However, the department broke the cardinal rules of enterprise management, failing to adequately comparison shop, analyze costs and document a solid business case before taking action, according to an audit by the Treasury Departments Office of Inspector General.
The audit says the project, dubbed TCE (Treasury Communications Enterprise), suffers from poor planning and execution, and should potentially be scrapped.
The department set out in early 2004 to replace a set of independent networks with a converged system that would facilitate back-office functions such as paying bills, citizen services such as online tax return filing, and information sharing with law enforcement and financial institutions.
A proposal from AT&T, estimated to cost $1 billion over 10 years, was accepted in December, 2004, but rival bidders protested and the Government Accountability Office upheld the protest, leaving the project up in the air.
In the business world, before making such a major investment decision, management would typically compare all available alternatives, but Treasury Department managers could not show that such due diligence had been performed, according to an audit report dated Feb. 10.
Managers did not take the time to adequately consider alternative governmentwide contract options, and they were unable to fully explain how they came up with the $1 billion estimate, according to the audit.
"[W]e believe that in its haste to proceed with TCE, Treasury lost potential opportunities for cost savings and made unnecessary mistakes that delayed its goal to replace [the existing system] before September 2005," the auditors said. "Moreover, despite the potential $1 billion cost estimated for TCE, we saw little evidence of adequate senior management oversight of the project."
The departments chief financial officer, Sandra Pack, agreed that all options should be considered before the contract is awarded, and that future major acquisitions should include a readily available business case, but she maintained that shortcomings in the process to date have not impaired decisions.
"While we recognize that incomplete documentation can have important consequences, we do not believe that here it has prevented the department from making the correct decision in selecting among the available alternatives to meet its telecommunications requirements," Pack said.