Report: CoreFLS failed on inadequate expertise, oversight

The Veterans Affairs Department should not award more task orders related to its troubled new financial management system to current contractor BearingPoint, nor any other vendor, until the department decides whether CoreFLS can be salvaged, a report released yesterday said.

"VA leadership needs to consider whether the CoreFLS project can meet the needs of the department or should be ended," said the report from the VA Office of Inspector General.

The IG also criticized VA for inadequate oversight of the contract that would ultimately cost $472 million. VA has committed $249 million to date.

VA leadership agreed with the IG's recommendations. The latest task order expired June 30.

The report follows an announcement last month that VA would phase out by Oct. 1 a pilot program designed to test the new $472 million financial management system at the Bay Pines Veterans Affairs Medical Center in St. Petersburg, Fla.

The financial management system, the Core Financial and Logistics System developed by BearingPoint Inc. of McLean, Va., has been beset with problems with data conversion and system interfaces, some of which led to substandard patient care and services at the VA hospital.

The IG cited inadequate contracting and monitoring of CoreFLS deployment. Most of the VA legacy systems that must integrate with the new financial system contained inaccurate data because they had not been used properly.

"This may be a systemic problem throughout the Veterans Health Administration," the IG report said. The effect of transferring inaccurate data to CoreFLS interrupted patient care and medical center operation.

"We are concerned that similar conversion problems will occur at other VA facilities if the conditions identified are not addressed and resolved nationwide," the report said.

If CoreFLS can meet the department's needs, VA should develop a comprehensive Statement of Work and compete the requirement.

Previously, VA noncompetitively awarded BearingPoint 22 task orders, for which the contractor developed the statements of work and cost estimates. VA accepted these without any independent evaluation of need or reasonableness. The IG said this was "tantamount to issuing BearingPoint a blank check."

VA should also ensure that it has the technical expertise to manage the project and that all its facilities have certified the accuracy and reliability of VA legacy systems and data that will be integrated with CoreFLS so similar conversion problems do not occur at other sites.

BearingPoint said it was reviewing the IG's report. "We are committed to CoreFLS, which is one of the most aggressive IT modernization efforts ever undertaken by the federal government," said BearingPoint spokesman John Schneidawind. "BearingPoint intends to continue to work with the VA and remains committed to this important project."

VA Secretary Anthony Principi established a board led by VA CIO Robert McFarland to examine the CoreFLS pilot program at Bay Pines and recommend what to do. Once the board decides on the future of the financial management system, VA will select a contracting officer technical representative separate from the project director to oversee CoreFLS requirements.