Squeezing Services

Homeland Security's massive effort to consolidate administrative systems is designed to deliver on President Bush's promise that the merger of 22 agencies would result in economies of scale great enough to hold DHS to a budget equal to and eventually less than the sum of its parts.

The department already has whittled seven payroll systems to two, 22 human resources service centers to seven and 19 financial management providers to eight. Greg Rothwell, Homeland Security's procurement chief, inherited seven purchasing shops and added an eighth to support agencies that entered DHS without their own. But the department has moved to a single system for reporting purchases.

Department officials plan eventually to scale back to just one payroll system and no more than three human resources centers. CFO Andrew Maner would like to further streamline financial management systems, though he has no magic number in mind. The department also is building a system, known as EMERGE2, to integrate budget, accounting and reporting, cost management, asset management, acquisitions and grant data.

But work remains to ensure that DHS' chief human capital, financial, procurement, information technology and administrative services officers have the authority and resources necessary, Acting Inspector General Richard Skinner recently told the Senate Homeland Security and Governmental Affairs Committee. Management directives published in October order the chiefs to plan integration efforts. The heads of DHS bureaus will be responsible for acting on these plans. Skinner says such dual accountability is workable, but could leave the business chiefs hamstrung because the staffers supporting them are scattered throughout DHS bureaus and don't report directly to them.

The IG and the Government Accountability Office also caution that agreements to share services require improved planning. The Immigration and Customs Enforcement bureau, for example, struggles to keep its own books in shape but took on accounting for 10 of the 22 agencies that formed the department, according to KPMG LLP, the accounting firm that conducted DHS' fiscal 2004 audit. Department officials and ICE failed to "prepare a thorough, well-designed plan" for transferring accounting responsibilities, the IG found. ICE's accounting practices were so flawed they constituted a "material weakness in internal control," KPMG auditors found.

But for all the problems, DHS officials aren't too upset with their progress in consolidating services. ICE might not be a perfect accountant, Maner says, but right now it is the best outfitted to handle finances for the Science and Technology, Citizenship and Immigration Services and Information Analysis and Infrastructure Protection directorates and others. DHS did not have a lot of leeway to mull over the agreement initially, but Maner says it will be reviewed annually.

The Transportation Security Administration is content to let the Coast Guard handle its finances, along with those of the Federal Air Marshal Service, as it has since December 2004. Under the shared system, TSA managers can send invoices to the Coast Guard's Chesapeake, Va., Finance Center electronically, avoiding paperwork necessary under the old system. Sue O'Brien, deputy director of the finance center, says that after hiring about 80 people, she has had little trouble providing financial services to the other two agencies. She'd be happy to see more Homeland Security bureaus join.