VA cancels $400M modernization contract

The Veterans Affairs Department is cancelling its $400 million financial system modernization program, and will direct those resources to other projects throughout the agency, a senior official has confirmed.

The VA’s Financial and Logistic Integrated Technology Enterprise (FLITE) modernization program is not central to the department’s mission and core responsibilities, Roger Baker, assistant secretary for information and technology at the VA, said during a press conference this morning.

“Prioritization of the projects has been the primary driver of this, along with the recognition that we can’t do everything,” Baker added.

Instead, VA wants to work on projects closer to its overall mission, such as modernizing the veterans benefit system and upgrading its health records system. “We have limited resources, and we have to make certain that we’re going to be successful at the large projects that we do decide to roll forward with,” Baker said.

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The FLITE program was a multiyear initiative to standardize business processes and update the IT infrastructure that supports financial and asset management inside the VA. The program consists of two parts: the Integrated Financial Accounting System (IFAS), the largest component, and the Strategic Asset Management System. It also includes the VA’s Financial Reporting Data Warehouse service, which integrates several separate systems. IFAS and the data warehouse make up approximately two-thirds of the entire program, according to Baker.

The overall FLITE program had an estimated price tag of between $400 million and $500 million, Baker said. So far, the VA has spent $16 million over the last several years in the planning phase for IFAS.

Baker said the VA has yet to award the most important task order, which is for the IFAS component, and that was the key to making the decision right now. The VA had been holding the procurement because of problems in the program. And, while straightening out those issues, officials realized the FLITE program was not a priority item, he said.

Instead, the VA would consider working on the financial system with smaller projects that have less risk and a greater likelihood of success, Baker said. The VA has had its current core financial management system (FMS) since the 1990s. He said the VA can fix its financial management weaknesses by addressing the systems that feed into FMS. Through smaller projects, the VA wants to make sure it can track its financial data being fed into the core system, Baker said.

The VA’s decision comes just two weeks after the Office of Management and Budget put a hold on all financial system modernization projects, of which the VA’s FLITE program was scheduled to be reviewed by OMB officials. Before OMB’s memo announcing the hold, VA and OMB officials had been in discussions about the future of the project, Baker said.

"These are the right decisions to make. They're hard decisions," Baker said. While the financial system needs attention, "we need to do things that we know we are going to be successful at and that are going to be the most impactful with the dollars that we spend."