[House Hearing, 108 Congress]
[From the U.S. Government Publishing Office]




PRIVATE SECTOR CONSULTANTS AND FEDERAL FINANCIAL MANAGEMENT: MORE THAN 
                          BALANCING THE BOOKS

=======================================================================

                                HEARING

                               before the

                 SUBCOMMITTEE ON GOVERNMENT EFFICIENCY
                        AND FINANCIAL MANAGEMENT

                                 of the

                              COMMITTEE ON
                           GOVERNMENT REFORM

                        HOUSE OF REPRESENTATIVES

                      ONE HUNDRED EIGHTH CONGRESS

                             SECOND SESSION

                               __________

                             JUNE 16, 2004

                               __________

                           Serial No. 108-244

                               __________

       Printed for the use of the Committee on Government Reform


  Available via the World Wide Web: http://www.gpo.gov/congress/house
                      http://www.house.gov/reform


                                 ______

                    U.S. GOVERNMENT PRINTING OFFICE
97-555                      WASHINGTON : 2005
_____________________________________________________________________________
For Sale by the Superintendent of Documents, U.S. Government Printing Office
Internet: bookstore.gpo.gov  Phone: toll free (866) 512-1800; (202) 512ï¿½091800  
Fax: (202) 512ï¿½092250 Mail: Stop SSOP, Washington, DC 20402ï¿½090001

                     COMMITTEE ON GOVERNMENT REFORM

                     TOM DAVIS, Virginia, Chairman
DAN BURTON, Indiana                  HENRY A. WAXMAN, California
CHRISTOPHER SHAYS, Connecticut       TOM LANTOS, California
ILEANA ROS-LEHTINEN, Florida         MAJOR R. OWENS, New York
JOHN M. McHUGH, New York             EDOLPHUS TOWNS, New York
JOHN L. MICA, Florida                PAUL E. KANJORSKI, Pennsylvania
MARK E. SOUDER, Indiana              CAROLYN B. MALONEY, New York
STEVEN C. LaTOURETTE, Ohio           ELIJAH E. CUMMINGS, Maryland
DOUG OSE, California                 DENNIS J. KUCINICH, Ohio
RON LEWIS, Kentucky                  DANNY K. DAVIS, Illinois
JO ANN DAVIS, Virginia               JOHN F. TIERNEY, Massachusetts
TODD RUSSELL PLATTS, Pennsylvania    WM. LACY CLAY, Missouri
CHRIS CANNON, Utah                   DIANE E. WATSON, California
ADAM H. PUTNAM, Florida              STEPHEN F. LYNCH, Massachusetts
EDWARD L. SCHROCK, Virginia          CHRIS VAN HOLLEN, Maryland
JOHN J. DUNCAN, Jr., Tennessee       LINDA T. SANCHEZ, California
NATHAN DEAL, Georgia                 C.A. ``DUTCH'' RUPPERSBERGER, 
CANDICE S. MILLER, Michigan              Maryland
TIM MURPHY, Pennsylvania             ELEANOR HOLMES NORTON, District of 
MICHAEL R. TURNER, Ohio                  Columbia
JOHN R. CARTER, Texas                JIM COOPER, Tennessee
MARSHA BLACKBURN, Tennessee          BETTY McCOLLUM, Minnesota
PATRICK J. TIBERI, Ohio                          ------
KATHERINE HARRIS, Florida            BERNARD SANDERS, Vermont 
                                         (Independent)

                    Melissa Wojciak, Staff Director
                   David Marin, Deputy Staff Director
                      Rob Borden, Parliamentarian
                       Teresa Austin, Chief Clerk
          Phil Barnett, Minority Chief of Staff/Chief Counsel

     Subcommittee on Government Efficiency and Financial Management

              TODD RUSSELL PLATTS, Pennsylvania, Chairman
MARSHA BLACKBURN, Tennessee          EDOLPHUS TOWNS, New York
STEVEN C. LaTOURETTE, Ohio           PAUL E. KANJORSKI, Pennsylvania
CANDICE S. MILLER, Michigan          MAJOR R. OWENS, New York
MICHAEL R. TURNER, Ohio              CAROLYN B. MALONEY, New York
KATHERINE HARRIS, Florida

                               Ex Officio

TOM DAVIS, Virginia                  HENRY A. WAXMAN, California
                     Mike Hettinger, Staff Director
                 Larry Brady, Professional Staff Member
                          Sara D'Orsie, Clerk
          Mark Stephenson, Minority Professional Staff Member


                            C O N T E N T S

                              ----------                              
                                                                   Page
Hearing held on June 16, 2004....................................     1
Statement of:
    Cruser, George, partner, public sector financial management, 
      IBM Corp.; David Halstead, vice president, Bradson Corp.; 
      Robin Lineberger, senior vice president, BearingPoint; and 
      Greg Pellegrino, partner, public sector, Deloitte 
      Consulting.................................................     4
Letters, statements, etc., submitted for the record by:
    Cruser, George, partner, public sector financial management, 
      IBM Corp., prepared statement of...........................     6
    Halstead, David, vice president, Bradson Corp., prepared 
      statement of...............................................    14
    Lineberger, Robin, senior vice president, BearingPoint, 
      prepared statement of......................................    21
    Pellegrino, Greg, partner, public sector, Deloitte 
      Consulting, prepared statement of..........................    32
    Platts, Hon. Todd Russell, a Representative in Congress from 
      the State of Pennsylvania, prepared statement of...........     2

 
PRIVATE SECTOR CONSULTANTS AND FEDERAL FINANCIAL MANAGEMENT: MORE THAN 
                          BALANCING THE BOOKS

                              ----------                              


                        WEDNESDAY, JUNE 16, 2004

                  House of Representatives,
Subcommittee on Government Efficiency and Financial 
                                        Management,
                            Committee on Government Reform,
                                                    Washington, DC.
    The subcommittee met, pursuant to notice, at 2 p.m., in 
room 2247, Rayburn House Office Building, Hon. Todd Platts 
(chairman of the subcommittee) presiding.
    Present: Representatives Platts and Towns.
    Staff present: Mike Hettinger, staff director; Larry Brady 
and Tabetha Mueller, professional staff members; Amy Laudeman, 
legislative assistant; Sarah D'Orsie, clerk; Daniel Hazelton 
and Katherine Edge, interns; Mark Stephenson and Adam Bordes, 
minority professional staff members; and Teresa Coufal, 
minority assistant clerk.
    Mr. Platts. This hearing of the Subcommittee on Government 
Efficiency and Financial Management will come to order.
    This is a continuing effort by the subcommittee to focus on 
financial management across the Federal Government. Today, we 
are delighted to have several individuals from the private 
sector who are with companies that play critically important 
roles in the Federal Government's effort to get our financial 
management in good stead.
    Because of time constraints and our expectation of the next 
series of votes, which will last about an hour once they begin, 
coming up in anywhere from 30 minutes to 1 hour, I am going to 
submit my opening statement for the record. And I would ask the 
ranking member and other members who may be arriving to submit 
their opening statements for the record so we can get right to 
our witnesses' statements and then to questions.
    [The prepared statement of Hon. Todd Russell Platts 
follows:]

[GRAPHIC] [TIFF OMITTED] T7555.001

[GRAPHIC] [TIFF OMITTED] T7555.002

    Mr. Platts. Maybe before we do introductions and have your 
statements, I'd like to ask each of you to rise and be sworn 
in, as well as any individuals who you may call on as part of 
your testimony or question and answer efforts today to rise and 
take the oath. Please rise and raise your right hands.
    [Witnesses sworn.]
    Mr. Platts. The record will reflect that the witnesses 
answered in the affirmative.
    As we begin testimony, because we are somewhat constrained 
on time, if we can try to keep statements to the 5 minutes and 
then have as much time as possible for Q&A, that would be 
great. Typically, we give a little bit of background. But I 
think today, other than identifying Mr. Cruser as being from 
IBM, if you would like to begin with your opening statement, 
and then we will move down from there and save again the time 
for questions.
    So, Mr. Cruser.

 STATEMENTS OF GEORGE CRUSER, PARTNER, PUBLIC SECTOR FINANCIAL 
MANAGEMENT, IBM CORP.; DAVID HALSTEAD, VICE PRESIDENT, BRADSON 
 CORP.; ROBIN LINEBERGER, SENIOR VICE PRESIDENT, BEARINGPOINT; 
     AND GREG PELLEGRINO, PARTNER, PUBLIC SECTOR, DELOITTE 
                           CONSULTING

    Mr. Cruser. Mr. Chairman, thank you. I am George Cruser. I 
am a partner at IBM Business Consulting Services. I am 
responsible for our public sector financial management 
practice. IBM provides financial management services to support 
the needs of the chief financial officer.
    Our core services focus on strategy and process 
transformations needed to improve the budget, finance, 
accounting operations, and overall agency performance, along 
with implementations of agency-wide financial systems and other 
enabling technology.
    By transforming and improving business practices, and by 
using standards based technology, Federal CFOs have been able 
to start moving from an operation that primarily collected data 
and reported on results, with little time for analysis, to an 
operation where having timely, accurate, and comprehensive data 
is a given, and more of their time is spent in the analysis and 
interpretation of results. Our implementations focus on the use 
of standard commercial off-the-shelf, or COTS, products that 
meet Federal Government requirements and help Federal CFOs move 
more rapidly toward high quality analytics and approved 
business practices.
    In our experience, IBM has found three noteworthy practices 
that can be applied Government-wide.
    The first is a Federal CFO with the commitment to require 
timely, accurate, and comprehensive financial reporting, and 
who accepts nothing less than a strong internal control 
environment and an unqualified opinion.
    The second is a financial CFO who has used enterprise-wide 
implementation of COTS software as a platform for 
transformation and substantial operational improvements. 
Implementing standardized financial software has been a means 
to improve but is not a best practice in and of itself. The 
best practice has been the Federal CFO's commitment to a 
comprehensive review of financial management processes, 
transforming these processes to align with the strategic goals 
of the agency, and then implementing software solutions to 
automate data collection, validation, and reporting. A new 
financial system can reduce the time to collect and report data 
as much as 50 percent, and can allow managers to answer 
questions directly from the system and make decisions quickly.
    The third point is that Federal CFOs have used software 
upgrades as a platform to make another round of improvements. 
Agencies who make a commitment to improvement will see a step 
function increase in the improvement with the initial 
implementation of COTS. Building continuous improvement into 
the process will allow for routine incremental improvements. 
Federal CFOs have found that they can gain another, albeit 
smaller, step function improvement in operations with each 
software upgrade. Software upgrades require many of the same 
steps as the software implementation. Therefore, establishing 
improvement goals and allowing the changes necessary to achieve 
these goals during the upgrade can yield dramatic results.
    IBM believes the greatest obstacle to Federal agencies 
implementing financial systems is the magnitude of the change 
they are willing to undergo. The most significant cost 
advantage is discipline around standardization. A basic 
recommendation common to all COTS implementations is 
standardized processes across the enterprise, allowing all 
parts of the agency to use compatible or even the same 
software. This allows agencies to have one set of business 
practices, allows cross-training and collaboration throughout 
the agency, and increases the overall knowledge base of the 
system.
    COTS products have been designed to meet all of the basic 
functions required by Federal agencies. Unfortunately, in lieu 
of streamlining business processes to take advantage of 
standard functionality, some agencies have required that the 
software be configured to conform to pre-existing business 
processes. This approach can require such massive 
reconfiguration of the COTS product that it looks more like a 
custom product than the underlying standard product from which 
it started. This complicates the initial implementation and all 
future releases.
    Finally, the set of incentives available to the Federal 
Government versus the private sector is a barrier to success. 
In the private sector IBM often sees that rising starts in the 
executive ranks are selected to manage system implementations, 
and when successful, lead to other promotions and other 
financial reward. In addition, these implementations are highly 
visible. A financial system failure will have an effect on a 
company's stock price--a negative effect. So throughout the 
implementation the project team has the access and the 
attention needed from the CFO and other officers of the 
company. In the Federal Government, providing those who lead 
the implementation with the incentives to meet and exceed the 
performance improvement target is often overlooked.
    Mr. Chairman, this concludes my prepared statement.
    [The prepared statement of Mr. Cruser follows:]

    [GRAPHIC] [TIFF OMITTED] T7555.003
    
    [GRAPHIC] [TIFF OMITTED] T7555.004
    
    [GRAPHIC] [TIFF OMITTED] T7555.005
    
    [GRAPHIC] [TIFF OMITTED] T7555.006
    
    [GRAPHIC] [TIFF OMITTED] T7555.007
    
    Mr. Platts. Thank you, Mr. Cruser. A number of points that 
you make in your statement are ones that really jumped out as I 
prepared for this hearing, and I look forward to coming back to 
you to expand on this.
    Next we have Mr. David Halstead, vice president of Bradson 
Corp.
    Mr. Halstead.
    Mr. Halstead. Mr. Chairman, on behalf of Bradson Corp., I 
would like to thank you for the opportunity to discuss the role 
of private sector consultants in implementing new financial 
management systems and improvements.
    Bradson provides financial management, accounting, and 
financial systems consulting to Federal Government 
organizations. The emphasis of our consulting support and 
solutions over the past 10 years has been on financial 
modernization and reform, including implementation of the CFO 
Act, FFMIA, and the President's management agenda, as well as 
the interpretation and adoption of new standards contained in 
the FASAB pronouncements, JFMIP systems guidance, and OMB 
bulletins and circulars.
    Bradson has partnered with many Federal agencies to 
establish and achieve improvement goals, enterprise-wide 
changes, and program improvements. A few examples of our 
ongoing support include building effective cross-walks, 
determining financial system specifications requirements, 
strengthening internal and management controls, analyzing COTS 
applications and JFMIP-approved software, and preparing 
financial statements and audit trails that result in 
unqualified audit opinions.
    Bradson has been able to achieve these and other successes 
by applying logical and practical project plans and approaches 
that include assignment of experienced accounting and business 
professionals, use of automated tools, and specific work 
steps--steps that contain incremental performance milestones 
and completion schedules, all focused to deliver the proper 
levels of energy and expertise so our customer is better able 
to achieve financial compliance and systems improvements.
    The leadership and guidance from the current 
administration, Congress, and various advisory boards continues 
to provide the framework for reforms and improvements. in 
addition to this leadership, as partners with the Government, 
we witness daily a Federal work force that is dedicated to 
meeting reform challenges and willing to adopt new concepts and 
practices needed to strengthen financial accountability. 
Important concepts and business practices, such as:
    Leadership support. Leadership with the authority to make 
decisions about resource allocation, funding, and technical 
direction; that is, a single senior executive who is 
responsible and accountable for planning and execution of the 
implementation project.
    Clear and consistent direction and instructions regarding 
the expectations for accounting, financial systems performance, 
and accountability reporting. Effective requirements documents 
and deployment testing. and program plans to avoid uncertainty 
and provide specific descriptions of agency-wide 
responsibilities and time lines.
    A campaign plan to broadcast widely the new system or 
business processes that includes the actions to be taken, 
explaining the benefits and payoffs of the phased logical 
approach selected by the agency's implementation team.
    Flexibility in the implementation of new systems standards. 
Acknowledgement that steady progress and incremental 
improvements are expected and acceptable. Sponsorship of 
special initiatives and pilot programs to illustrate the 
effectiveness of selected new systems, operations, and 
improvement processes, to include adequate time, resources, and 
training to achieve buy-in from agency employees and users.
    Accessibility to and funding for technical expertise, 
consulting services, and other outside assistance to provide 
the help agency's need to meet the growing demands for change.
    And finally, to facilitate the Government's implementation 
of improved financial systems and processes, there needs to be 
a mechanism for acknowledging and rewarding unique 
accomplishments.
    In other words, Mr. Chairman, agencies require direction on 
where to go with improvements but need flexibility and 
resources to plan and support how to get there.
    Despite these positive actions that will facilitate 
improvements, challenges and obstacles lie ahead. The Federal 
Government is a very large, complex, and geographically 
dispersed group of entities, composed of many missions that 
serve our Nation and its citizens. Therefore, it is not a 
simple task to get consensus on a new system's integration and 
functionality requirements, information architecture schemes, 
and/or deployment plans. In addition to the sheer size and 
complexity, there is so much change occurring in some agencies 
that it is very difficult to focus on what end state the new 
agency-wide COTS system will support.
    Second, when implementing a new financial system there is a 
tendency to focus on the procurement of the software package 
rather than on the total business process--the total process 
that requires important improvements in business operations. 
Procurement of the selected JFMIP approved application is a 
significant step but there should also be adequate resources 
and technical emphasis placed on changing the associated 
business tasks required for successful implementation and 
sustainment. In most instances, the more complex work begins 
rather than ends following the purchase of the COTS 
application.
    And finally, our Federal Government agencies are undergoing 
extensive reform in areas other than financial systems 
modernization, placing extra burden on agency manpower and 
resources. The CFO Act, GPRA, Clinger-Cohen Act, and GISRA are 
a few of the far-reaching requirements that agencies continue 
to implement. In fact, nearly all agencies are placing a very 
high premium on the success of several challenging reforms, 
including physical and systems security, the ability to achieve 
and sustain unqualified audit opinions, implementation of 
enterprise-wide IT capabilities, and integration of disciplined 
planning, budgeting, and reporting, as called for in the 
President's management agenda.
    Although the modernization road ahead contains challenges, 
it also presents opportunities for success. The combination of 
clear and effective guidance and resources from the 
administration and Congress, the hard work and steady progress 
toward improvement and dedication of the Federal work force, 
and the technical assistance and solutions provided by 
consulting firms, like Bradson, will continue to result in 
modernized financial practices and systems.
    Mr. Chairman, I thank you for inviting Bradson to speak 
about this subject. Bradson looks forward to continuing its 
partnership with Federal agencies to provide valuable advice 
and consulting services. We hope this testimony will help you 
in your efforts to lead and facilitate Government reform.
    [The prepared statement of Mr. Halstead follows:]

    [GRAPHIC] [TIFF OMITTED] T7555.008
    
    [GRAPHIC] [TIFF OMITTED] T7555.009
    
    [GRAPHIC] [TIFF OMITTED] T7555.010
    
    [GRAPHIC] [TIFF OMITTED] T7555.011
    
    [GRAPHIC] [TIFF OMITTED] T7555.012
    
    Mr. Platts. Thank you, Mr. Halstead. Again, we will come 
back with questions once we have all the opening statements.
    Next we have Mr. Lineberger, senior vice president with 
BearingPoint.
    Mr. Lineberger, the floor is yours.
    Mr. Lineberger. Good afternoon, Mr. Chairman, Mr. Towns. On 
behalf of BearingPoint, one of the world's leading system 
integration and management consulting firms, I want to thank 
you for the opportunity to share some of our views on systems 
implementation of Federal financial systems. I am the senior 
vice president responsible for the services that we provide to 
the Federal Government and our healthcare clients, responsible 
for nearly $1 billion worth of services. I have over 23 years 
of experience in implementing technology in government, having 
begun my career in the U.S. Air Force where I was responsible 
for software quality assurance and development. Since that 
time, I have supported nearly all of the cabinet level agencies 
in their technology efforts.
    Today I would like to comment briefly on BearingPoint's 
experience in assisting our Federal clients in implementing new 
commercial off the shelf software, or COTS, such as Oracle, 
PeopleSoft, and SAP. We are currently engaged in implementing, 
leading the implementation of agencies that include the 
Department of Health and Human Services, the Department of 
Interior, the Department of Veterans' Affairs, and the 
Department of the Navy. These programs are at various stages in 
their implementation lifecycles and collectively as well as 
individually offer valuable lessons learned. I would like to 
share with you.
    The testimony today will focus on six key areas I think 
that best represent the practices and/or challenges for 
successful deployment of systems across the Federal Government. 
These six topics represent some of the most common high impact 
focal points for improving the success rate of these projects.
    The first, using proper methodologies and techniques in 
commercial off the shelf software implementation. 
Traditionally, our clients have been using a custom development 
systems development lifecycle. They need to adjust and take a 
look at the new methods necessary that implements pre-existing 
software from a configuration perspective, not a software 
development perspective.
    Second, setting realistic expectations for COTS financial 
systems implementation. At the beginning, the client leadership 
needs to set the expectation that the business processes will 
change, to adopt those business practices as they exist in the 
software and, as one of my colleagues pointed out, not try to 
drastically recode or reconfigure the software as it comes out 
of the box.
    Establish and utilize best practices in governance. It must 
establish strong executive leadership and sponsorship for the 
program. It is necessary to have a dedicated, focused, and 
committed leader who can help drive them through some of the 
barriers such as cultural, resistance within the organization.
    Best practices in team-building and development need to 
combine three things to effectively lead the organization. You 
have to have good, skilled professionals from the systems 
integrator combined with top-notch functional experts within 
the organization built into a collaborative team to address the 
implementation and configuration efforts.
    Change management. You have to adequately prepare the work 
force to receive and effectively operate the new system. You 
need vision and leadership, work force preparation which 
requires work force restructuring, role redescription, and 
training. Most importantly, training must be mandated.
    And finally, a broader observation of how to attain better 
value from the financial systems implementation. It must 
utilize the fully integrated system. Try to use as much of that 
single branded software as you can to prevent deconstruction of 
the software in the development of interfaces which cause both 
short-term implementation challenges as well as long-term 
lifecycle costs.
    Mr. Chairman, thank you again for this opportunity. I look 
forward to answering any questions you have on my testimony.
    [The prepared statement of Mr. Lineberger follows:]

    [GRAPHIC] [TIFF OMITTED] T7555.013
    
    [GRAPHIC] [TIFF OMITTED] T7555.014
    
    [GRAPHIC] [TIFF OMITTED] T7555.015
    
    [GRAPHIC] [TIFF OMITTED] T7555.016
    
    [GRAPHIC] [TIFF OMITTED] T7555.017
    
    [GRAPHIC] [TIFF OMITTED] T7555.018
    
    [GRAPHIC] [TIFF OMITTED] T7555.019
    
    [GRAPHIC] [TIFF OMITTED] T7555.020
    
    [GRAPHIC] [TIFF OMITTED] T7555.021
    
    Mr. Platts. Mr. Lineberger, thanks for your testimony and 
also thanks for your service as a member of the U.S. Air Force 
in the past.
    Next we have Mr. Greg Pellegrino, a partner with Deloitte 
Consulting and director of Deloitte's public sector practice.
    Mr. Pellegrino. Thank you, Mr. Chairman. Good afternoon. I 
am Greg Pellegrino. I am the global managing director of 
Deloitte's public sector practice and work with leading 
governments all over the world. I also have the unique role of 
being directly responsible for our efforts to serve the U.S. 
Department of Homeland Security here in Washington. I 
appreciate the invitation to appear before you and to provide 
these brief remarks. I will also refer to my written testimony 
that we have submitted.
    We know that Government leaders want to import the best 
practices from private sector experiences into public sector 
operations here in Washington. In fact, I believe that in the 
not too distant future Government here can, and should, 
establish new standards that will be recognized as best 
practices themselves.
    But we also know that Government is different than the 
private sector. I think the key question, though, for this 
committee is: How different can the U.S. Government afford to 
be in implementing financial management systems? Does different 
need to mean costlier and less efficient in achieving the goals 
of implementing these systems? Customization is expensive. The 
more unique that unique agency needs are defined precisely but 
are also kept to a minimum, the more departments and agencies 
will be able to use broadly accepted procedures from the 
private sector and other leading governments and capitalize on 
best practices. And I should point out that there is growing 
recognition of this among Federal leaders. For example, the 
U.S. Postal Service chose commercial software to support its 
massive financial transformation initiative and then re-
engineered their processes to support their commercial best 
practice implementations. And rather than ask that software be 
custom-written to map to older processes, they took this 
approach and achieved their objectives on time and on budget. 
The Postal Service took this approach despite the fact that 
there are very few software packages that are intended to 
support a $67 billion organization of its size, and worked very 
closely in a partnership with the vendors to ensure that those 
products could scale adequately to their needs.
    We need to ask: How different can Government be in focusing 
on the process rather than the result? Often the emphasis on 
projects tends to evolve into designing specifications and then 
trying to meet them, rather than developing solutions and 
seeking to achieve them. Yet, more often than not, key success 
factors that should be addressed, including stakeholder 
communication, change management, knowledge transfer, rather 
than just simply technical specifications, need to become the 
focus. And incentives must be provided to encourage managers to 
focus on the solution as a whole.
    The Office of Management and Budget and the Office of 
Personnel Management recently took an encouraging step. They 
worked together to put out an open request for information 
seeking the private sector's best ideas on Government-wide 
solutions to financial management processes, people management, 
and grants management. And so what they are saying is that 
anyone who has a proven solution that can be adopted for 
Government-wide use, to bring it forward.
    And even recognizing that Government is different, we need 
to ask the question: Can Government afford to balkanize 
authority and still expect to obtain results in these large 
initiatives? Department officials are often given 
responsibility but not necessarily the authority they need to 
fulfill that responsibility in these programs, leaving no one 
single executive or manager with department-wide authority to 
pursue these strategic objectives. If an initiative is 
important to a department, clear ownership and the authority to 
achieve the results must be maintained at the department level.
    We know that Government must address the differences 
inherent in its unique nature. In some respects Government 
timeframes can be warped by election cycles and sometimes 
seemingly arbitrary funding rules. Democracy tends to be that 
way and we all elect to live with it. But it does tend to leave 
management challenges and it disconnects revenue and cost-
savings from appropriations and budgeting, with little 
incentive to capture efficiency gains and realign those 
resources. Budgets have no direction to go but up, as a result. 
Managers can be given broader incentives to pursue savings and 
clearer authority to achieve these business goals.
    And so, what we urge is a much stronger role for the chief 
financial officer, the chief information officer, together, in 
these types of programs as well as other major transformations.
    We agree that the Federal Government has many unique needs. 
We look forward to answering your questions, and we appreciate 
the opportunity to spend time with you today.
    [The prepared statement of Mr. Pellegrino follows:]

    [GRAPHIC] [TIFF OMITTED] T7555.022
    
    [GRAPHIC] [TIFF OMITTED] T7555.023
    
    [GRAPHIC] [TIFF OMITTED] T7555.024
    
    [GRAPHIC] [TIFF OMITTED] T7555.025
    
    [GRAPHIC] [TIFF OMITTED] T7555.026
    
    [GRAPHIC] [TIFF OMITTED] T7555.027
    
    [GRAPHIC] [TIFF OMITTED] T7555.028
    
    [GRAPHIC] [TIFF OMITTED] T7555.029
    
    [GRAPHIC] [TIFF OMITTED] T7555.030
    
    Mr. Platts. Thank you, Mr. Pellegrino.
    I was remiss in not recognizing the ranking member of the 
committee, Mr. Towns from New York. Thanks for joining us, Ed.
    We are going to jump right into questions and try to get as 
many subject areas as possible before the votes call us over to 
the floor.
    I want to start with, Mr. Cruser, in your written 
statement, and you touched on it in your oral statement here 
today, you capture what our subcommittee has been after when we 
look at financial management across the Federal Government, 
which is, in your words, ``Begin the journey of moving from an 
operation that primarily collected data and reported on 
results, with little time for analysis, to an operation where 
having a timely, accurate, and comprehensive data set is a 
given and more of their time is spent in the analysis and 
interpretation of the results.'' That is exactly what we are 
seeking to do as an oversight committee is help that goal be 
achieved across the Federal Government in all agencies. And 
each of you and your companies play a critical role in that 
goal being achieved, working with the agencies themselves, the 
software companies, and having a partnership to allow us to get 
the most efficient operation out there and truly where we get 
to a financial management system that gives that timely 
reliable data that can then be relied on in the management of 
the agency and its programs.
    One of the things that was touched on in all of your 
written testimonies and again here today was the issue of COTS 
software and agencies' ability to accept that commercial off 
the shelf versus customizing. I would be interested if each of 
you would be interested in commenting on your experience of how 
common is it that an agency refuses to accept that off the 
shelf and wants to customize and basically keep their business 
practices as are instead of adjusting internally to what is 
much more readily available. And then two followup parts to 
that. Where there is an agency that wants to customize and not 
use a COTS system, what type of discussions go on between your 
companies and others with the agency in question to try to 
weigh the pros and cons, including the cost, as well as the 
impact of upgrades that will also have to be customized. If you 
could each give me your opinion of how common it is, and then 
those discussions that do or do not go on. We will just start 
and go across.
    Mr. Cruser. Sure. Happy to, Mr. Chairman. I would argue it 
is very common to see resistance to change. And I do not know 
that is actually limited to the Federal Government. We see it 
in our commercial clients not wanting to change. I think it is 
somewhat unique in the Federal Government in that typically 
managers in the Federal arena are so accustomed to working with 
exceptions, the rules and regulations by which they live. The 
field handles all of the normal daily processing, so all they 
get to see really is exception after exception after exception. 
So they begin to live in a world where they think of themselves 
as being unique because they really only see the unique aspects 
as opposed to the 90 percent of transactions that are 
``normal'' transactions. So I think there is a lot of 
resistance to changing their processes. But I think there is 
just a lot of resistance to change.
    In my written remarks, I noted, regardless if you do not 
like to change, a little change yields a little improvement, a 
lot of change yields a lot of improvement. That is really the 
discussions we have when they want to customize. We try and 
explain to them that whatever you think you are saving in pain 
now, you are going to have that pain at the next upgrade and 
the following upgrade and the following upgrade, not being able 
to do what you want. So I think we spend a lot of time trying 
to convince people to customize as little as possible, because 
ultimately, at least at IBM, we want the client to get as much 
value as possible because that is how we get our next good 
piece of work is because of the results we had with client A to 
take to client B.
    Mr. Platts. Thank you. Mr. Halstead.
    Mr. Halstead. Sir, I would say there is resistance to 
change, but I would say there is resistance to change anyplace 
you implement an integrated agency-wide financial system, 
whether it be the House of Representatives or the Department of 
Homeland Security or a private industry company. It brings on 
new processes, new procedures, people have to sit in training, 
it slows down their work processes, and now they are faced with 
meeting their day to day reporting requirements and 
incorporating all the new things that the new system brings 
along. You also have the program manager of the COTS 
implementation that is concerned about time lines that he has 
been given. Where the COTS system may require a change in this 
business process X, if he goes out and changes that business 
process X, he is going to slow down his implementation, it is 
going to cost more, it is going to take more manpower.
    So when you are planning a COTS implementation, the 
milestones, everything looks very rosy, and then you start and 
it can quickly balloon into something that you do not want it 
to. So there is resistance just from the classic human nature 
of resistance, and then there is resistance because you know 
what it can evolve into if you allow it to.
    Mr. Platts. Thank you. Mr. Lineberger.
    Mr. Lineberger. Mr. Chairman, we see resistance almost 100 
percent in terms of across the agencies. But where we see it is 
middle to lower management. The leadership I think is beginning 
to understand the peril of not accepting practice out of the 
box. In fact, the governance model that we discussed in our 
testimony provides a construct to prevent that bottoms-up 
``That is not the way we do it today,'' or ``The way we do it 
today is the way we ought to continue to do it.'' Provide some 
constructs for filtering that out of both the requirements and 
the configuration process through a good governance model. A 
change control board, a change management process will help 
filter through what actually has to be changed to support the 
business versus what is being proffered up as ``We need to 
continue to do business the old way.''
    To the second part of your question, the dialog we have 
about custom software development in the financial arena, we 
will not do it. We do not enter into the dialog because it is 
bad for the Government to try to build a bottoms-up custom 
financial system.
    Mr. Platts. OK. Mr. Pellegrino.
    Mr. Pellegrino. Mr. Chairman, it is important to recognize 
the timing of a hearing like this on this subject because we 
are in a transition that calls for something new in order to be 
successful with the implementation of commercial off the shelf 
tools as important as these enterprise systems are for 
achieving the objectives of Government. We have a generation, 
and generations, of managers in the Government who have had 
experience with custom software development systems that have 
been built uniquely to meet the very specialized needs of 
Government and we are in a period of time where those are being 
replaced and a new generation of leaders are emerging with 
expertise in this new way of doing business. So, in the future 
I would expect the Government to be again setting a standard 
and helping to shape best practices rather than seeking to 
implement those of others.
    But in the meantime, I think it is very critical for us to 
not only respect and appreciate the uniqueness that Government 
has, but also look at ways for Government leaders to justify 
and make sure that the investments that they are making in 
dealing with that uniqueness is something that returns value to 
the citizen. I think from that perspective, we encourage a much 
more I think accelerated approach to teaching the best 
practices, focusing on resource deployment and change 
management, so that the leaders here in these agencies feel 
that they have the budget and the support to take on the 
transformation of their agencies that needs to be done in order 
to be successful.
    As far as the discussion, absolutely, this is a dialog. We 
are moving from projects that have been about software and that 
today it is not about the software, it is about the people and 
the organization. And this is a journey that these agencies are 
on where there are many turns and there are many chances to do 
the wrong thing or the right thing, and helping navigate 
through that is something that our firm and the leaders that we 
have who have had experience in successful implementations are 
very focused on.
    Mr. Platts. Thank you. I have some followup questions, but 
I want to yield to the ranking member, Mr. Towns from New York. 
Ed, apparently we expect votes pretty soon. And then figuring 
that first vote is going to be open 20-25 minutes, my guess is 
we have 25 minutes or so here.
    Mr. Towns. OK. Thank you, Mr. Chairman. I also thank you 
for holding this hearing as well.
    Let me just sort of pick up on something that you said, Mr. 
Pellegrino, and I would like for you to expound on it. You made 
the comment that Government is different from private sector. 
Could you expound on that. Are you talking about red tape or 
the bureaucracy? What are you really talking about?
    Mr. Pellegrino. Sure. The objectives of the Government and 
the way that it manages its operations and its objectives are 
very different in the sense of a focus on creating value for 
its citizens as opposed to the private sector motivation of 
creating shareholder value. That suggests something that I 
think is very fundamental to these projects; and that is, these 
projects and the efficiency of Government in meeting citizen 
needs is primarily focused on how to meet the needs for equity, 
how to meet the needs for performance and delivery, how to meet 
the needs of the Government workers themselves in a way that 
addresses those unique roles that Government plays in our 
country and around the world. I think from that standpoint, 
this is not about differences that should be a disabler or 
should prevent Government from seeking world class operations, 
but rather should be something that should be reflected in its 
approach to implementing a business case that strives to meet 
those objectives of delivering value to the citizens for the 
taxpayer dollars.
    So there is a fundamental difference but it is not a 
barrier that should be preventing Government from achieving 
objectives in these types of programs.
    Mr. Towns. Thank you very much. Let me just throw this out 
to all of you, and we will just go right down the line, 
starting with you, Mr. Cruser, is the Government dedicating 
enough resources to address the needs of agencies seeking to 
implement secure and efficient financial management systems? 
Enough resources there?
    Mr. Cruser. In my experience, while the total count of 
resources might be enough, I do not think that they have pulled 
enough of the right talent off of the line and dedicated them 
to the implementation of a financial system. So, unlike in a 
commercial enterprise where ten people will be taken and told 
they no longer have your old job, all you have to do is 
implement systems, we find in the Federal Government we have 
access to 20 people but they have a day job doing all the 
things they always did and around that day job they need to do 
the financial implementation. So in the end, you do not have 
enough focused resources typically to be successful in the 
financial implementation.
    Mr. Towns. Thank you. Mr. Halstead.
    Mr. Halstead. Sir, to dovetail on that, I would say that 
the resources are probably there, the resources and the 
technical expertise that needs to be there, though need to 
focus on things like project management capabilities, earned 
value management capabilities, specific technical and 
functionality capabilities. Many times a budget director is 
taken off their normal job and they are put in charge of the 
implementation, or at least a component of the implementation. 
So without knowing what the numbers are for resources, I would 
say they probably are sufficient but they probably need to be 
realigned a little bit to focus on, for instance, front-end 
analysis long before the purchase is made, and then post-
implementation testing and sustainment after the implementation 
is made. So there could be some realignment that I think would 
help.
    Mr. Towns. Thank you very much. Mr. Lineberger.
    Mr. Lineberger. I believe that overall the number of 
dollars and head count--the dollar amounts are adequate, there 
is enough dollars, the human capital is the shortage and I do 
not see enough of available resources. Our clients are 
typically one deep in a lot of these critical functions. They 
are making day to day tradeoffs between pulling someone off the 
line and letting a day to day type activity languish versus 
dedicating their one deep person to a particular functional 
area.
    Second, within the programs, I do not see enough resources, 
whether dollar or human capital, allocated to the change 
management function. Across the board, I think we are not 
spending enough time and energy in the preparation of the work 
force and the training of the work force in advance of the 
deployment.
    Mr. Towns. Thank you. Mr. Pellegrino.
    Mr. Pellegrino. Mr. Congressman, we do not see that 
adequate level of resources typically on these types of complex 
engagements and programs. We see in commercial implementations 
that are similar to these in complexity as much as a one-to-one 
match of the Government resources with the private sector 
resources in order to help support the knowledge transfer to 
the workers from the private sector experts in order to provide 
for change management, provide for the business process change 
that needs to occur, and it is really done in a collaboration 
together. We do not see that type of level of commitment of 
resources. We do not see those resources being simply 
available, let alone the fact that if they were available there 
are many other things that are also a priority in these 
agencies. And so this is an area where the business model and 
the approach to implementing these complex programs needs to 
match the resources available and that there needs to be a 
clear agreement in terms of the approach to procurement, the 
approach to the partnership with the private sector partner who 
is assisting the agency that is consistent with his level of 
resource issues that are quite common.
    Mr. Towns. Thank you very much, Mr. Chairman.
    Mr. Platts. Thank you, Mr. Towns. Mr. Pellegrino, I think 
it was you, in talking about the customizing issue, I think you 
said a ``justification for uniqueness,'' that maybe there 
should be some threshold that is established. Were you 
envisioning something at the CFO/CIO level of saying that we 
are going to spend X dollars on customizing instead of using a 
COTS system in presenting that to the secretary or head of the 
agency, or is it something lower level where that justification 
should be made to the CFO/CIO?
    Mr. Pellegrino. I think you can take the approach of both 
looking at this at the overall program level, at the COTS 
level, and you can also take the approach of looking at it all 
the way down to a specific business process within the agency. 
And what I encourage is that the leadership involved with these 
programs that are responsible for achieving the business 
objectives treat this as a portfolio and that they manage that 
portfolio based on ultimately getting to the agency objectives 
that they are expected to meet while also justifying where they 
are going to deviate from either Government accepted standard 
processes or tools or industry best practices. And that 
justification should be treated as a business case, that 
deviating from that is for a purpose and it is a purpose that 
meets either a unique agency role, or a need of a citizen, or 
other part of the Government.
    Mr. Platts. Thank you. Across all of your testimonies is 
the importance of leadership and setting the tone in that 
culture of an agency, department with the senior leaders. What 
would be your opinions on the level of involvement and 
interaction between CFOs and CIOs in deciding what this new 
financial management system is going to look like, what 
programs are going to be used, and whether it is going to be 
customized or not, what business practices, what significant 
changes. How close is that dialog in your opinion between CFOs 
and CIOs?
    Mr. Lineberger. Mr. Chairman, in every case that we are 
implementing, there is a great amount of dialog and it 
generally shapes up around enterprise architecture and the 
technology base as a purview of the CIO, both dealing with the 
early implementation, supporting the development, supporting 
the deployment, and ultimately the role of the CIO in 
sustainment. So they are sort of owning the architecture and 
then being involved to assure that the network connectivity and 
throughput of the infrastructure beneath the application is 
adequate to support the deployment. And what we try to do 
actually, is get--I believe those are a deputy secretary for 
administration, budget, and finance--the Deputy of 
Administration to become the program sponsor to which in many 
organizations both the CIO and the CFO reports. So that we have 
a single champion there to become an arbiter if ever necessary. 
But then collectively giving the CFO the purview of what we 
call the applications layer. Then the business practices 
associated with the business of finance, have him take the 
business approach, defining which practices will or will not be 
implemented, and really having the CFO or his proxies push back 
on the customization and configuration in favor of the business 
practice and substantiate it.
    Mr. Platts. You touched on a followup that I was going to 
have as part of the interaction between CFOs and CIOs. Who is 
your main contact person within an agency or department that 
you are working with? You seem to try to identify the deputy 
secretary or project person that kind of leads the charge.
    Others that would like to comment?
    Mr. Halstead. I would say we are finding much the same 
thing. The CFO/CIO are working together. There still probably 
could be some improvement related to a single senior executive 
that takes the fall if the system implementation is not 
successful.
    Mr. Platts. The accountability, that this is your 
responsibility and there is no passing the buck or shading the 
responsibility?
    Mr. Halstead. A lot of the questions and answers have been 
related to the difference between private industry and public 
sector. I would say one of the greatest differences, certainly, 
is that in the private industry there is a single person that 
will lose their job if the implementation is not successful. I 
am not sure the same can be said for the public sector. So 
although the CFO and the CIO work together very well in terms 
of funneling up the requirements on the CIO side and handling 
the finance side, the functionality on the CFO, down the road 
sometimes that synergy loses some momentum.
    Mr. Platts. That accountability example, I believe it was 
DoD where they had spent $100 million on a new system and 7 
years in realized that this was not going to work. In the 
private sector, if a corporation spent $100 million and in 7 
years, someone would be out the door. We just say, well, start 
over and try again. Big difference.
    I want to try to touch on a couple of other topics, if we 
could. Mr. Towns, do you have other questions?
    Mr. Towns. Yes, I do, but I will defer.
    Mr. Platts. Let me touch on one other one here. Mr. 
Halstead, in your statement you talked about one of the 
challenges in the agencies is that they purchase a system and 
think they are done as opposed to thinking that is just the 
beginning of a long process. That highlights a question I was 
going to touch on, which is, with the systems being used being 
certified under the Joint Financial Management Improvement 
Program and that they have been tested and meet the 
requirements of that, it seems that we still have agencies that 
put in these new systems and then cannot do what that 
certification is supposed to make sure they do. A specific 
example would be NASA in their implementing a new system and 
yet cannot prepare financial reports as the system is supposed 
to be able to do. Any thoughts on how that happens, not 
necessarily specific to NASA, but in a broad sense?
    Mr. Halstead. I would say, in general, two things. First of 
all, there is a lot of energy behind identifying which of the 
COTS systems they are going to purchase, and there are not that 
many options. Then the system is implemented. It is being 
overlaid in a series of legacy manual and integrated processes, 
some are not integrated, and it is being overlaid with a number 
of feeder systems that some are not interfacing properly. So 
you have the issue of a new application being installed in an 
old environment, and you have the instance of a new application 
being installed in an old business process environment. So even 
if you come on board with a new ERP, you have still got many of 
those same issues. I do not know specifically what happened at 
NASA, but I know from helping other Federal agencies that is 
what we encounter more often than not.
    Mr. Platts. And to some degree it is that unrealistic 
expectations of we do this system and, boom, we get immediate 
results versus the added commitment of implementation that is 
really going to be required.
    Mr. Halstead. Well, it is high level architecture type of 
incompatibility as well as small frustrating things like my 
requisition has ten digits and this new COTS application has 
nine and so I cannot process my documents. That can slow down 
the process for successful implementation. So we do see it at 
the higher level, the frustrations, as well as the worker staff 
member who cannot just get their work done and transition to 
the new system as quickly as they would like.
    Mr. Platts. Thank you. Mr. Towns.
    Mr. Towns. We talked about change is difficult and you 
indicated the resistance of that middle management and below. 
Why do you think that has occurred? And I agree with you that 
change is difficult. I have noticed that in my own office. 
[Laughter.]
    Why do you think that occurs?
    Mr. Cruser. I think one of the pieces is a middle manager 
understands today what they do and how they can be successful. 
And I think oftentimes in communicating what this change will 
be it is very hard for that individual. We have not done a good 
job at explaining to that individual here is what the new world 
is going to look like, here is how you are going to be 
successful in it, and today you have the skills you need to be 
successful in it or you are missing this skill and we are going 
to get you that skill before you need it so you will be 
successful in this new world. We do not paint a very good 
picture for what it is going to look like tomorrow. So if you 
do a good job today and you know how to do it, you are fearful 
of maybe I will not be able to do a good job tomorrow because 
no one has really told me what tomorrow is. So I think it is a 
long term better communicating of what the future is like and 
what your pathway is to get to that future.
    Mr. Towns. Thank you. Do you want to add something?
    Mr. Pellegrino. Yes. I would add, Mr. Congressman, the 
challenge here is that so often these things are built based on 
the processes that have worked before and what these managers 
have grown up with in their careers. And these now, with new 
expectations, with new processes that these systems help 
enable, these become people projects. These become projects 
that are not just about technology, they become projects where 
the difficult process of leading people to achieve a new set of 
objectives, to achieve new goals is one that is just quite hard 
and it needs to be acknowledged in the approach to these 
programs that type of change for a work force this large is 
quite a difficult undertaking. And so, we would like these 
leaders to think that the project really starts when those 
systems are implemented rather than thinking of this as being a 
whole new world when they come in with the a new system 
implemented yesterday and that everything is going to be easy. 
It is quite a difficult process. And the people change aspect 
is the hardest thing that these managers will face in their 
careers in programs like this.
    Mr. Towns. Thank you. Thank you, Mr. Chairman.
    Mr. Lineberger. Mr. Towns, may I comment?
    Mr. Towns. Yes.
    Mr. Lineberger. I think also if we look upstream in the 
program justification process, the business cases, the business 
case that the secretaries have to bring forward to get funding 
generally is justified around cost-savings, cost take-out. And 
so what you begin with is a process by which people become 
fearful--if this becomes implemented, where are they going to 
get the cost-savings, where are they going to get the 
efficiencies. That translates into personal risk around their 
job. So that to look for ways to justify or to be able to 
implement these programs and sell them on quality, cost 
avoidance, and better data, as one of my colleagues talked 
about, looking for ways to justify and move the programs 
through on those bases rather than pure it costs this today, we 
can go to shared services and have this many fewer people, and 
that is something at the beginning that is setting a tone of 
resistance out of personal fear, in my opinion.
    Mr. Towns. Thank you very much.
    Mr. Platts. Thank you, Mr. Towns. I am going to just skip 
the first vote. So if you want to----
    Mr. Towns. I think I need to go.
    Mr. Platts. I am going to let you run. Thank you for your 
participation.
    I am going to try to get in two more questions here before 
running. We have a couple others I will not get to, not many, 
but if we present to you a few, would you mind submitting 
answers just in writing back to us for the record, that would 
be great.
    One other one I wanted to touch on. Earlier I asked how 
common it is about customizing versus just taking the COTS 
system. How common do you find it with programs that you have 
been involved with that at some point there is a major change 
in direction once you get into it, and how would you classify 
the cost of that, whether it be in dollar terms or time and 
delay? How common are those type of delays, and does it relate 
to just not enough leg work being done up front by the agency 
of what they really were looking for from the system that you 
are helping them to implement?
    Mr. Cruser. I would start by saying the desire to make a 
significant change happens daily and much of the work we do is 
to convince people not to. I think what I am seeing over the 
course of the last several years is more people are 
understanding that every change they make--I almost use a house 
renovation example for people, of every time you make a change, 
the builder makes a lot more money. So you have to really want 
this change because it is going to delay things, and it is 
going to cost more money, and it limits the surety of our 
success. So, you know, we want to be successful in phase I, 
phase II, phase III. So I think we convince them more often 
than not, not to change. And when it is a change, it is 
typically something that they cannot get around--some policy 
change or regulatory change has forced some change. We have to 
make that change, you integrate that successfully in the 
program and move forward.
    Mr. Platts. Great. Mr. Halstead.
    Mr. Halstead. Sir, I would say that much of the change is 
generated by organizational--if the front end requirements 
analysis is done methodically and properly, and I believe that 
in most cases it is, the organization is still evolving. We can 
take Homeland Security and the Department of Defense over the 
last 3 years. That organization today is still getting new 
organizational charts nearly weekly. So what end state will 
this COTS application support, who will do the reporting, who 
will do the imputing, who will do the different levels of 
treasury reporting, those questions spawn changes, 
unfortunately, required to the overall core application or the 
feeder systems that are going to be implemented. So if the 
agency has set itself up for hitting the bull's eye rather than 
just the target, which is sometimes a problem, and then those 
changes start coming in, there is an expensive customization 
process that is required.
    Mr. Platts. Thank you. Yes?
    Mr. Lineberger. Mr. Chairman, if you would set a threshold 
somewhat, let us just say 10 percent of program cost or 
schedule, as qualifying as major, I do not see in the programs 
we are working any single customization or individual 
requirements change at this point having driven that kind of a 
change. What I do see at that level of impact is inclusion of 
new scope. An example would be budget formulation versus 
execution. Most of the COTS packages have evolved with a pretty 
good budget execution capability organically built in; however, 
they are all generally weak on budget formulation. So that as 
they begin then to say let us bring budget formulation into 
this, you do rebaseline, it gets really more aggregating or 
bringing in new scope rather than, say, one single process 
change or change order. So I do not see major, in terms of at 
least setting that as a standard, individual changes or 
reconfigurations causing that.
    Mr. Platts. OK. Mr. Pellegrino.
    Mr. Pellegrino. I just would like to bring a slightly 
different perspective on change, in that the more that these 
programs are focused on enabling new business models, greater 
efficiency, transformation of agency operations, there needs to 
be an environment where change, even major change and course 
corrections and adjustments to business processes, the 
strategies that departments are executing themselves, then they 
need to be enabled. The specification orientation around 
procurement, the length of the procurement, the lack of a 
partnership between the private sector team and the agency in 
achieving objectives versus meeting specifications, is one that 
there can be a lot of resistance to changing the spec while at 
the same time the mission is changing right underneath the 
project itself. That creates a departure. The business 
leadership in the Government is going to continue to stay 
focused on meeting constituent needs and the mission while it 
is evolving while at the same time the degree to which these 
things have been defined precisely have the project teams kind 
of going along as if nothing has occurred for fear that it will 
raise cost, for fear that they will be held accountable for 
missing their budget and their milestones and so forth. So 
there needs to be an environment where, while minimizing 
customization, change is enabled to make sure that objectives 
are met and that the leadership on both sides are held 
accountable for meeting those targets amidst a rapidly changing 
environment here in Washington.
    Mr. Platts. So we keep the focus on what is the ultimate 
goal we are after and do whatever is necessary, including 
sometimes change, so we achieve that ultimate goal.
    I am going to close with, one, an observation, and you have 
touched on it in your statements and in your written testimony 
as well, and that is the importance of the public sector 
following the example of private sector in raising the level of 
importance or focus and prioritization to the CFO position and 
the role the CFOs play. That is certainly something that this 
subcommittee agrees with. As with DHS, we are trying to raise 
the standard at DHS of the CFO and the priority given to that 
position and that office.
    My final question is, is there something and I will say 
hard to do, but any one thing in particular you think this 
subcommittee really should be looking at, be aware of as we 
follow some of the major implementations that are ongoing in 
various agencies for our oversight responsibilities? Is it that 
interaction between CFOs and CIOs? Is it the regard the CFOs 
have at the senior level, the secretary level? Is there any one 
thing that we should really look for or be mindful of? How 
about we just go down the line.
    Mr. Cruser. I guess the top item that would come to mind 
for me would be to really make sure that as it is being 
reported to you, you understand here is the ultimate goal that 
we are trying to get to and here is the progress that we are 
making to that goal. Because I think all too often it is much 
easier to give a status report that at the end of the day you 
do not have any idea if they are close to that goal or not 
close to the goal as they tell you about all kinds of other 
things that got done as opposed to how effective they were 
toward meeting the end goal.
    Mr. Platts. So advancing down the path, not just being busy 
along the path.
    Mr. Cruser. Right.
    Mr. Platts. OK.
    Mr. Halstead. And I think that starts with establishing 
what standards this COTS off the shelf solution must meet, but 
then allowing for flexibility in how the specific agency will 
use those standards to meet its reporting requirements. And 
then the third component would be the accountability of each 
individual person for their role and responsibility.
    Mr. Platts. OK. Thank you. And this is a vote where I am 
going to have to run here shortly.
    Mr. Lineberger. I would look for evidence of a strong 
governance model that includes configuration management and 
change management, and participation in each of the operating 
divisions in the resolution whether or not they are adopting 
those requirements, changes, those configuration changes in the 
program.
    Mr. Platts. So that management team from top to bottom is 
truly there and it would fulfill its assigned mission.
    Last word, Mr. Pellegrino.
    Mr. Pellegrino. When these efforts fail to achieve 
objectives it is usually no surprise. The leadership, the teams 
involved knew well in advance that things were not going along 
as planned. And we should be looking at what those indicators 
are where resources are not being committed adequately, where 
changes are being made on an unnecessary frequency, where dates 
are being missed, and where things are not being accepted as 
specified. Those are all attributes that need to be looked at 
by leadership that are accountable for achieving these 
objectives and taken seriously so that course corrections and 
adjustments can ensure value for the dollar being spent.
    Mr. Platts. Great. Thank you. And I again thank each of you 
for your written testimony and your appearance here today. I 
apologize for the time crunch but I do not think you want to 
sit here for an hour while we are over there voting. So I 
appreciate your letting us run through this. We will keep the 
record open for 2 weeks to followup with just a couple of 
written questions for you and look forward to those responses.
    This hearing stands adjourned.
    [Whereupon, at 3 p.m., the subcommittee was adjourned, to 
reconvene at the call of the Chair.]

                                 
