Treasurys Network Plan Lacks Enterprise Accountability

By Caron Carlson  |  Posted 2006-02-13

Treasurys Network Plan Lacks Enterprise Accountability

In an attempt to transform its voice, data and video networks into a more efficient, converged system, the U.S. Department of the Treasury attempted to emulate enterprise network procurement.

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.

Click here to read what the Government Accountability Office has to say about the DODs IT efforts.

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.

Next Page: Members of Congress express doubts.

Members of Congress Express


The project has taken heat from the Office of Management and Budget and members of Congress as well. In response to the audit report, Rep. Tom Davis, R-Va., chairman of the House Committee on Government Reform, said he had had misgivings about TCE from the outset.

"I suspected for the last year or so that TCE was an ill-considered stovepipe program conceived at a time when we needed to move in the opposite direction," Davis said.

"I felt that TCE would foster the perpetuation of duplicative agency-specific administrative functions across government that are far more costly and far less efficient than GSAs centrally managed acquisition infrastructure for telecom."

Davis said the audit report confirmed his suspicions.

"I hate to say I told you so, but the IG report reveals exactly what I have been saying consistently for the last year: TCE is a disaster and ought to be abandoned before the Treasury wastes even more precious taxpayer funds," he said. "Its a total mystery why the Department has so stubbornly tried to move forward with TCE."

The Treasury Department is not the only federal agency that has had difficulty emulating corporate American in moving toward more productive and cost-effective IT systems.

The GAO finds that the private and public sectors face different IT challenges. Read more here.

In January, the Government Accountability Office found that the Department of Defense is moving forward with a $34 billion IT project, called the Global Information Grid, but it is not clear who is in charge of the project and nobody is held accountable for the results.

An inherent lack of high-level coordination and cooperation among the departments divisions is leaving the project somewhat up in the air, the GAO found.

"DOD is at risk of not knowing whether the GIG is being developed within cost and schedule, whether risks are being adequately mitigated, or whether the GIG will provide a worthwhile return on DODs investment," the GAO said in a report released Jan. 31.

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