you can, to an extent. But ultimately, at the end of the day, the agency is the one who’s responsible for all of this. They’re the ones who are signing the representation letters at the end of the day, saying that the internal controls and financial statements are fairly presented and operating, so they can’t fall asleep at the wheel and just rely on those external parties. And the same thing with even just thinking about what is the point of the review, not just signing a piece of paper at the end of the day. It’s really digging in and seeing did what was supposed to happen, happen? And I think that’s where we have a lot of errors and control deficiencies when we identify them.

Jared Serbu And you mentioned this briefly, but I just want to make sure we hit it, that it sounds like FHFA is really taking everything that you’ve given them on board, and they’re working to address everything that you recommended.

Anne Sit-Williams Yes. The director of FHFA and the Inspector General have taken these recommendations that we’ve made very seriously. They’re already, when we met with them a few months ago, have already started implementing some of the remediation efforts to correct the internal control findings. And we start the audit very soon for 2024. So, we’ll be able to follow up on those.

Tom Temin Anne Sit-Williams, director for financial management and assurance at the Government Accountability Office, speaking with Federal News Network’s Jared Serbu. We’ll post this interview along with a link to her report at federalnewsnetwork.com/federaldrive. Subscribe to the Federal Drive wherever you get your podcasts.

The post Internal financial control problems can afflict agencies large and small first appeared on Federal News Network.

• The Department of Veterans Affairs paid out $11 million in bonuses to career executives not eligible to receive them. Now a bipartisan group of lawmakers is seeking answers. House lawmakers are asking VA how long it will take to claw back those bonuses and what steps it will take to hold department leaders accountable. The lawmakers also want to know what steps VA will take to ensure future financial incentives are awarded responsibly.
  (Spanberger demands answers, accountability from VA over nearly $11 million misspent on executive bonuses - Rep. Abigail Spanberger (D-Va.))
• For the second time this week, a federal cybersecurity leader is heading out the door. Eric Goldstein, the executive assistant director for cybersecurity at the Cybersecurity and Infrastructure Security Agency, is leaving federal service after more than three years. CISA confirmed his last day will be in June, but didn't say exactly when. Goldstein's decision to leave government comes two days after Chris DeRusha, the federal chief information security officer, announced his decision to move on. CISA Director Jen Easterly praised Goldstein, saying through his leadership CISA pioneered new models of operational collaboration, reshaped its ability to detect and address cyber risks and shifted the balance toward building technology that is secure by design. A CISA spokesperson didn't say who would be acting in his place after Goldstein leaves.
  (Second senior cyber leader this week to exit federal service - Federal News Network)
• Transportation Security Administration employees are about to see major workforce changes. That is after TSA signed off on a new collective bargaining agreement with the American Federation of Government Employees. The seven-year contract offers more official time, sick leave, uniform allowances and much more. It also comes after TSA workers received a major pay bump last year. Altogether, it will have a massive positive impact, said TSA Administrator David Pekoske. “If we didn’t have this CBA, if we didn’t have this pay package, I would submit to you, we probably wouldn’t have a TSA in five or 10 years,” Pekoske said. Looking ahead, AFGE is now calling for the passage of a bill to further cement workforce rights at TSA.
  (TSA, AFGE see milestone contract as ‘pivot point’ for frontline workforce - Federal News Network)
• New legislation in the House calls for a crackdown on improper payments. Federal agencies made more than $230 billion in improper payments last year. A bipartisan bill seeks to rein in that wasteful spending. The Enhancing Improper Payment Accountability Act would subject federal spending programs to stricter reporting requirements if they pay out more than $100 million annually. It would also require agencies to report out their antifraud and risk management controls. Reps. Abigail Spanberger (D-Va.) and Blake Moore (R-Utah) are leading the bill.
  (Spanberger, Moore Introduce Bipartisan Legislation to Reduce Improper Payments, Strengthen Confidence in Federal Programs - Federal News Network)
• The White House wants agencies to consider social and behavioral science in policymaking. On Wednesday, the Biden administration released its Blueprint for the use of Social and Behavioral Science to Advance Evidence-Based Policymaking. Policymakers will have access to data used to measure the effectiveness of government services, and how they reach their intended targets, before developing programs. The blueprint provides a hundred examples of how social and behavioral science has been used to advance innovation and ensures that agencies will have the appropriate number of staff with the required expertise.
  (White House releases policymaking guide - Whitehouse.gov)
• The Technology Modernization Fund Board is making its first investment in generative artificial intelligence as part of awarding four new investments, worth $49.2 million, to three agencies yesterday. The State Department received its first two awards from the TMF, including $18.2 million to use GenAI in its data environment to improve the sharing and understanding of information among all of its offices around the world. The State Department also won funding to modernize its identity and access management tools. The National Oceanic and Atmospheric Administration and the Office of Federal Student Aid won the two awards from the TMF to modernize customer-facing systems. Since January 1, the TMF Board has made nine awards to eight agencies.
  (State, NOAA, Education win new IT modernization funding - Federal News Network)
• The Army is getting rid of its online training for enlisted troops. The service is eliminating the requirement for all enlisted soldiers to complete the Distributed Leader Course. Soldiers currently working on the courses will not be required to complete them. And soldiers who have not begun the training are no longer required to start. Enlisted soldiers were previously required to complete the courses before attending a noncommissioned officer academy.
  (Army eliminating Distributed Leader Course - U.S. Army)
• The Department of Veterans Affairs is trying to use a career development portal to boost its cyber workforce skills. The internal VA website includes training modules spanning 32 different cyber work roles across the agency. Through the portal, the VA is offering courses in IT, AI awareness and much more. VA employees can also take a self-assessment to decide what skills they can — and should — try to develop. The goal is two-fold: improve retention of the agency’s cyber employees, and close some of the VA's existing skills gaps in technology.
  (VA career development portal - Department of Veterans Affairs)
• The Department of Homeland Security will launch a cyber task force focused on artificial intelligence if a bipartisan bill makes it through Congress. The bill would require the Cybersecurity and Infrastructure Security Agency to lead a group to address safety and security challenges posed by AI. CISA’s AI task force would give annual updates on its work to Congress. Reps. Troy Carter (D-La.) and Bennie Thompson (D-Texas) introduced the bill.
  (Congressman Carter, Thompson Introduce CISA Securing AI Task Force Act - Rep. Troy Carter (D-La.))
• House lawmakers want to give personnel at the Office of Strategic Capital temporary assignments in the private sector. The House Armed Services Committee’s draft defense bill would require the Defense Department to establish a program under which the Office of Strategic Capital would arrange assignments for its employees at private companies, with the goal of improving their understanding of emerging defense industrial base capabilities and the role of venture capital in shaping future modernization requirements.
  (Lawmakers want to place Office of Strategic Capital employees in private companies - House Documents)

The post Spanberger demands VA clean up its act when awarding financial incentives first appeared on Federal News Network.

Sikorsky Aircraft and the Defense Department have been arguing in court for the past 17 years, over the company’s compliance with cost-accounting standards. One reason it has been running so long is the government keeps asserting violations but takes no action. For more on the importance of this case, the Federal Drive with Tom Temin spoke with Haynes Boone procurement attorney Zach Prince.

Interview transcript: 

Tom Temin Sikorsky Aircraft and the Defense Department have been arguing in court for the past 17 years over the company’s compliance with cost accounting standards, CAS. One reason it’s been running so long is the government keeps asserting violations but takes no action. For more on the importance of this long-running case, we turn to Haynes Boone procurement attorney Zach Prince. Is this, like, the biggest thing since the INS law case, which might be still running after 50 years, for all I know?

Zach Prince  So, Tom, the dispute has been essentially based on facts that came up in 2007. So, what happens, if you’ve got a contract that’s subject to the full cost accounting standards, you have to submit a disclosure statement. And the disclosure statement sets forth your accounting methodologies, the way that you’re accounting for costs.

Tom Temin And the way you have to account for cost is clearly delineated in regulation, correct, if you’re a defense contractor?

Zach Prince Yeah. So, if you’ve got the cost accounting standards, it sets forth standards. So, those are broad frameworks for certain categories of costs or how you have to set up your accounting. The way you implement that is somewhat up to you. It’s intentionally set up as more of a framework than very specific ‘you must do X, Y, and Z, and no other accounting is okay.’ But the reason you have a disclosure statement is so that you can tell the government this is how we account within the framework for these categories of costs. The government reviews it and then they start issuing contracts — multi-million dollars of contracts — necessarily, right? Because if you’ve got cash contracts that means they’re at least $2 million. Full CAS means you got 50-plus million dollars in CAS-covered work. So, we’re talking about huge contracts that are based on a understanding of what your accounting framework is.

Tom Temin Many years ago, before it got into dispute territory, we should say — the dispute hasn’t been going as long as I said, but the contract has — Sikorsky submitted its methodology for cost accounting and it seemed to be okay with the government?

Zach Prince Yes. So, they submitted their disclosure statement in 2007. And included in that disclosure statement are explanations of how it’s dealing with IRAD, independent research and development costs, and bid and proposal costs. Any big contractor that’s dealing with this is setting forth those methodologies. The government looks at it for adequacy. And then years later, in this case, they came back and they said, hold on a second, we think the way you’re actually doing this for IRAD and BMP, which is a CAS 420 issue, is wrong, and they demanded millions of dollars in a cost impact. The magnitude is blocked out in the decision. So we don’t know exactly the dollars, but it’s got to be millions for this dispute to be worthwhile.

Tom Temin All right, and Sikorsky, then, obviously has not agreed. And there’s the idea of post-facto discovery after acceptance of the disclosure statement is really what this dispute is all about.

Zach Prince Yeah. They made an argument that I’m extremely sympathetic to, and it’s one that a lot of big defense contractors have. And that’s, the government saw what we’re doing, right? They knew the methodology that we’re applying. They should not be allowed now, years later, after they’ve awarded millions of dollars in contracts, to say, actually, that was always wrong from the get-go. Set aside the merits of whether CAS 420 is or is not violated here. Sikorsky argued we shouldn’t have to get there because the government accepted this. We should just move on. This came up in the big Raytheon case a couple of years ago at the Federal Circuit, first at the Armed Services Board. Also, the Armed Services Board agreed in that case that the disclosure statement that Raytheon had filed had set forth how they were accounting for certain lobbying costs and other corporate organizational costs, and that that should have prevented the government from raising the challenges that it did. The circuit ignored it all. So this still hasn’t been tested at the circuit. They just set aside that issue and dealt with something else. Here, at the Court of Federal Claims, Sikorsky brought up the same argument, and the government said in 2022, they moved to dismiss on that basis. They said there’s no sound basis within the law for Sikorsky to prevent us, the government, from challenging a CAS violation based on their disclosed practices. We have the right to challenge any violation of CAS within the six-year statute of limitations, and that’s it. And this was a big decision in 2022 was that Judge Leto, at the Court of Federal Claims, denied the government’s motion to dismiss. In other words, the court said, we’re going to entertain this argument that you are, in fact, prevented from arguing that Sikorsky had an issue when you’ve accepted their disclosed practice. It didn’t say at that time that this is definitely going to win, but it did represent what we thought was potentially a sea change in what are often 100-million-plus dollar disputes that the government should not, in all fairness, come in years later and say, we knew what your practice was, but now we don’t like it and it’s too late for you to fix it because you’ve incurred these costs. But tough, you now owe us money.

Tom Temin We’re speaking with procurement attorney Zach Prince. He’s a partner at Haynes Boone. And let me just ask you about a fine-sounding distinction. And that is the government could or could not accept the methodology in the disclosure. But then later, could it find that while we are still in agreement with your methodology, you, Mr. Contractor, violated your own methodology and we’re going to challenge that cost on that basis? But that’s not what’s happening here, right?

Zach Prince No, that’s not what’s happening here. And I think even Sikorsky would agree in that situation that the government would be permitted to come in and say, you aren’t following your disclosed practice, right? You have to follow your disclosed practice. The issue that Sikorsky, I think, rightfully raised, and the court was clearly sympathetic to, was we were following our disclosed practice, and the government is saying that our disclosed practice is insufficient.

Tom Temin Interesting. And what’s also surprising to, you know, a layman in this, if you look at a company like Sikorsky, which has been a federal contractor since the founding of the first helicopter, and then you’ve got places like Raytheon, which go back decades, what could possibly be different in the way they’re accounting for contract 10,000 that they weren’t doing in contract 9,999 back to zero?

Zach Prince So, it is common practice. A large company is going to have some changes in the way that they are approaching their accounting. And they’ve decided that accounting for costs this way versus that way, this gets really arcane, is beneficial to us for different reasons that have benefits. One cost objective, there’s another cost objective. There is a lot to the accounting treatment of different costs. And when they want to change a cost accounting practice and a CAS-covered contract in particular, they have to go through a whole process for explaining to the government what the change is and why it’s beneficial to the government and why they ought to accept it. That’s not exactly what was the issue here, but there’s plenty of reasons that a company would be changing their cost accounting.

Tom Temin What is the status of this case now? And it sounds like something the entire industry should be watching. Really?

Zach Prince The industry ought to be watching this. So this case is now in discovery. And that’s where this decision that I’m bringing up today and why it’s on my mind again, came up. The government in discovery started asking about information relating to 155 separate IRAD or independent research development projects. They’ve got a contracting officer’s final decision here, though, that question costs related to two specific projects. The government seemed to be in discovery, making these sweeping requests that are wasting a lot of company resources, potentially in a phishing expedition, to find more fodder for another claim. And Sikorsky said the government ought not to be allowed to do this. The way they tried to bring this to the court’s attention, usually in discovery, and without going too far into the weeds in this kind of thing, you’d ask for a motion to essentially prevent the government from asking about these things. They asked for a motion to dismiss instead. They wanted to dismiss the government claims pertaining to anything except for the two IRAD projects that were in dispute. The problem was, that the court was grappling with, there were no claims from the government relating to anything except for those two projects. That is, the court can’t dismiss something that hasn’t been asserted. On the other hand, the government can’t ask for things pertaining to something that it hadn’t asserted either. So, Sikorsky really did win on that point. The court said, notwithstanding the government’s suggestion, that maybe there’s some sort of broader argument the government had initially brought against Sikorsky that every IRAD project is flawed somehow. That’s not actually what they asserted. The government claim, just like a contractor claim, is subject to what you actually state, right? And what the government then decides in a final decision. So, Sikorsky is still protected from these sweeping government demands for more information. And so the government has to stay focused on the claim that’s before it, for now at least, unless they want to issue a new decision on these two projects. And so we’re still working our way to an actual decision on the merits. My guess is a trial and a decision on the merits. So this is going to be percolating for years to come, I suspect.

Tom Temin Right. And by the way, the two projects you were talking about are improvements to the H60 Blackhawk and the S92 gearbox. So it can get pretty arcane what it is you’re dealing with, whatever the S92 gearbox is, but sounds like there’s some sand in that gearbox at this point.

Zach Prince That’s a good way to frame it.

Tom Temin Procurement attorney Zach Prince is a partner at Haynes Boone. As always, thanks so much.

Zach Prince Thanks for having me, Tom.

Tom Temin We’ll post this interview at federalnewsnetwork.com/federaldrive. Hear the Federal Drive on demand. Subscribe wherever you get your podcasts.

The post Contractor’s dispute over cost-accounting standards has roots dating back 17 years first appeared on Federal News Network.

• Sen. Chuck Grassley (R-Iowa) wants a progress report on how the Defense Department is improving oversight of its purchase cards. The senator is looking for answers from the Pentagon by early May about how it is implementing auditor recommendations to increase oversight of employees using the government purchase card. Grassley said a recent inspector general report, finding employees classified purchases for COVID-related emergency services that turned out not to be COVID-related, shows a lack of internal controls. The purchases ranged from plumbing repairs to NordicTrack ski machines to lab chemicals and supplies. Grassley detailed five questions, including asking for all the processes and procedures DoD has in place to ensure the purchases are what they are purported to be.
  (Sen. Grassley presses DoD on purchase card oversight - Sen. Chuck Grassley (R-Iowa))
• Agencies considering moving offices now have to take into account several social, economic and environmental factors before making a decision. An updated Federal Management Regulation from the General Services Administration told agencies to keep in mind factors like proximity to transportation corridors and promoting environmentally sustainable development. These requirements, for both leased and owned buildings, are in addition to agency mandates around mission, physical security and cost considerations. GSA issued the final rule as part of its requirements under the Biden administration's federal sustainability plan. GSA had not updated the regulation since 2005. The new rule goes into effect on May 22.
  (New factors for agencies to consider when moving office buildings - GSA)
• Agencies have more answers for handling hiring changes under the Fair Chance Act. To start, agencies have to make job applicants aware of the requirements in the Act, the Office of Personnel Management (OPM) said. That law bans agencies from asking applicants about their criminal history until after giving them a conditional job offer. OPM said agencies should also make sure their procedures for implementing the Fair Chance Act are well-documented. That can help, for example, if an applicant questions the timing of a criminal history check. OPM said agencies who have clear documentation on hand are better able to mitigate complaints or adverse actions.
  (Guidance on restrictions on preemployment criminal history inquiries - Office of Personnel Management )
• The Department of Veterans Affairs is seeing new pay incentives drive up employee retention. VA Secretary Denis McDonough said “quit rates” for its workforce are at “historic lows.” He said data shows its use of a new critical skills incentive is contributing to higher retention. VA got that authority under the toxic-exposure PACT Act and can offer bonuses to employees with skills in short supply at the department. McDonough said the VA is also recruiting more nurses after losing them to big pandemic hiring bonuses offered by private health care providers. “We have some evidence to suggest that some of those nurses are returning,” McDonough said.
  (VA sees its special pay authorities driving up workforce retention - Federal News Network)
• The Coast Guard is planning to eliminate some units and realign some others because of “unprecedented” staffing shortfalls. The agency said it intends to shut down almost two dozen small-boat stations across the country. Those stations will stay in the Coast Guard inventory, but only be used during special circumstances, because the service does not have enough crew members to staff them full time. The service is accepting public comments on the plan through May 24.
  (Operational Adjustments Resulting from Workforce Shortages - U.S. Coast Guard (via Federal Register))
• The State Department can take years to get a new embassy up and running. But the top Republican on the Senate Foreign Relations Committee said that is not fast enough when diplomats need to hit the ground running. So Committee Ranking Member Jim Risch (R-Idaho) has introduced the Embassy in a Box Act. The bill would require the department to develop a way to fast-track the planning and construction of new missions overseas, and would require the State Department to issue guidance on the expedited construction methods.
  (Risch introduces Embassy in a Box Act - Sen. Jim Risch (R-Idaho))
• Specialists in acquisition, HR and budgeting will have a new website to get information on the federal workforce. The so-called “HR marketplace” compiles personnel data, along with available solutions to governmentwide human-capital challenges. The Office of Personnel Management launched the new website earlier this week, with the idea of creating a “one-stop shop” for anyone looking to better understand workforce issues. One of the end goals is to help agencies more effectively invest in HR technology.
  (HR marketplace website - Office of Personnel Management)
• The Air Force is moving forward with what might end up being DoD's biggest example of teaming manned and unmanned systems together. That is an idea Defense officials started pressing for, in a big way, a decade ago. Officials said they have executed contract options that will give existing vendors the go-ahead to start building real-world examples of the unmanned systems that would fly alongside human pilots in the Air Force’s Collaborative Combat Aircraft program. Eventually, the Air Force wants to build about 1,000 of those systems, with a final production decision expected in 2026.
  (Air Force exercises two Collaborative Combat Aircraft option awards - U.S. Air Force)

The post Senator underwhelmed by DoD oversight of government purchase card first appeared on Federal News Network.

It might seem like agencies designated as high impact service providers receive the bulk of the attention when it comes to customer experience efforts in government, but small component and independent agencies also are pursuing transformative CX — some using Technology Modernization Fund dollars.

Two cases in point: AmeriCorps, which fosters volunteerism in service of others, and the National Transportation Safety Board, which investigates civil aviation and other U.S. transportation accidents. We talked with technology leaders from both agencies for a panel during Federal News Network’s CX Exchange 2024.

NTSB Chief Information Officer Michael Anthony noted a CX theme that many agencies encounter, namely, the importance of a broad definition of “customer.”

For NTSB, everyone is a potential stakeholder or customer constituent, Anthony said. He named the traveling public, those affected by transportation accidents, the industries whose accidents the NTSB investigates, other federal agencies with which NTSB cooperates, and the agency’s own staff as possible customers.

AmeriCorps has an equally broad constituency. Chief Modernization Officer Linda Southcott said the agency thinks in terms of the thousands of its grant-receiving organizations with whom a quarter million volunteers interact directly each year.

Tapping TMF to tackle core systems revamps

Through its TMF-funded customer experience project, AmeriCorps is replacing its 20-year-old core grant management case system. The leadership team hopes to improve things for both the agency staff and the grantees, Southcott said. AmeriCorps received a $14 million TMF investment for the modernization effort.

“We’re developing a new grants management system,” she said, “trying to bring more flexibility and efficiency to our business processes and our workflows, but also increasing access to those resources for our public constituents.”

Southcott added that with the existing system, “we have challenges in meeting our business needs and also growing and scaling up as national service continues to grow.” One issue is that federal grant management standards evolve, and it had become increasingly difficult for the legacy system to inculcate what’s known as the Federal Integrated Business Framework for Grants.

AmeriCorps planners expect the new system, which is nearing completion, to better support data-driven decision-making and deliver more value from grant-related data, said Andrea Gibbons, the agency’s chief data officer. She envisions the new system helping AmeriCorps get “to a place where we can start to do more predictive analytics and to see what changes that we can make to our programs.”

The agency began the effort to modernize the grant system and its workflow in 2022. It’s now in the final phases of design and configuration.

By comparison, NTSB’s program is nascent. It launched its TMF-funded effort about six months ago, Anthony said. The goal is to solve problems stemming from the scattered nature of the agency’s data and applications.

“Our investigative data is not centrally located,” Anthony said. “And because of that, it’s not easily accessible or even exploitable for our internal and external stakeholders.” Investigators have trouble sharing data, and they often must enter the same data into multiple systems separately, he said.

The to-be state will bring all investigative data into a single, secure environment, Anthony said.

“This is really going to streamline the management of our investigative artifacts,” he said. “That’s investigative reports, supplemental documents, accident data and, probably — most importantly  safety recommendations.”

The future system, he added, will incorporate a modern, intuitive search function. Anthony anticipates future data visualization capabilities and improved data sharing with stakeholders such as the Federal Aviation Administration using application programming interfaces.

“We’re also going to be doing something we haven’t done before, and that is proactive notification of when an investigation changes,” Anthony said. Customers will be able to subscribe to alerts, rather than having to keep checking the NTSB website.

The new system, moreover, will better support an enterprise case management environment for NTSB, he said. Eventually staff will also digitize past incident and investigative data.

“And that’s where I think you really see like a force multiplier,” Anthony said. “You can really run analytics, generative artificial intelligence, all those capabilities on top of that. All of these things are really going to benefit our external constituents as well as internal staff.”

TMF benefits beyond access to funding

Small agencies typically lack deep budgetary resources to take on projects like total systems modernizations, which can leave them unable to keep pace with larger agencies they cooperate with. For instance, Southcott said, AmeriCorps has struggled to keep its systems as up to date as those of agencies like the Federal Emergency Management Agency and the Centers for Disease Control and Prevention. AmeriCorps partners with both in its public health channel.

Besides the extra money, “the TMF opportunity also gave us access to technical assistance and guidance from industry experts at the TMF board,” Southcott said.

TMF funding also comes with the virtue of not being tied to the uncertainties of regular appropriations. For fiscal 2024, those are arriving in agency coffers six months into the fiscal year. Plus, Southcott added, the TMF board will negotiate repayment plans other than 100%.

For Anthony, small agency work proved a revelation after spending the bulk of his early career as an Army civilian and at the IRS, Anthony said. At NTSB, funding is relatively thinner, and people typically wear multiple hats, he said.

“The bottom line is: Our past and current appropriations simply don’t meet our internal and external customer demands,” Anthony said. “And because of this, we continue to add technical debt.” Multiple mandates pertaining to initiatives such as zero trust and artificial intelligence only compound the problem, he said.

“TMF for us is a game changer to enable us to do some of the things we know we need to do,” Anthony said. “We just haven’t had the resources to do it.”

Prioritizing CX investments

Even with extra money from TMF, technical and program managers must pick their opportunities carefully, starting with understanding what customers need most, all three panelists said.

Up-to-date case management topped the NTSB list.

“However, in our, in our case, we had to figure out what not to include,” Anthony said. “There’s a lot more demand than capacity, so we tried to select some of the most important pain points for each of our various stakeholder communities, something that we could do in a timely manner.”

At AmeriCorps, “our staff has mentioned for years, the pain points with our legacy systems,” Southcott said. Effectively going after the pain points, she said, required collaboration. That’s because one of the goals for modernization is to capture knowledge in users’ heads and express it as sharable data.

“It’s important to be doing this together with the chief data officer — having a solution that allows folks to do their jobs and do the transactions, but then building centralized data where the analytics can happen,” she said.

Added Gibbons: “We rely so heavily on institutional knowledge. We have a staff that knows everything about everything.” But they must spend a lot of time hunting for information. “That’s really what this whole effort will free people up for, to be able to use data more innovatively.”

Discover more customer experience tactics and takeaways from Federal News Network’s CX Exchange 2024 now.

The post CX Exchange 2024: AmeriCorps, NTSB on using TMF funding to reimagine systems and services first appeared on Federal News Network.

New data from the Government Accountability Office estimates agencies lost as much as $521 billion due to programmatic fraud between fiscal 2018 and 2022.

The Office of Management and Budget strongly disagrees with that estimate, questioning the plausibility of GAO’s assessment.

No matter what the real amount of fraud is across government — and agencies may never truly know — the Treasury Department is giving agencies tools to stop fraud before it starts.

David Lebryk, the fiscal assistant secretary at the Treasury Department, said Treasury is offering new and existing platforms and databases to help agencies move from being reactive to proactive in stopping fraudulent payments.

“Oftentimes was very difficult to have to raise our hand in real time and say, ‘we can get money out the door and prevent fraud at the same time.’ So one of the really major focuses that we’re having at Treasury is to think about ways that as you design programs and you have tools available to the agencies to make sure that you can do both — you can get the money out the door quickly but also make sure that you’re preventing fraud to the maximum extent possible,” Lebryk said in an exclusive interview with Federal News Network. “We have something called the Center of Payment Integrity, in which we have a number of databases that we allow agencies to match against. That includes looking at things like eligibility verification, making sure we’re not paying dead people, for example, understanding whether the vendor has problems and we shouldn’t be doing business with a vendor, whether there’s been someone incarcerated and other kinds of eligibility criteria. In addition, we’re also offering a service called Account Verification Services, in which we can make sure that when a payment goes to a bank account, it is in fact going to a real bank account holder. We can do that in real time. And third, we’ve had some success with really looking at check fraud and how we can minimize check fraud, which is a problem that’s impacting the private sector.”

While the Treasury makes 98% of all payments electronically, the 2% that goes out via paper check are facing a higher risk of fraud.

Treasury tool stopped $500M in potential fraud

Lebryk said Treasury has been piloting and is now expanding a new tool that uses machine learning to look for anomalies on paper checks. So far, Treasury has run about 40 million checks through the ML application.

“If we see an anomaly, we actually flag that check and let the financial institution know that there’s a potential problem with it,” he said. “To date, that tool has stopped over $500 million of fraudulent payments that would have gone out. It is a case of very good collaboration with the inspector general community. They allowing us to then use it to actually bring more cases against fraudsters. We have a lot more opportunity to do even more of that kind of thing.”

The verification tool scans checks looking for unusual such as a foreign bank account or address, or if the person has never received a government check before.

Like with any machine learning and similar tools, Lebryk said Treasury has been improving the data and models to gain confidence in the approach and reduce false positives.

Lebryk said Treasury is now using the check verification tool on all checks go through Treasury and the Federal Reserve.

“That information that is going back to financial institutions in really near-real time so that the financial institution can take quick action,” he said. “This is another case where the government has limited capability to design quickly, new technology and skills that the private sector is actually investing a lot of money in. So this is another example where we have leveraged the private sector, and we will continue to level of private sector in terms of looking at really their tools that are being used and that we might be able to take advantage of.”

GAO makes 3 recommendations

Treasury is looking for similar tools and capabilities from the private sector. It is holding an industry day on April 18-19, and released a request for information in early March to get a better understanding of what industry is using or is developing to improve payment integrity.

The use of better tools and data is one of three broad recommendations from GAO for how OMB and Treasury can do more to reduce and eliminate fraud.

GAO said OMB should issue new guidance that identifies and establishes consistent data elements and terminology for use across agencies and requires agencies to use existing data systems and processes to do more to limit fraud.

Meanwhile, GAO says Treasury should establish an effort to evaluate and identify methods to expand governmentwide fraud estimation to support fraud risk management. It should prioritize programs at increased risk of fraud. Treasury also should take more advantage of its data-analytics capabilities, such as within the Office of Payment Integrity, which includes the Do Not Pay program.

Lebryk said the Center for Payment Integrity proved its value time and again during the pandemic, and it’s expanding those lessons across the government.

“When we started using the account verification tool, we said if we were going to make an economic impact payment to an individual who already was receiving a government payment and we were comfortable that that was a legitimate account, we flipped some of those payments to go directly to those accounts,” he said. “That ability to do that significantly reduced fraud, but also importantly, it made for a much better end user experience.”

Treasury goal to risks core all payments

Lebryk said all of the tools through the Center for Payment Integrity are free to agencies.

“We want to encourage agencies to actually use these databases and to run their payments against those databases. Now, in the end, that agency has to make a determination about whether they want that payment to go through or not, with so many payments that we issue, we don’t have the ability to make judgments ourselves at Treasury. Only the agency can make a judgment about whether it’s a payment that they’d like to make or not make because they’re the ones who provide us the amount, and the person who’s actually going to receive the payment,” he said. “One of the challenges I think that we face is how do we make sure that agencies have the capability to use our services, and then once they get the information back from us, what do they do with that information? In some cases, there are situations where a hit will occur and, in fact, it should be a payment because it’s legitimate. There are other cases where it’s really shouldn’t be a flag. I think as we look into the future as we are trying to really develop these capabilities, we should be scoring every payment that the government makes. We should be putting some sort of confidence level of around that payment.”

Lebryk added in time the tools will continue to improve and give agencies a better sense of where a payment falls in the fraud/risk spectrum.

He said Treasury will continue to build or take advantage of private sector fraud detection capabilities and build internal analytical tools.

In fact, a new bipartisan bill, introduced Monday, backed by House and Senate lawmakers, as well as the White House and federal watchdog agencies still investigating pandemic fraud, would preserve analytics tools built by the Pandemic Response Accountability Committee (PRAC), a governmentwide council of inspectors general, and would repurpose those tools use to uncover more fraud in federal spending.

The Government Spending Oversight Committee Act would give agency IGs the tools they need to combat fraud across more than 10 major funding bills, including pandemic-related spending.

Lebryk said FEMA is a good example of an agency that is trying to take fraud prevention more seriously and building internal analytical capabilities to stop it proactively.

“It’s an area where there’s real opportunity because much of the money that’s spent is federally-funded, state-administered programs. I think one real area of opportunity for us is how do we engage the states more so they can actually have access to the data that we have available to us?” he said. “There’s things like has someone applied for an unemployment benefit in one state and also done it in two other states? And the ability to have datasets and capability to match against that to find out that’s occurring. It would and can be a really step forward into preventing fraud.”

The post Treasury giving agencies a fighting chance to prevent fraud first appeared on Federal News Network.

Navy Secretary Carlos Del Toro has made it clear, time and again, that readiness will not suffer.

Del Toro met with acquisition leadership yesterday to lay out how it will prioritize readiness over investments in new products.

Russell Rumbaugh, the assistant secretary of the Navy for financial management and comptroller, said Thursday that the acquisition professionals heard some of the details about the steps the Navy would have to take if Congress doesn’t pass a full year budget.

“Obviously, we’re still hoping this doesn’t happen. But it’s a little bit breathtaking when the Secretary has to sit there and hear the bad news delivered to his acquisition professionals,” Rumbaugh said after speaking at the ACT-IAC Digital Transformation Summit in Reston, Va. on Thursday. “Every time we go through these budget shenanigans, it makes everybody’s life harder. All of the funds distributions are different. We have multiple ways that we may have to chop it up to make sure we stay within the controls that we’re stuck with because of a continuing resolution and to create a lapse, it’s even worse. There’s plenty of drama and turbulence no matter what.”

The first of two current continuing resolutions expire March 1 for some agencies and March 8 for others.

It’s unclear if Congress will even pass all spending bills and there is some discussion about a full-year CR.

The Congressional Budget Office reported in January that a full-year CR could require big cuts to agency discretionary budgets. Non-defense agencies would face a 5% or a total of $41 billion in cuts, while defense agencies would have to reduce their discretionary spending by about $1 billion or 1%. If Congress passes a full-year appropriations at current levels, only non-defense agencies would face cuts under sequestration of about 9% or $73 billion.

In December, the Office of Management and Budget said that cuts under sequestration would not be decided until later this spring.

Navy to make readiness a priority

All of this uncertainty is leading the Navy to plan for the worst.

Del Toro said at the AFCEA and U.S. Naval Institute West 2024 conference in San Diego on Feb. 15 that the Navy may face a deficit of $40 billion without a full year budget.

“[W]hile Congress has so far avoided a painful and disastrous government shutdown, a full-year continuing resolution would be monumentally damaging to our efforts to build and maintain the fleet of today — much less the fleet of the future,” Del Toro said. “Without a full budget, our safety and readiness will suffer, at a time when we are ill able to afford it—lost time in readiness cannot be bought back through future funding.”

Rumbaugh added that the cuts from sequestration in 2013 severely impacted the Navy’s readiness and a decade later, it is “still trying to dig out of that hole.”

Other military services have rang similar alarm bells. The Air Force said a yearlong continuing resolution, estimating that the service would lose as much as $13 billion in buying power before adjusting for inflation. The Space Force would face the largest funding gap, losing nearly $2.6 billion in research dollars. The Air Force would lose up to $1.4 billion in research, test, development and evaluation dollars. It would have to cancel 34 construction projects, and the measure would impact seven national security space launches.

Navy auditability could suffer

Sabrina Singh, the deputy press secretary for the Defense Department, said on Monday that a full-year CR would have a major impact on the services and defense agencies’ readiness.

“No amount of money can buy back the time we lose when we are forced to operate under continuing resolutions,” Singh said. “If you add up the total time spent under a CR going back to 2011, we’ve spent nearly five years under CRs.  That puts our national security at risk and prevents the department from modernizing as we continue to be constrained to existing funding levels and prevented from launching new programs. We must break this pattern of inaction.  We can’t outcompete the People’s Republic of China with one hand tied behind our back three, four, five or even six months of every fiscal year. The best way that Congress can support the department is to pass appropriations bills into law as soon as possible. We need predictable, adequate, sustained and timely funding.”

Rumbaugh said both the potential funding shortfall and the focus on readiness over investment will have downstream effects on the Navy’s goal to become audit ready by 2028.

He said the migration to the new enterprise resource planning (ERP) systems is considered an investment. So if the Navy is prioritizing readiness over investments, including new ships, all the progress the service has made over the last few years will slow down.

“By 2026, we want to shut off [the legacy system] SABERS for the Department of the Navy and be out of that and into our big ERP. The nitty gritty is taking a bunch of commands and moving them, and some of them do have unique financial transactions we haven’t dealt with before,” Rumbaugh said. “Other times it is a modern magnification. And most probably you just kind of take the people with you. They have to learn we’re asking a huge amount of them to not just do their day job, but learn how to do their day job in a totally new environment. We are very sympathetic and very concerned about them even as we have to just do it.”

Marines already migrated

The Navy recently completed the migration of the Bureau of Personnel to the ERP. Rumbaugh said the Fleet Forces Command are among the final organizations that need to migrate and that will happen over the next few years.

“Migrating them is in process. We’re just cleaning their data, which you won’t be surprised to hear is a fairly formidable challenge. But we’re in the process, I can see the end of this migration. It’s great,” he said.

As a part of the ERP modernization effort, Rumbaugh said the Navy has retired 11 of 16 financial management systems, but a CR and/or sequestration would impact the service’s ability to shut down the remaining systems.

The Marines Corps already are well on their way to not only moving to a new systems, but, hopefully, auditability.

Rumbaugh said the Marines decided to move to Defense Agencies Initiative (DAI), a financial management modernization effort that doesn’t involve the services.

“They’re all the way there on the financial management, and that does just address a huge amount of problems,” he said. “There was still a bunch of side things we had to do, but that migration, that huge cultural change, which was absolutely turbulent, absolutely painful, they are through, and in fact, I think, now healing from it.”

The post Without full year budget, Navy to face $40B shortfall first appeared on Federal News Network.

The Coast Guard’s transition to a new Department of Homeland Security financial management system is under the microscope at the Senate Appropriations Committee, where lawmakers are seeking more information about delayed payments and cost increases.

The committee, in the report on its fiscal 2023 spending bill, is directing DHS’s chief financial officer and chief information officer, along with the Coast Guard, to brief the committee on the delays once the annual spending bill becomes law.

“The committee is concerned with delayed payments and significant cost escalations resulting from the Coast Guard’s transition to its new financial management system,” the committee’s report states.

Lawmakers want to know the “full extent of the delays,” as well as whether they’ve been fixed. The report also calls for the CFO and CIO to brief the committee on “lessons learned from all prior transitions and measures that are being taken to ensure that further transitions are successful and cost effective.”

The Coast Guard announced it had fully transitioned to the Financial Management System Modernization Solution in January. It’s the third DHS component to adopt the new system after the Countering Weapons of Mass Destruction Office and the Transportation Security Administration, respectively.

But challenges that existed prior to the official transition only deepened, with technical issues causing delays in payments across the Coast Guard, including for contractor invoices, permanent change of station (PCS) claims, temporary duty (TDY) claims and other expenses. At one point, the backlog reached 29,000 invoices.

In March, the Coast Guard established an Incident Management Team to address the technical issues and chip away at the backlogs. The team is led by Rear Adm. John Hickey, director of operational logistics. The team has been working with contractors IBM and Oracle on the FSMS technical issues.

In an Aug. 2 email, a Coast Guard spokeswoman said the backlog is down to 2,800 invoices. The service is now “on track” to pay all invoices over 30 days old by the end of fiscal 2022, according to the spokeswoman.

The Coast Guard has also fully cleared the backlog of PCS and TDY claims, respectively, and is processing those claims in real-time, according the spokeswoman.

“The Coast Guard continues to resolve defects and improve FSMS and its interfaces,” the spokeswoman said. “While system responsiveness has improved and significant progress has been made on fixing problems, the Coast Guard continues to work with the contractors to prioritize efforts, reduce latency and resolve remaining defects to improve user experience.”

Meanwhile, Senate appropriators are asking  more questions about DHS’s broader financial systems modernization plans. The report on the fiscal 2023 spending bill directs DHS “to provide a strategy for the acquisition of software and services related to FSM, including an analysis of alternatives and a plan for how the department will ensure full and open competition in the award of all related contracts.”

Budget documents show DHS is requesting $114 million for financial systems modernization in fiscal 2023. The funding covers software upgrades for the Federal Emergency Management Agency, Immigrations and Customs Enforcement, the Cybersecurity and Infrastructure Security Agency, DHS’s Science and Technology directorate and the department’s management directorate.

“The Committee is concerned that an expectation of implementation by components exists for these efforts without properly planning for contingencies that preserve congressional prerogatives, and consequently the department is encouraged to ensure transitional flexibility,” lawmakers write in the report on the fiscal 2023 spending bill.

The post Lawmakers flag concerns with payment delays, cost overruns for Coast Guard’s new financial system first appeared on Federal News Network.

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• The Postal Service is reminding employees they can’t get paid for speaking, writing or teaching about their experience on the job. That includes writing a book or article about the specifics of their postal duties or internal postal information. Leaders there want the Postal Service to present a single, united message to the public. Anyone with questions about the policy can call the USPS ethics helpline at (202) 268-6346.
• Continuing resolutions are hurting the ability of agencies to do business or hire. The Government Accountability Office found that Congress enacted 47 continuing resolutions since fiscal 2010. Officials at the Agriculture Department told GAO that CRs can cause hiring activities to slow down or pause. USDA Office of Rural Development officials said they may not extend new hire offers during a CR. The Education Department said travel funds may be inaccessible during a CR and in some cases the department has to delay contracting decisions until it knows its final funding levels. Congress has enacted a CR in all but three of the last 46 fiscal years.
• The Government Accountability Office reported that the Defense Department is likely underreporting how much money it’s spending on cloud services. In part, this is because DoD has not fully and consistently implemented the TBM, the Technology Business Management framework, as required by OMB in 2019. GAO found the Army and the Air Force did not follow leading TBM implementation practices, causing DoD to struggle in how it fully tracks IT costs. GAO recommended the DoD CIO issue new guidance to ensure consistent TBM implementation. But the Pentagon disagreed with that recommendation, saying only that the services and agencies are responsible for data quality.

• The Defense Health Agency came out on top over a protest of one of its major IT services contracts. The Government Accountability Office upheld DHA’s award to Perspecta Enterprise Solutions under its enterprise IT services integrator vehicle. Two losing bidders, Deloitte and ManTech, filed a protest after the May 13 award for this contract that is worth at least $640 million. GAO said Deloitte and ManTech’s claims that the award was tainted by conflicts of interest were not supported. And GAO said the two losing bidders’ allegations that the evaluation and selection decision were unreasonable and inconsistent also fell short. DHA will use the EITSI contract for all IT services and support capabilities, including delivery of a single electronic health record system to support an estimated 9.4 million beneficiaries.

• The U.S. Copyright Office rolled out a new digital service for citizens seeking a copyright. The Copyright Office, part of the Library of Congress, has enabled online posting of documents for obtaining a copyright. Creators can establish an account using Login.gov. They can pay the recordation fees through Pay.gov and track their application status online. The Enterprise Copyright System goes public after a testing period that started in 2020. Mailing in paper is still possible, but the Copyright Office recommends online.

• The Bureau of Prisons must pay $300,000 in a discrimination settlement. The American Federation of Government Employees said BOP prison wardens in Mississippi intentionally discriminated against a local union president. BOP must compensate Cydnee Price for over 1,000 hours of union work she completed on her own time. AFGE said federal wardens prohibited Price from working entirely on official time to perform union work, although the previous union president did not receive the same treatment. Price is the first Black woman to serve as a chapter president for a federal correctional center.

• The Defense Department is encouraging service members at risk for Monkeypox to get vaccinated. The World Health Organization officially declared Monkeypox a health emergency last week. The Defense Department is taking steps to ensure service members know how to stay safe. There is an approved vaccine within the U.S., however supplies are limited. DoD is working with the Centers for Disease Control and Prevention on ensuring service members have access to the vaccine within 24 to 48 hours. DoD said service members should seek medical care immediately if they believe they were in close contact with someone who is infected. Monkeypox spreads through bodily fluids, rashes and through respiratory droplets.

• Lawmakers are shining a spotlight on the Coast Guard’s troubled transition to a new financial management system. The Senate Appropriations Committee is calling on Department of Homeland Security officials to explain payment delays and cost overruns after the Coast Guard switched to a new DHS financial management system. The Coast Guard announced the official transition to the system in January. But technical delays quickly led to a backlog of payments for contractor invoices, permanent change-of-station claims, and other charges. The appropriation committee is directing a briefing on the Coast Guard delays, as well as DHS’ overarching strategy for financial systems modernization.

• The Cybersecurity and Infrastructure Security Agency is in line for another budget increase. The Senate Appropriations Committee’s 2023 Homeland Security spending bill includes $2.9 billion for CISA. That’s $334 million more than CISA’s current budget. The Senate committee’s bill would increase funding for cyber threat hunting and several other CISA programs.

• Most military retirees in DoD’s TRICARE system will soon pay for their health premiums out of their regular paychecks. Paying by allotment has been optional until now, but Congress sought to make it mandatory as part of the 2020 Defense authorization bill. The new rule is finally going into effect today and once fully implemented, DoD said it expects to save about $3 million a year, because it will no longer have to cover the bank processing fees for retirees, who currently pay with credit cards.

• The Senate Special Committee on Aging is looking into the accessibility of federal websites for seniors and people with disabilities. Sen. Bob Casey (D-Pa.), the committee’s chairman, called on the Department of Veterans Affairs to improve digital services for disabled veterans. He’s also urging the Justice Department to restart governmentwide reports evaluating the accessibility of federal technology. DOJ has not issued an accessibility evaluation report since 2012, despite a requirement that the agency complete them every two years.

• The Senate’s bill funding the military would abolish the Hyde amendment and expand abortion access for service members. The Hyde amendment bans abortions by federal entities except in cases of rape, incest or potential harm to the pregnant mother. If passed, the bill would significantly change how service members receive abortion care. Since Roe v. Wade was overturned, some service members have been grappling with travel and financial issues when seeking an abortion.

• Pay day is going to be twice a month — the first and 15th — for all active duty soldiers starting on Oct. 1. The new standard is part of the Army’s effort to move to the Integrated Pay and Personnel System. While the change will impact the number of times soldiers get paid each month, it will not change their total monthly compensation. Soldiers switching to semi-monthly are not going to miss a payment or have to stretch their money out because of the switch.

• Monthly returns on nearly all Thrift Savings Plan stock and Lifecycle funds rose in July. The TSP bounced back after a June slump. The small cap stock index “S fund” had the biggest improvement since June. It increased by 18.27 percentage points. The government securities-backed “G fund” was the only fund that declined. It dropped slightly from 0.29% in June to 0.26% in July. The L Income fund had the smallest monthly increase. It grew from -1.60% in June to 2.21% in July. All funds finished in the black for the first time since April 2021. (Federal News Network)

The post Postal workers reminded they cannot profit from speeches, articles or books about official duties first appeared on Federal News Network.

The Defense Department and its components are now into their fifth consecutive year of having their financial statements scrutinized by independent auditors. In the first few years, there were some very promising signs that DoD was on the path to eventually earning a clean opinion, as every other federal agency has already done.

But in the assessment of the department’s inspector general — the office with overall responsibility for auditing the financial statements — it’s getting more difficult to find clear signs of widespread financial improvement. To be sure, Defense components are still finding and fixing a lot of individual problems. But as of 2021, there was little to suggest the department was making significant headway against the systemic problems that are holding it back from a clean audit.

That’s at least one of the biggest takeaways from the latest edition of a plain-language summary the OIG publishes each year to summarize the billion dollar-per-year audit effort.

Marcus Gullett, the deputy assistant inspector general for audit, financial management and reporting, said the scale of the DoD audit effort is massive, and in the OIG’s view, still a completely worthwhile endeavor, but that DoD leadership needs to do more to ensure those efforts bear fruit.

“We’re talking about over $900 billion in appropriations. Fifty-four percent of total government assets are in the DoD, and this involves over 1,200 auditors across 26 standalone audits. So it’s worth commending the efforts that the audit teams and the components put in year in and year out,” he said in a wide-ranging interview discussing the results on Federal News Network’s On DoD. “But 17 of those 26 standalone audits have disclaimers of opinion, which basically just means that there’s not enough audit evidence available to conclude that the financial statements are fairly presented. So the theme for FY 2021, frankly, is that the progress has stalled.”

While the audit is a vast enterprise and DoD has had some successes, the overall statistics do tend to suggest the department is treading water.

This year’s financial statements showed the military departments and Defense agencies managed to solve 808 distinct problems — called notices of findings and recommendations (NFRs), in audit parlance. But auditors reissued another 2,678 NFRs that had already been identified in past years’ audits, and added another 690 to the pile this year.

Another way of looking at the problem is to measure DoD’s number material weaknesses: broad categories of problems that are so serious that they could lead to meaningful misstatements about, for example, the department’s spending in a particular area, the valuation of its assets, or the inventory it has on hand.

In 2021, there were 28 of them, two more than the previous year, and 25 were repeats from the 2020 audit. In 2020, there were 17 DoD components that hadn’t yet earned an individual clean opinion. The number was still the same as of 2021.

“One way to think about this is that when we issue NFRs, management agrees with us. We have over 90% concurrence rates, and they’re developing corrective action plans,” Gullett said. “There’s a cadence there of being willing to address a specific issue.”

The harder part seems to be getting DoD financial management leaders to see the forest for the trees — and take serious steps to resolve the much harder underlying challenges that many of those NFRs point toward.

“We’ve been pretty consistent in messaging over the last few years that this effort needs to lead to developing sustainable business processes,” he said. “What we might see, for example, is in the IT realm. One particular system may have an access control issue, so the auditor issues an NFR. And next year, the component addresses the issue in System A. But then, the auditor comes back and says, ‘Okay, the issue is fixed in System A, but System B has the same exact access control issue this year.’ So that’s the type of enterprisewide thinking we need to see before the components are able to move toward addressing the material weaknesses that flow from all of those NFRs.”

But the OIG thinks there’s reason for optimism on that front. During the first few years of audits, many of the politically-appointed leadership positions critical to that enterprisewide view were vacant or led by acting officials. That’s no longer the case. DoD’s top two financial management positions are now held by Senate-confirmed officials. The Army and Air Force also have Senate-confirmed leaders in their respective comptroller/CFO seats.

In the early days of the audit effort, DoD ordered each of its components to draw up credible “roadmaps” for how that component could achieve a clean opinion. Now that those positions are filled, there’s a good opportunity for the Pentagon to not just hold the components to their plans, but for DoD as a whole to draw up one of its own.

“The roadmaps are oftentimes inconsistent across components. They also have sort of vague measures of success,” Gullett said. “So one of the things we’re focused on in developing measurable goals is taking a top down approach from the DoD comptroller level: sort of pushing down their expectations for these roadmaps.”

And asked whether DoD’s “stalled” progress means it’s time to reassess the overall audit effort, Gullett said the answer is clearly no.

After all, most of the 800 NFRs the department managed to close over the past year really were financial management weaknesses that should have been solved anyway, even if the audit weren’t the driving factor behind them. And the more DoD can do to communicate the operational impact of fixing its finances, the better.

“Each year the auditors identify something tangible, it kind of highlights [that’s] important,” Gullett said. “This past year, the Navy highlighted that its inventory records showed [less than what it had]. At another Defense Logistics Agency site, DLA wasn’t measuring certain metals accurately. We have example after example, and the risk here is that if you don’t know what you have and where you have it, your ability to accomplish your mission can be hampered. I’d also point to contingencies. Ukraine, or COVID-19, or Afghanistan. Those things happen, if DoD doesn’t have the controls in place to pivot to support these contingencies, that’s going to have a bigger impact on the overall operating budget. So this is an opportunity to really hone in developing those sustainable solutions with clear goals, holding the components accountable, and kickstarting the audit progress again.”

The post Four years into DoD financial audits, IG says progress has stalled first appeared on Federal News Network.

For the last few years, the IRS has been changing its external reputation and internal culture of an agency that doesn’t take technology risks.

The Pilot IRS program may be one of the most well-known examples of this external evolution, reaching out to vendors to bring in innovation and new approaches to contracting.

Internally, the use of robotics process automation in the procurement and financial offices has been a strong influence on the workforce’s culture.

Shanna Webbers, the assistant deputy commissioner for operations support at the IRS, said a combination of short-term wins and agencywide collaboration helped drive two major changes.

“The technology enables our staff do other things or things that they may find more interesting, instead of just mundane, repetitive tasks. That’s really what we want to do. We want to create an environment where our staff want to come to work, where they’re excited to come to work, where they feel like they are making a tremendous amount of value to executing our mission at the IRS,” Webbers said on Ask the CIO. “How do we create that and beyond just upskilling and rescaling in areas with human resources-related to technology or robotic process automation? We really are looking at the whole person. How do we ensure that every individual in the organization has the right skill set, the right experience and the right knowledge to take on positions of greater responsibility?”

Webbers said that meant changing how they trained the workforce. Instead of focusing 80% of the training on the technical aspects of procurement, the use of RPA and automation has let the IRS refocus the training to 50% on technical and 50% on other skills like critical thinking, writing, leadership and collaboration.

Agency collaboration

The second initiative to drive the culture change is to create a partnership with the agency’s chief information officer’s office.

Webbers said the CIO’s office must give its final “blessing” before the bot can launch, the office has provided acquisition and financial with liaisons to help work through the documentation and security processes.

“We have a process in place where when we have ideas, we, through an intake form, submit them to the CIO and they get reviewed. There’s an IT advisory board that makes recommendations for how to move forward,” she said. “If we don’t have the capacity or the funding to move forward, the CIO’s office helps to prioritize the RPA investments.”

Across procurement and financial, the IRS has implemented a small amount of RPA bots so far, but expect to increase the number over the next year.

“We have other ones that are in the queue right now. In the next six to 12 months we are  focusing on RPA implementation that’s working around data reconciliation and management for our manual adjustments for refunds and deposits, that could save up to 35,000 hours per year,” said Teresa Hunter, the IRS’s CFO. “There’s a significant opportunity. We are a very paper-based organization. It’s just a matter of our IT organization having the capacity and the funding to keep up with the demand that is going to be coming their way. The CIO has a big job of making sure that we are secure and safe. It’s a balance between having a good relationship with your CIO office and understanding their perspective as well as the needs of the businesses.”

Hunter, like many CFOs, are seeing the value of bots for financial operations.

She said she is encouraging the staff to take a new way of looking at how they could do their work, which areas are repetitive and require mundane tasks that somebody had to do that.

“We know it does save time and effort on our staffs’ part,” Hunter said. “As we’re working on the automation, the innovation, the efficiency effort within CFO, we’re also looking at skill sets of our staff and how can we upskill or reskill them? What are the core areas that we want to focus on of making sure our staff are being trained to develop and grow in their role as we move forward with some of these shifts and changes? We aren’t looking to reduce full-time equivalents (FTE), but we’re looking at being able to be more analytical in our decision making and how we are approaching the work that we have to do so that we can be more successful and how we’re making decisions, how we’re coming to conclusions, and really getting ahead of any type of like audit issues or anything like that, where we’re really understanding our data and our workforce is really growing and developing along that path that would get us to the future of finance and the skill sets that are going to be required for people in a CFO organization.”

Relying on the innovation team

For both Hunter and Webbers, the continued move toward automation and using bots will be a balance of enthusiasm from the early adopters and managing those who remain cautious about it.

“One of the things that I believe helped us in that was just being open to hearing what they have to say about using bots. Every viewpoint was critically important to understanding the risk that may be associated with using a robotic process automation on a process that we had not proven out. So trying to take all of that input, letting them know that their input was important and mitigating the particular risks or accepting those risks, or coming up with a different approach to eliminate the risk, was our approach,” Webbers said. “At the end of the day, because I was in charge, I said, ‘Okay, let’s do it, we’re going to try and see.’ Fortunately, it worked out really well, and I think that those instances where we got those quick wins was important for people to gain confidence.”

She said the IRS looks back at every RPA implementation to create lessons learned and figure out where they can improve upon the process for next time.

Hunter added the CFO’s office created an innovation team to which employees can submit ideas for how to automate or improve a process.

“What I wanted to do was make folks a part of the process, where, I’ll steal a quote from procurement, can you tell me what you hate so that I can make you love it?” she said. “What are those opportunities that you just dislike doing every day? Let’s take a look at it because maybe there’s opportunity to do the work in a different way or automated it or whatever the solution may be, but there’s got to be an answer. We’ve focused on that as well as the change management portion of it as we’re thinking about how we’re looking at our work products. It’s really the mindset of how can a bot help me in my day-to-day life?”

The post IRS’ quick wins by procurement, finance demonstrate power, value of RPA first appeared on Federal News Network.

The federal shared services effort is about to undergo yet another revival.

The 20-plus year initiative to get agencies to move to common, back-office systems for financial management and human resources will, once again, try to convince agencies they have the cure to the legacy system disease.

“Many of the new solutions the government is or will be working on are digital products and services. This means that they are and must be designed with certain human best practices in mind. Those include human centered design, agile delivery, and frequent iteration in response to user feedback, which is critical to the work that we do,” said Krystal Brumfield, the associate administrator in the Office of Governmentwide Policy at the General Services Administration, at the recent ACT-IAC and Shared Services Leadership Coalition 2022 Shared Services Summit. “As we work on new shared services, we also want to continue to increase the adoption of existing and established shared services. If you have worked with federal services, and some of these might sound familiar, GSA fleet smart pay and the Enterprise Infrastructure Solutions (EIS) vehicle. I’m happy to report that all 24 CFO act agencies have adopted GSA SmartPay. This is a big win for shared services. We will continue to work with the senior accountable points of contact at each CFO and agency to promote federalwide shared services. We will also actively reviewing other federalwide share services to see if they are willing and meet the criteria to be included in the existing shared services portfolio.”

Brumfield joined the long-list of federal officials offering the “this time will be different” speech about shared services.

A quick history: The Office of Management and Budget kicked off this idea of shared services in 2001, added the Lines of Business initiatives in 2004 and by 2019, added at least three more memos, a new strategy, which created the quality service management office (QSMO) approach. During every one of these instantiations, the level of frustration grew among users and the number of legacy systems continued to increase.

And despite all this hard work, time and effort, many agencies still need to modernize back-office systems — financial, human resources, grants and acquisition — to name a few. The Treasury Department found in 2021 that at least 56 federal financial systems are approaching the end of their useful life.

The number of human resources systems facing a similar fate is not yet known. The Office of Personnel Management is about to launch a survey of the state of HR systems to help direct their future strategy and marketplace.

Shared services challenges remain the same

With the exception of the Cybersecurity and Infrastructure Security Agency at the Homeland Security Department, the QSMO effort suffers from the same maladies as previous attempts ranging from a lack of a clear mandate to no direct funding to oversight and accountability that ebbs and flows from OMB and from Capitol Hill.

Former and current federal officials who worked on shared services say while some mandates may be necessary, the key to this effort continues to be answering the “what’s in it for me?” question.

Jacqueline Jones, the deputy assistant secretary for administrative services at the Interior Department, said at the conference shared services providers, which the Interior Business Center is a governmentwide provider, must show agencies why moving their functions to another agency will be valuable.

“Are you going to take me to the next level for data analytics? How will you support my mission in a future state? How are you keeping up with everything that seems to change?” Jones said. “What I’ve experienced is it was always ‘that’s great, but it seems repetitive’ to what the agency is already doing. So we can’t just offer repetitive work. It must be mission focused work.”

Beyond the move to four e-payroll providers in the early 2000s that OMB mandated, there are only a handful of successful financial management or human resources shared services efforts. Even the latest attempt to modernize those payroll providers fell apart in November when one of the teams that the General Services Administration awarded a place on a multiple award contract dropped out.

The question then is, why is this latest revival different?

The answer, of course, is it may not be. Hopefully, the lessons of 20 years of fits and starts will drive the new efforts in the financial management and human resources areas to start.

Financial marketplace close to launch

The financial management QSMO led by the Bureau of Fiscal Service in Treasury is furthest ahead of the other non-cyber initiatives. The Fiscal Service just finished a two-year assessment to be ready for the future of financial management.

As part of that analysis, Commissioner of the Bureau of Fiscal Service Tim Gribben decided that they needed to run this QSMO marketplace as a business.

Tami Perriello, the deputy commissioner for finance and administration at BFS, said, the marketplace will be required to be competitive, control costs, focus on quality service delivery, be innovative and constantly looking at customer experience. She said the Administrative Resource Center (ARC), where the financial management shared service offering lives, now reports directly to Gribben.

Perriello said BFS will launch the FM QSMO marketplace with public and private sector providers later this year.

“We’re establishing and, very nearly there, partnering with our colleagues at GSA a more standards-driven marketplace that’s designed to meet common needs at a baseline of capability. We are collaborating with government and industry to establish those baselines and included in them all of the things that everyone could think of, which is going to be challenging for all of you providers of services and solutions to government,” she said. “The idea behind all of this is to reduce burden on agencies to adopt these shared services solutions. If it meets the basic standards, then the fewer, more unique requirements you have can be plugged in. But you can be confident that after we’re done reviewing it and it’s available on the marketplace, that service or solution is going to meet the basic governmentwide reporting needs and capabilities that all of us have to have to meet.”

GSA and BFS announced in April it would refresh the multiple award schedule with a new special item number for financial management quality service management office (FM QSMO) core financial management solutions and IT professional services.

GSA and the QSMO will hold a webinar on May 18 for vendors to learn about the technical evaluation requirements for SIN.

GSA and Fiscal Service are trying to make sure they answer the “what’s in it for me?” question too.

Brumfield added GSA is collaborating with agency and industry partners to create a performance management framework to measure the impact of the QSMO services.

“This framework will take a balanced scorecard approach to ensure that we’re able to measure how the marketplaces are performing,” she said. “The scorecard will roll out in three phases to validate what we’re doing, to make sure that there’s value in the work that we’re doing based on industry feedback. We will modify our business standards based to allow for public comment. These standards are placed on Regulations.gov.”

Brumfield said GSA also is looking for other shared services options from agencies. But, and going back to the value comment from Jones, Brumfield made it clear that “our lens should focus on what our customers want and their experience says from start to finish, this administration is committed to building an effective, equitable and accountable government that puts the public first.”

Technology a differentiator this time?

Perriello, a former CFO at the Small Business Administration, said the value question was one she often wrestled with in that role.

She said CFOs must be able to demonstrate to leadership that moving to shared services will make the agency mission more efficient and effective.

“One of the things that new technologies has brought to us is the ability to bring disparate systems together. New technologies allow not just a general ledger sitting there with dead transactions in it, but that bring that data in with all of the loan systems, the procurement system and the other systems that are providing transactions, and looking at all of the across all of those feeder systems and bringing that data together is now possible because of the advances in technology,” she said. “But not everybody can afford to do that, so making that available is incredibly important to meet both the unique needs of an agency and to achieve the benefits of standardization that a shared services can provide.”

It’s a positive sign that GSA and the Fiscal Service are talking about the needs of the customer and taking a human-centered design approach as they develop the marketplace. But what will matter in the short term is getting agencies to buy in to that concept and get some successes from a few early adopters.

The post Another attempt to revive federal shared services first appeared on Federal News Network.

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• The Office of Personnel Management is giving formerly incarcerated individuals an opportunity to join the federal workforce. OPM is hosting webinars this week for formerly incarcerated job seekers to understand the federal hiring process. It’s also holding webinars for agencies to learn about recruiting strategies and hiring authorities meant for candidates with a criminal record. Candidates don’t have to answer questions about their criminal history in the initial application for most federal jobs, but do need to disclose that information once they receive a tentative offer of employment.

• The Federal Managers Association is raising the red flag over bonuses paid to the U.S. Marshals Service’s Senior Executive Service members. The association wrote to Sens. Dick Durbin (Ill.) and Chuck Grassley (Iowa), the chairman and ranking member of the Judiciary Committee, respectively, asking them to look into both cash awards paid to SES in 2019, 2020 and 2021, and the slowness of the Marshals Service’s response to their Freedom of Information Act request. FMA said the agency paid hundreds of thousands of dollars in bonuses during a time when thousands of USMS employees went without pay during a 35-day furlough in 2019.

• Firings are on the table for Department of Veterans Affairs employees who don’t comply with COVID-19 requirements. VA Secretary Denis McDonough said six health care workers have been separated from the agency for not following workplace COVID-19 requirements. One employee refused to give the agency his agency vaccination status. Four employees were terminated for refusing to wear a mask. Another was fired for refusing to comply with COVID-19 testing requirements. McDonough said the agency is providing reasonable accommodations for employees who have requested religious or health exemptions to the vaccine mandate for health care workers. “The decision here, at the end of the day, has been a clinical one. It’s how do we ensure veterans that we’ve taken every step within our power to ensure their safety and their security?” (Federal News Network)

• The Department of Veterans Affairs major financial systems upgrades earned a good review from auditors. The VA got high marks for its change management and data migration and conversion efforts under the Financial Management Business Transformation program. VA is replacing its 30-year old financial system with the Integrated Financial and Acquisition Management System. This $3.2 billion project already is implemented at the National Cemetery Administration and the Veterans Benefits Administration. The Government Accountability Office found VA is doing a good job meeting the seven tenets of good change management. GAO also said VA’s data conversion activities were consistent and sought to minimize risks to operations.

• Nobody said auditing the Defense Department would be cheap. The Navy Department has just created a new contract vehicle to support its audit readiness efforts. It’s worth up to $1 billion over the next five years. Four vendors won spots on the ID/IQ contract: KPMG, Deloitte, Guidehouse, and Sehlke Consulting. Navy officials told vendors they want them to get their financial processes in shape for an independent audit and also support “sustainable” processes to keep them that way once the Navy or Marine Corps earns a clean opinion.

• Congress spent the last few years trying to improve privatized military housing after mold, mice and lead paint harmed service members and their families. Now even after guilty pleas from contractors, some of the same issues are afoot. Balfour Beatty Communities has been disregarding environmental and safety concerns in military housing communities for the past two years. That’s according to a new Senate report looking into the company. The findings come after the business pleaded guilty late last year to defrauding the government between 2013 and 2019. The Senate report said Balfour Beatty’s behavior since 2019 mirrors the tactics it used in the years previous. Executives from the company were scheduled to testify before lawmakers today. (Federal News Network)

• The federal government is spending taxpayer dollars on robot dogs on the border, derelict lobster trap removal, and an opera about monkeys. Sen. James Lankford (R-Okla.) is highlighting these programs in his sixth annual report highlighting what he considers wasteful federal spending. Lankford said in this year’s report that the Army spent more than $13 million for office furniture at a facility in Florida, a nearly $2 million went to renovate buildings at Guantanamo Bay.

• Craig Martell is stepping up as the chief digital and artificial intelligence officer at the Pentagon. Martell will help the Defense Department accelerate its adoption of digital solutions, data management, analytics and AI. Martell recently served as the head of machine learning for Lyft and also held the same positions at Dropbox. He also is a tenured professor at the Navy Postgraduate School.

• The Cybersecurity and Infrastructure Security Agency is bringing on a long-time cybersecurity leader. CISA announced that Bob Lord will join the agency as a senior technical advisor. He’s expected to focus on strengthening partnerships, including the Joint Cyber Defense Collaborative. Lord was the first chief security officer at the Democratic National Committee. He also worked as chief information security officer at Yahoo and previously led Twitter’s information security program.

• The National Geospatial-Intelligence Agency released a new tech strategy. NGA released new technology focus areas at this year’s GEOINT summit in Denver. They include a big emphasis on data access and integrity, as well as automation. The areas help explain where the agency is headed, according to NGA Director, Vice Adm. Robert Sharp. “You can see that our workflows are changing from human initiated to machine to machine initiated, we need to make these changes in order to increase our speed and stay ahead of the growing amount of GEOINT created each and every day.”

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