No room for redundancies

Forest Service takes the ax to its duplicative services and systems.

Project: Human resources management. Agency: Forest Service.

Goal: To re-engineer all business processes associated with fiscal procedures
and consolidate human resources roles and responsibilities.

Obstacles: An antiquated information technology system, dispersed HR employees across 90 offices and
disparate technology platforms from office to office and region to region that created uneven policy administration and lengthy delays in invoice payments.

Solution:
Client and contractor worked together to create a plan that included a complete business process re-engineering effort, new HR information systems, consolidation of
offices and transition to electronic bill-paying systems.

Payoff: HR management functions were consolidated in a central, shared IT services environment in Albuquerque,
N.M., and business process re-engineering efforts are on target to save more than $100 million in the next few years.

If there's one federal agency that should be
able to see the forest for the trees, it's the
Agriculture Department's Forest Service.

Under prompting from the Office of
Management and Budget and
Congress to reduce operating
costs as its annual budgets shrink, the service
looked at its internal operations and discovered
some redwood-like problems: The service
had 90 human resources offices spread
across the country, a decentralized human
resources management and 153 separate
accounting units. Not to mention a paper-based
invoice processing system that was
keeping the logging industry busy.

The result was uneven HR administration
across the agency, information technology systems
that varied from office to office and
region to region, inadequate financial oversight
and lengthy delays in paying vendors.

Although federal auditors and the inspector
general had given the service's fiscal and budgetary
processes a satisfactory "clean-opinion"
rating for several years, they also noted that
the annual rating was achieved through "a
Herculean effort that was not sustainable in
the long run," said Jesse King, chief financial
officer at the service.

"We were also on the
[Government Accountability
Office's] high-risk list, and we
were under close scrutiny by OMB
for all the financial management
problems we had," he added.

There was also what King called "a
comprehensive weakness" in the
service's IT systems that involved
many things, he said, including
obsolete software and weaknesses
in network security. "We're working
diligently on it with USDA. It's
been a very tough thing to resolve."

After King, a former banking
executive, was hired as CFO,
USDA awarded BearingPoint Inc. a three-year,
$46 million contract in October 2004 to reengineer
the service's fiscal operations, trim its
HR organization and eliminate redundancies
and inefficiencies and their associated costs.

"We started with the people and the
processes aspects of the transformation and
then we selectively applied technology," said
Bob Emerick, senior manager of
BearingPoint's civilian agency practice.

TAILOR-MADE APPROACH

The original mandate was to proceed carefully
from an IT standpoint, Emerick said,
because the service was spread across the
country and unaccustomed to large-scale
changes. "Yet I think we found
places within that re-engineering
[plan] where we could really
leverage technology in a meaningful
way without overwhelming
the organization."

Under the contract,
BearingPoint would assist King
and his team in a business
process re-engineering of all
financial management and budgetary
processes. The service
experts and the contractor
formed 17 teams to examine all
processes and then redesign
them to operate more efficiently.

"They would also work with us
in identifying a central location someplace in
the country that would be an appropriate
place to centralize these operations," King
said. That place turned out to be
Albuquerque, N.M.

"We began implementation with a 15-
month timeline from start to finish, which is
very aggressive," King added. Every two weeks
a group of employees and their work were
transferred to Albuquerque.

In addition, the multiple payment centers
were eliminated, first by combining them into
four regional centers. They were later reduced
to one, which eventually also was moved to Albuquerque, Emerick said.
The consolidation of the financial management
operations has resulted in annual savings
of about $48 million, King said.

The multiple centers also had lacked the
technology to facilitate payments to vendors,
he said. About half of the service's annual
budget of slightly more than $40 billion goes
for fire suppression activities, including payments
for locally contracted services such as
aircraft assistance, medical care, and local
firefighters and police participation.

Under the old system, reams of paper documents
were prepared at a Forest Ranger station,
then faxed or shipped to multiple payment
centers for checking and verification
before vendors could be paid. Millions of dollars
often were not dispensed because of the
delays, which severely restricted the contractors'
budgets and payrolls.

BearingPoint's budget and finance re-engineering
effort focused on consolidating the
exchange of data by capturing it once electronically.

"We [introduced] the concept of using
service-oriented architecture and enterprise
application integration to tie together a lot of
the systems that were used as part of that
process," Emerick said.

That allowed the service's employees in the
field to enter invoice data once and transmit it
to the contracting officers and the vendors for
validation and signatures.

"When the payment center got it, it was
ready to go," he added. "Effectively it was just a
couple of pushes of buttons at that point to
finalize the transaction."

The result is a consolidated system that pays
vendors promptly and provides better managerial
and operational control over the 600
Ranger districts in nine regions. And by paying
its invoices within 30 days of receipt, as mandated
by federal law, the service saves money
by not having to make interest payments, King
said.

The agency has also instituted a number of
different systems changes that answer basic
accounting questions for King. "For example,
how many invoices do I have in my staff 's possession
to process to pay?" he said. "How old
are those invoices? What's the dollar value of
those invoices?"

ELECTRONIC END GAME

Emerick said the service expects to realize
about $100 million in savings on the finance
and budget side in the first couple of years. "I
don't want to misspeak, but I am pretty confident
they are on track for that savings."

Although the official contract concluded at
the end of 2007, BearingPoint is still working
on the project.

One goal yet to be realized is the total elimination
of paper documentation. A completely
electronic system would give King and his
staff a new management tool, he said. "It
would give us the ability to look in a system
and know exactly what stage of the process an
invoice is in."

"We're now working to bring in those other
documents in a paperless manner and have
them scanned upfront and then routed electronically
into the process," Emerick said.

The USDA last year awarded Accenture
LLP a contract worth about $100 million to
assist the service in replacing its current obsolete
Foundation of Financial Information
Management System. "That project is under
way," King said. "So at some point in the next
two to three years, Forest Service will be
migrating or converting all of its existing
ledger system into SAP."

David Hubler (dhubler@1105govinfo.com) is associate
editor at Washington Technology.

Reader Comments

Please post your comments here. Comments are moderated, so they may not appear immediately after submitting. We will not post comments that we consider abusive or off-topic.

Please type the letters/numbers you see above

What is your e-mail address?

My e-mail address is:

Do you have a password?

Forgot your password? Click here
close
SEARCH
contracts DB

Trending

  • Dive into our Contract Award database

    In an exclusive for WT Insider members, we are collecting all of the contract awards we cover into a database that you can sort by contractor, agency, value and other parameters. You can also download it into a spreadsheet. Read More

  • Is SBA MIA on contractor fraud? Nick Wakeman

    Editor Nick Wakeman explores the puzzle of why SBA has been so silent on the latest contractor fraud scandal when it has been so quick to act in other cases. Read More

Webcasts

  • How Do You Support the Project Lifecycle?

    How do best-in-class project-based companies create and actively mature successful organizations? They find the right mix of people, processes and tools that enable them to effectively manage the project lifecycle. REGISTER for this webinar to hear how properly managing the cycle of capture, bid, accounting, execution, IPM and analysis will allow you to better manage your programs to stay on scope, schedule and budget. Learn More!

  • Sequestration, LPTA and the Top 100

    Join Washington Technology’s Editor-in-Chief Nick Wakeman as he analyzes the annual Top 100 list and reveals critical insights into how market trends have impacted its composition. You'll learn what movements of individual companies means and how the market overall is being impacted by the current budget environment, how the Top 100 rankings reflect the major trends in the market today and how the biggest companies in the market are adapting to today’s competitive environment. Learn More!