No room for redundancies

If there's one federal agency that should beable to see the forest for the trees, it's theAgriculture Department's Forest Service.Under prompting from the Office ofManagement and Budget andCongress to reduce operatingcosts as its annual budgets shrink, the servicelooked at its internal operations and discoveredsome redwood-like problems: The servicehad 90 human resources offices spreadacross the country, a decentralized humanresources management and 153 separateaccounting units. Not to mention a paper-basedinvoice processing system that waskeeping the logging industry busy.The result was uneven HR administrationacross the agency, information technology systemsthat varied from office to office andregion to region, inadequate financial oversightand lengthy delays in paying vendors.Although federal auditors and the inspectorgeneral had given the service's fiscal and budgetaryprocesses a satisfactory "clean-opinion"rating for several years, they also noted thatthe annual rating was achieved through "aHerculean effort that was not sustainable inthe long run," said Jesse King, chief financialofficer at the service."We were also on the[Government AccountabilityOffice's] high-risk list, and wewere under close scrutiny by OMBfor all the financial managementproblems we had," he added.There was also what King called "acomprehensive weakness" in theservice's IT systems that involvedmany things, he said, includingobsolete software and weaknessesin network security. "We're workingdiligently on it with USDA. It'sbeen a very tough thing to resolve."After King, a former bankingexecutive, was hired as CFO,USDA awarded BearingPoint Inc. a three-year,$46 million contract in October 2004 to reengineerthe service's fiscal operations, trim itsHR organization and eliminate redundanciesand inefficiencies and their associated costs."We started with the people and theprocesses aspects of the transformation andthen we selectively applied technology," saidBob Emerick, senior manager ofBearingPoint's civilian agency practice.The original mandate was to proceed carefullyfrom an IT standpoint, Emerick said,because the service was spread across thecountry and unaccustomed to large-scalechanges. "Yet I think we foundplaces within that re-engineering[plan] where we could reallyleverage technology in a meaningfulway without overwhelmingthe organization."Under the contract,BearingPoint would assist Kingand his team in a businessprocess re-engineering of allfinancial management and budgetaryprocesses. The serviceexperts and the contractorformed 17 teams to examine allprocesses and then redesignthem to operate more efficiently."They would also work with usin identifying a central location someplace inthe country that would be an appropriateplace to centralize these operations," Kingsaid. That place turned out to beAlbuquerque, N.M."We began implementation with a 15-month timeline from start to finish, which isvery aggressive," King added. Every two weeksa group of employees and their work weretransferred to Albuquerque.In addition, the multiple payment centerswere eliminated, first by combining them intofour regional centers. They were later reducedto one, which eventually also was moved to Albuquerque, Emerick said.The consolidation of the financial managementoperations has resulted in annual savingsof about $48 million, King said.The multiple centers also had lacked thetechnology to facilitate payments to vendors,he said. About half of the service's annualbudget of slightly more than $40 billion goesfor fire suppression activities, including paymentsfor locally contracted services such asaircraft assistance, medical care, and localfirefighters and police participation.Under the old system, reams of paper documentswere prepared at a Forest Ranger station,then faxed or shipped to multiple paymentcenters for checking and verificationbefore vendors could be paid. Millions of dollarsoften were not dispensed because of thedelays, which severely restricted the contractors'budgets and payrolls.BearingPoint's budget and finance re-engineeringeffort focused on consolidating theexchange of data by capturing it once electronically."We [introduced] the concept of usingservice-oriented architecture and enterpriseapplication integration to tie together a lot ofthe systems that were used as part of thatprocess," Emerick said.That allowed the service's employees in thefield to enter invoice data once and transmit itto the contracting officers and the vendors forvalidation and signatures."When the payment center got it, it wasready to go," he added. "Effectively it was just acouple of pushes of buttons at that point tofinalize the transaction."The result is a consolidated system that paysvendors promptly and provides better managerialand operational control over the 600Ranger districts in nine regions. And by payingits invoices within 30 days of receipt, as mandatedby federal law, the service saves moneyby not having to make interest payments, Kingsaid.The agency has also instituted a number ofdifferent systems changes that answer basicaccounting questions for King. "For example,how many invoices do I have in my staff 's possessionto process to pay?" he said. "How oldare those invoices? What's the dollar value ofthose invoices?"Emerick said the service expects to realizeabout $100 million in savings on the financeand budget side in the first couple of years. "Idon't want to misspeak, but I am pretty confidentthey are on track for that savings."Although the official contract concluded atthe end of 2007, BearingPoint is still workingon the project.One goal yet to be realized is the total eliminationof paper documentation. A completelyelectronic system would give King and hisstaff a new management tool, he said. "Itwould give us the ability to look in a systemand know exactly what stage of the process aninvoice is in.""We're now working to bring in those otherdocuments in a paperless manner and havethem scanned upfront and then routed electronicallyinto the process," Emerick said.The USDA last year awarded AccentureLLP a contract worth about $100 million toassist the service in replacing its current obsoleteFoundation of Financial InformationManagement System. "That project is underway," King said. "So at some point in the nexttwo to three years, Forest Service will bemigrating or converting all of its existingledger system into SAP."