The U.S. Coast Guard began using a new financial management system in December 2021 as part of a larger $510 million modernization effort, but the Government Accountability Office (GAO) has found that it is not working as expected, and that “serious issues identified in operational system testing will need to be resolved before system capabilities are fully realized.”
The Department of Homeland Security (DHS) has defined and implemented a tiered governance structure to provide oversight of its financial systems modernization programs. In 2018, DHS also established the Joint Program Management Office to lead all aspects of the modernization programs, in partnership with DHS components. DHS has both department-level and program-specific plans to modernize financial systems.
Coast Guard’s primary goal of acquiring its new financial management system was to integrate the financial, contract, and asset accountability functions, as well as improve system operational performance to meet user needs. Coast Guard declared initial operational capability for the system in a June 2022 memo. The same memo however stated that Coast Guard management were “extremely concerned about the integration, functionality, and future sustainment of the system”. For example, contract documents would become trapped in automated workflows and manual corrections to records had to be made for Coast Guard to continue processing contract awards.
Coast Guard did not achieve expected full operational capability of the system in December 2022. DHS’s auditors found that Coast Guard had insufficient design and implementation of controls over both the review of obligations incurred and recording the receipt of goods and services to ensure the accuracy of expenditure records. The issues found hampered management and stakeholders’ ability to rely solely on system-generated reports to prepare accurate and auditable financial statements. Coast Guard’s ability to make timely and critical management decisions with assurance was also compromised. DHS declared a breach of program baselines for performance and decided to delay its planned December 2022 declaration of full operational capability.
GAO reports that although DHS identified, documented, and tracked metrics to assess Coast Guard’s system deployment, it did not address and remediate known issues identified in operational testing. The watchdog said DHS is now in the process of developing a remediation plan to address outstanding issues.
As part of its review, GAO also found that corrective action plans Coast Guard developed to address its fiscal year 2021 audit findings did not always contain all of the data attributes recommended in applicable guidance. For example, although DHS guidance emphasizes the importance of root cause analyses in resolving deficiencies, GAO found that such analyses were often not done.
GAO recommends that DHS’s Under Secretary for Management should ensure that the Joint Program Management Office works with Coast Guard to remediate known issues identified from testing, prior to declaring full operational capability for the ongoing financial systems modernization efforts. DHS agreed and added that these efforts would likely require adjustments to approved performance parameters and requirements. DHS expects to complete this action by the end of March 2023.
In addition, GAO is also calling for DHS’s Under Secretary for Management to ensure that Coast Guard follows applicable guidance when developing corrective action plans to include documenting the root cause analysis and other recommended attributes. DHS agreed with this recommendation also and expects to complete the work required by May 31, 2023.
GAO’s review also looked at financial management system modernization at the Federal Emergency Management Agency (FEMA) and U.S. Immigration and Customs Enforcement (ICE), both of which are in the planning phases of their modernization efforts. In November 2022, DHS awarded contracts for software licenses and stated that it plans to award contracts for system integration services for these components.
According to GAO, “DHS risks not fully achieving its goal of deploying systems that produce reliable data for management decision-making and financial reporting if it does not remediate serious issues identified by testing”. The watchdog added that “resolving deficiencies identified by testing before proceeding to the next phase in the acquisition process can help reduce the risk that future system modernization efforts at FEMA and ICE will not meet mission needs or expected capabilities”.
GAO recommends that DHS’s Under Secretary for Management should ensure that the Joint Program Management Office works with FEMA and ICE to remediate issues as they arise from user testing prior to moving forward with subsequent milestones for the ongoing financial systems modernization efforts. DHS concurred and set a date of September 30, 2024 to meet the recommendation.
