Labor to bring financial management system back in-house

The Labor Department hired Booz Allen Hamilton under a $74.2 million contract to manage its financial management system while it prepares to move to a federal s...

The Labor Department plans to move to a federal shared service provider for financial management services by 2019. But in the meantime, Labor will modify its current set up and move off a shared services provider.

Labor will directly contract with Booz Allen Hamilton under a three-year deal instead of paying the Transportation Department’s Enterprise Service Center and receiving operational support from Booz Allen.

Labor announced June 17 in a sole source justification on that it would contract directly with the company under a new $74.2 million task order through the General Services Administration’s IT schedule.

“Now that the New Core Financial Management Systems (NCFMS) is stabilized, the opportunity exists for DoL to assume project management oversight and realize efficiency in service and cost by contracting directly with BAH,” Labor wrote in its justification. “DoL continues to move forward with efforts to transition to a shared service provider for financial management services. Continued operation of NCFMS is required until the transition to a SSP is completed. BAH will provide assistance with decommissioning NCFMS, which could potentially begin in 2019.”

Labor had to move its financial system to ESC in 2014 after its contractor, GCE, suddenly went out of business. Labor paid more than $5 million for software licenses and interfaces for its financial management system in the cloud.

Over the last two years, Labor and ESC worked to stabilize and run the “highly-customized” Oracle eBusiness Suite 12.0.6 and the legacy software integrations with financial and procurement systems as well as interagency systems for grants management and travel management.

A Labor spokesperson said on an annual basis, NCFMS processes an estimated 454,000 invoices; 266,000 payments; 188,000 travel documents; 47,000 obligation documents; and 7,000 requisition documents and is used to manage and account for nearly $60 billion of taxpayer funds.

Labor says that the financial system now has reached a “steady state” and it has made changes to improve the data and personnel skill-sets to manage the system.

Labor says the move to only working with Booz Allen will give it more information and oversight over the system, and it will be able to more easily prioritize functions.

“By contracting directly with BAH to perform the same work, DoL will gain greater oversight and flexibilities in management of the contract and contract administration,” the agency wrote. “In addition, DoL expects to have greater cost certainty than previously realized as elements of this proposed award to BAH will be firm-fixed price. DoL expects to gain $2.6 million in contract efficiency as compared to the DoT/ESC actual costs for the operation and maintenance from April 2015 through March 2016.”

Labor says it has paid ESC about $18 million for the transition of the system and data from GCE.

Labor was one of the first agencies to move its financial system to the cloud. Back in 2009, the agency signed a $15 million contract with GCE to take advantage of the shared service.

In the end the deal didn’t work for Labor for several reasons, including an early contracting mistake for cloud services where the agency didn’t own its data and ended up spending money to buy it back from GCE.

Under the new deal, Booz Allen will provide financial services, to include business process support, accounting operations and internal and external audit support, financial application operations and maintenance services and technology hosting and systems administrative services.

Eventually, Booz Allen also will provide system decommissioning services once Labor moves to a federal shared service provider.

“DoL continues to discuss with [General Services Administration, Office of Management and Budget] and Treasury about further NCFMS stabilization efforts as well as a strategy to allow the department to begin the transition to a federal shared service provider,” Labor wrote in the justification document. “DoL is committed to ensuring that all identified barriers to competition are removed for the subsequent competition to SSPs, and the current limited sources award will allow for timely decommissioning of the current NCFMS.”

OMB in March 2013 mandated agencies migrate to a federal shared service provider. OMB named four financial management providers in May 2014–the departments of Agriculture, Interior, Treasury and Transportation.

In May, the White House expanded its approach to shared services, naming a customer council as well as a give agencies a shared services playbook.

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